The Future of Fundraising: Cryptocurrency Donations for Nonprofits
It would not be a post about cryptocurrency without an opening statement that this should not be considered financial advice. Further, the responses from our industry leaders below are opinions (albeit from a very knowledgeable group of people on the topic). Now that that’s out of the way, let’s get into it.
I first became interested in cryptocurrency when I had a nonprofit customer ask me about accepting crypto as a donation and how it could play into their overall technology strategy. I didn’t know the answer, so I brought it to one of Arkus’ Co-Founders, Justin Edelstein, who has been interested in the space for some time now, and we started to dig into it.
This led us into conversations with nonprofits who have benefited from accepting crypto as donations —sometimes as a result of an NFT sale. One well-known NFT project, the Bored Ape Yacht Club, has partnered with Orangutan Outreach and led to almost $1M in donations so far. It also led us into several conversations with those who are making it possible and accessible for nonprofits to accept crypto as donations.
As I dug further into the space and started to bring up the topic in everyday conversation. I also encountered several skeptics. One thing Justin suggested to me when I was first learning, and what I said to those who expressed concerns over crypto being “real” or “trustworthy,” was to go to the bank, walk to the teller window, and ask that person for all your money. What would the teller’s response be?
The purpose of this post is not to explain what crypto and NFTs are, (you can get more into some of that here — NFT for Membership Organizations: A Blockchain Think Piece) but rather to provide resources for how nonprofits can learn more about, and take advantage of, their immense potential. We’ll also be talking more about the what and how of things in our upcoming webinar — see details below to sign up. For now, I’d like to open up some of these initial conversations with those helping to break ground for nonprofits in crypto.
A Conversation with Industry Leaders
Over the past few months, I spoke with several individuals who helped inform my perspective on this topic. The Giving Block and Engiven are the two leading platforms that enable nonprofits to accept cryptocurrency as donations; DoinGud is making it easier for artists to get connected to causes they care about, and partner on NFT projects; and finally, David Bianchi is one of the leading artists in the space, as well as the creator of the art genre “Spinema”, in which he creates spoken word films minted as NFTs and donates a portion of the proceeds to nonprofit organizations that speak to his values and mission. More info on these individuals can be found here:
- Pat Duffy, Co-Founder at The Giving Block
- James Lawrence, Co-Founder at Engiven
- Nikoline Arns, Co-Founder at DoinGud
- David Bianchi, Artist & Creator of the genre “Spinema”, in which he creates spoken word films minted as NFTs. You can follow him on Twitter @davidbianchi
What do you see as the greatest opportunities for nonprofits with cryptocurrency? What will be their greatest challenges?
Pat Duffy, Co-Founder at The Giving Block:
The greatest opportunity presented by Crypto Philanthropy is reaching today’s new, young donors since they’re the fastest growing donor demographic. About 94% of (crypto) users are Gen Z and Millennial. It’s also a great time to build relationships with the crypto community’s High Net Worth donors and to stand out among your nonprofit peers — crypto press releases are the best performing in the nonprofit industry. Nonprofits who fundraise crypto are simply always going to be more exciting options for young donors than the alternative.
The greatest challenge is the aging nonprofit demographic. The average nonprofit employee is in their 50s, and the average crypto user is in their 20s. A lot of the industry is simply too far removed from this donor base, so it’s going to take time for the sector to adapt.
James Lawrence, Co-Founder at Engiven:
For the majority of nonprofits, accepting cryptocurrency donations is “found” money. Most crypto donors that have appreciated crypto are seeking the sizable tax benefits associated with making these donations. I call it “found” money because most of these gains have exceeded the donors’ investment expectations and donating it over and above their traditional giving becomes very compelling both for their tax deductions and for the nonprofit’s benefit. At present, we are seeing cryptocurrency donations as the tide that raises all boats. The more donors contemplate giving, the more we talk about philanthropy, the more we hear about the benefits, the conversation around generosity is lifted across the board.
I personally speak with the leadership of dozens of charities every month and they often convey their challenges with accepting cryptocurrency. The main issue is understanding how cryptocurrency works in the context of giving and getting their leadership to embrace it.
Nonprofits tend to move more cautiously when it comes to adopting new technologies and are often reluctant to accept the perceived risks without their peers leading the conversation. Fortunately, we are now seeing some of the most respected nonprofits in the US such as The Salvation Army and Compassion International accepting cryptocurrency donations through Engiven. These kinds of charities set the bar and demonstrate to the rest of the nonprofit world that cryptocurrency is a valid and valuable asset to accept.
Nikoline Arns, DoinGud:
To be able to open up to cryptocurrencies you tap into a whole new spectrum of market with capital and a general generous mentality. The creators, artists and crypto community are already connected with social organisations in their purpose - they wake up and want to make a difference, and in this social causes and nonprofits are the same - they’re all living to make an impact for the better. By connecting those communities:, magic happens.
