The marketing and advertising world has become consumed with talk of NFTs and how businesses can tap into the brave new world of art, commerce and blockchain. But what are these mysterious items and how can they potentially be leveraged in the nonprofit sector?
Let’s dive in.
What are NFTs?
NFTs are non-fungible tokens, which is an incredibly unhelpful definition if you’re not familiar with fungibility or if you’re not sure how tokens function. So let’s break it down.
Let’s start with “non-fungible.” Well, what is fungibility? Fungibility is the ability of a good or asset to be interchanged with other individual goods or assets of the same type. The US dollar is a fungible asset. An example of a fungible exchange is if you give me four quarters and I give you back a dollar. We exchanged something of value for something else of equal value.
A non-fungible asset is anything with unique properties whose value can increase or decrease. A house is a non-fungible asset. A car is also a non-fungible asset. One 2010 Honda Civic might have 100,000 miles on it; another might have 20,000. Those two cars are going to have very different values, even though they’re the same make and model.
So let’s apply that thinking to NFTs: NFTs allow you to buy and sell ownership of unique digital items and keep track of who owns them using the blockchain. An NFT can either be one-of-a-kind or one copy of many, but the blockchain keeps track of who has ownership of the file.
Why do people buy NFTs? As Coinbase’s VP of Products Sanchan Saxena recently explained on the “ NFT Now ” podcast, it’s more than just a status symbol for many. “People buy NFTs,” he said, “as a mechanism for them to express what they believe in, what is an extension of them, and what they want the world to know about them.”
How can the nonprofit world use NFTs? Here are just a few ways.
NFTs Offer an Additional Avenue for Fundraising
This is perhaps the most obvious use case for how nonprofits can tap into the NFT world. Minting new NFTs can serve as an additional stream for regular ol’ fundraising. Someone buys an NFT from your nonprofit--—or an NFT artist you’ve partnered with—and your org receives a donation. Your nonprofit can receive these donations in crypto. (If you’re starting to fear the complicated tax ramifications of receiving crypto, the American Red Cross has been receiving crypto donations since 2014. If ARC can do it, so can you.)
If the thought of receiving crypto donations from your NFT sales makes you too nervous, there are a few NFT marketplaces that also accept credit cards. Here’s a few of the more notable ones: Coinbase’s soon-to-launch NFT Marketplace , Rarible and Nifty Gateway .
Nonprofits Can Leverage a Secondhand Marketplace
The exchange behind between nonprofits and their key stakeholders (donors and volunteers) typically involves a donor or volunteer giving an organization time or money in exchange for the satisfaction of knowing they’re helping a great cause and/or receiving some level of acknowledgment. This acknowledgment from nonprofits can come in the form of something as small as swag (a free branded water bottle after running a 5K) to something as grand as naming rights (The Smith Cancer Center at City Hospital). However, once a pledge is made and the donation is received, the exchange is often done—until the organization re-engages the donor or volunteer for another donation.
What if a nonprofit could continue to receive residuals after secondary sales? Imagine a world where every NFT that is purchased can then be resold, acting as a fundraiser on top of a fundraiser. Suddenly a nonprofit pivots from a relationship manager to one incentivizing and encouraging a lively marketplace. To do so, a nonprofit must focus on analyzing their industry to create favorable terms for their buyers and creating marketing moments when an investor might want to resell their NFT to pick up on any profit.
How does a nonprofit energize a marketplace and encourage transactions? Well, that brings us to community.
NFTs as Community Builders
Coinbase’s Saxena said on “NFT Now” that “NFTs can reflect who you are, your ethos, your values. It reflects you being a part of that community.” Think of why so many of us host virtual fundraisers for birthdays or wear nonprofit branded t-shirts. So many of us do it because we like what it says about us our values. Nonprofit-related NFTs create a new way for people to tell the world: “I am passionate about this issue.”
But minting or buying NFTs is only the first step in showing the world what issues you value. Most successful NFT projects have one thing in common. Each one has energized a group of individuals to continue their passion for the same art through continued engagement on discord servers, Twitter, in-person events and NFT roadmaps for future engagements.
Often these NFT collections make owners feel like they are part of a club. All successful nonprofits are able to accomplish the same thing—making their donors and volunteers feel like they are part of a community and like their opinions truly matter.
You only have to look as far as NFT collections like CryptoPunks or Bored Ape Yacht Club . When someone is purchasing one of these exclusive NFTs, they’re often purchasing their way into the community as much as they are buying a piece of art.
At the Ad Council, we recognize the opportunity that exists in this new world of NFTs, and would love to learn from partners, creators, and more. If you work in Web 3 and are interested in discussing ways we can partner together in this emerging space, don’t hesitate to reach out.
Photo by Andrey Metelev on Unsplash