The greatest challenge will be to dive into the adventure and get to understand the core of the decentralized mindset of why cryptocurrencies and NFT’s exist. It's a bit of a learning curve but if you search for the underlying values you will probably find many overlaps with your organisation's values. And you will find the crypto community very eager to explain and help you understand! (link to discord of doingud where communities can ask questions: https://discord.com/invite/Dsy8MEmBSE )
David Bianchi, Artist:
I think they will have the opportunity to launch their own artistic campaigns and collectible tokens to further their brand impact as well as drive currency to their base through NFTS and build value of the assets over time. Collectors like a philanthropic component to a NFTs utility. Regarding cryptocurrency as a whole, the possibilities are limitless. With the right developmental team they could launch their own ICO, or just buy and hold and watch their wealth grow. With crypto the transfer of currency is mostly instant and practically without fees compared to traditional banking fiat structures, so for the nonprofit sector this should be a no brainer.
The challenges are awareness, education and adoption. For those in the traditional world it takes a long time to get them up to speed. The nonprofit world moves slowly and they are trudging their way into technology and trends for the most part. Crypto moves so fast that unless they are willing to really trust and run, they will get lost in the dust of advancements in the ecosystem.
Does an organization need someone who is well-versed in crypto in order to take advantage of it? Why or why not?
Pat Duffy, Co-Founder at The Giving Block:
No, definitely not. Few of the nonprofits we support have a crypto expert or enthusiast on staff and, thankfully, that makes no difference in their ability to fundraise crypto effectively (I should know, I was that “crypto guy” at a nonprofit once!). If you’re working with a company that does crypto fundraising all you need is a team that’s good at fundraising and using social media.
I'd compare it to you having someone on your team who's invested in stocks. They might be able to tell you a bit about how buying and selling them works, but they're not necessarily a valuable resource when it comes to how your nonprofit should accept them, or the best way to get people with stocks to donate. The upside is that they'll at least be able to push your team past the misconceptions that scare nonprofits away from cryptocurrency, thinking it's difficult to use, not traceable, etc.
Having an internal Crypto Philanthropy champion definitely sparks the conversation and often is the reason nonprofits look into crypto (which rocks!), but those people tend to make very little difference in whether or not a nonprofit fundraises crypto effectively. The biggest variable is how good your team is at learning a new form of fundraising and how effectively you execute on what we coach your team to do.
James Lawrence, Co-Founder at Engiven:
Charitable organizations don’t need an in-house expert to leverage the benefits of cryptocurrency. But they do need a champion or an advocate. In most of the organizations we serve, there’s at least one individual who has some level of experience with crypto and sees the long-term benefits of accepting crypto donations. However, if an organization doesn’t have an advocate but wants to understand the process, benefits, and compliance, companies like Engiven take a well-rounded approach by providing every organization with the training and insights they need to fully understand and embrace this new asset class.
David Bianchi, Artist:
Yes, they do. I can’t bake a cake properly even if I have the ingredients that are required, without experience of how to set temperature, mix the batter properly etc. the cake will fail. The same applies for all disciplines, not just crypto. You need proper understanding of the blockchain today and have talent that sees the future as it is unfolding.
It’s very easy to make fatal flaws in crypto space. The ecosystem is also riddled with scammers dying to steal your wallets. So it’s very important you have people that know what they are doing and know what red flags to look for.
What are the best resources for nonprofits to learn more about the space as it relates to them?
Pat Duffy, Co-Founder at The Giving Block:
We are!
The main reason we exist is because there's not a whole lot out there that makes sense about how nonprofits can accept crypto donations. There are tons of articles written about the space that are kind of misleading. Some underplay what goes into it, some make it seem impossible. Some resources provide dangerous advice on how to accept crypto, or try to use outmoded donor engagement strategies that don't work on this demo.
In short, I'd say the best place to start learning about Crypto Philanthropy is our site, reading blogs and FAQs, or op-eds, articles, blog posts, podcasts and videos we've done through other platforms.
When you're ready to run through your questions, comments, concerns you can book a demo on our site to drill down on everything with someone from our team and see how the product works from end to end.
Alternatively, if you'd like to go a step further without getting "pitched" by us, I'd go to our site, click "donate" and check out the list of nonprofits fundraising crypto with us. If you see one that you think is similar to you, reach out to them and ask them questions. Hopefully they'll be generous enough to answer!
Overall, we take pride in the stuff we've put together and I wouldn't send anyone anywhere else but our platform. Of course we feel that way. Still, there's lots of stuff on our site for you to learn and get tuned up.
James Lawrence, Co-Founder at Engiven:
The best place for charities to start learning about cryptocurrency is online. There are a ton of great resources on YouTube, Reddit, and from articles/blogs which are easy to find. I also recommend coindesk.com and blockworks.co for a steady diet of crypto-based news, what I like to call “the crypto of things.” My best advice is to find an advocate for crypto within the organization and empower them to gather the needed information and present it to leadership for discussion.
Nikoline Arns, DoinGud:
I can list a few here, and there is one that is actually related to the story of Ethereum for if people are curious about what started all this, their mindset and how this idea was built. There is Camila Russo, and she is very connected with everybody that was in this place in the beginning, which of course started with Bitcoin, then Ethereum and Vitalik. She writes it in a way that is super accessible, and it's a story about people with purpose, and the book that she wrote The Infinite Machine is very enjoyable. It will tell you the story about why this technology was created, and I think it's a really great book. I will also list some resources that are not books, since sometimes nobody has time to read books! This especially applies to NFT, because by the time you have finished a book, the whole system has changed already. I have a movie to watch called The Greatest NFT Film Ever Made. It's a very modest title for this video, and it was made by The Defiant! It's one of the best resources if you want to dive into what NFTs are for beginners. Also, A Beginner's Guide To DAO's is a very good read to start understanding what these organisations are in the first place. My last recommendation summarises my personal motivation of why I'm doing what I am doing and what is the giving economy. This book is very old, it's called The Gift by Lewis Hyde. It basically talks about how the gift in itself is like a starting point in society.
David Bianchi, Artist:
The internet to get the basics. “What is crypto?”, “What is a NFT?”, “What are the benefits of the blockchain?” Google searches will give you most of what you need - after you have the fundamentals, you can learn what the right questions to ask are in order to get sized up with a team of pros. You have to know what questions to ask. But for the 101 stuff, search the web and join some clubhouse rooms and learn the floor. A great resource for non-profits to get into being able to accept crypto is Engiven. They are a platform that works solely in the non-profit sector and acts as a fiscal sponsor for 501c3’s. But this is a step you take once you know the basics and trust blockchain and crypto.
What are the risks of not participating?
Pat Duffy, Co-Founder at The Giving Block:
Right now there are 400,000 crypto users per crypto-enabled nonprofit. That ratio is unsustainable of course, and over time it will become dramatically more competitive. Any nonprofit who isn't a giant sector leader knows how hard it is to try to claw your way to the top once there are a handful of market-leaders. Right now, the door is wide open for small and mid-sized nonprofits to carve out a slice of the pie.
The nonprofits who joined us in 2018 are our best performing. Not accepting crypto today is like not launching a website in the 2000s. You can continue to wait, but the later you jump in the harder it is to get ahead.
James Lawrence, Co-Founder at Engiven:
At present, most charitable organizations do not accept crypto donations. While that is changing quickly, it means that the early adopters are likely to receive the bulk of these donations as the pool is quite small relative to the number of registered charities in the US. There’s also a risk in alienating donors who would prefer to donate crypto. Nonprofits should simply view cryptocurrency as a new tool to fund their mission and engage with donors. We haven’t yet begun to understand the longer-term implications and opportunities around crypto, blockchain and philanthropy. However, for those of us who have been pushing the conversation forward over the past 4-5 years, there’s no question that cryptocurrency will have a missive impact on the nonprofit community in the years ahead. While nonprofits need to perform their own due diligence and move into crypto at their own pace, there’s nothing but upside to accepting crypto donations at this point.
Nikoline Arns, DoinGud:
Well yeah! The risk of not benefitting from the giving economy from these communities that are growing everyday. And besides cryptocurrencies and funding, there are technical apps and tools being developed everyday that might really help in organising and empowering your organisation in a transparent, open and ethical way.
David Bianchi, Artist:
I don’t know that there are risks, there are certainly opportunities that will be lost. Blockchain is changing how we do everything, not just finance, art and merchandise and collectibles. The blockchain will be used in the medical field, augmented reality, virtual reality, legal systems, data tracking systems, motor vehicle tracking. So if you don’t participate now and learn and be an early adopter you’ll eventually join once the rest of the world has no choice and you’ll be heavily behind the curve. Is that a risk, or a liability?
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Continuing the Conversations: Where to Go From Here
All in all, I’ve really enjoyed getting to know more —and believe the potential for nonprofits to raise more money, build brand awareness, and build their capacity to better serve on their mission is immense, particularly for those who get involved early. The best way to get started is to start jumping into these conversations yourself, and exploring the resources available.
Arkus will continue to be a provider of resources on this topic. Want to continue the conversation with us? Join our webinar on October 14th — “Cryptocurrency Giving & Nonprofit Fundraising”. Registration is open below.
What questions do you have around cryptocurrency and nonprofit giving? You can also let me know in the Salesforce Trailblazer Community or reach out on LinkedIn.
