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The Role of Blockchain and NFTs in Nonprofit Fundraising

NonprofitMobile
Hannah Scherwatzky

The nonprofit world is due for innovation. Anyone who’s ever worked at one will agree. Technology has propelled business growth in sectors like agriculture, transportation, and healthcare. Meanwhile, nonprofit organizations in the same industries struggle to expand fundraising and recruit top talent. Blockchain technology can be one way for nonprofits to secure fundraising opportunities in a fast, secure, dynamic, and transparent way.

The world is changing fast, and mission-driven projects need to move along at the same speed. With the advent of NFTs, DAOs, and distributed ledger technology, nonprofits can expand their impact and increase donor retention. Here’s how.

How Blockchain Technology Can Help Nonprofits

According to a Nonprofit Tech for Good study, "blockchain technology can revolutionize how nonprofits raise funds and donors give to charity."

Blockchain is a distributed database that allows for secure, transparent, and tamper-proof transactions. Nonprofits can streamline their fundraising efforts and make donations more secure.

Nonprofit teams, board members, and donors can track donations onchain to ensure they are being used for the intended purpose. This would give donors more confidence that their money is being used effectively and help build trust between nonprofits and donors.

Blockchain technology enables fast, seamless payments with unparalleled public transparency. Transparency is key in an industry ripe with ethical issues around the use of funds.

"Smart contracts" between nonprofits and donors specify how the donation will be used and automatically release the funds when certain conditions are met. This would further ensure that donations are used as intended and make the donation process more efficient. With smart contracts, donors can earmark donations for specific projects or causes.

Overall, blockchain technology has the potential to revolutionize the nonprofit sector by making donations more secure and transparent. This ultimately leads to more trust between nonprofits and their donors and helps to increase fundraising efforts.

But blockchain is an all-encompassing term for a trillion-dollar space. Let’s get more granular with NFTs and DAOs.

NFTs and Nonprofits

Non-fungible tokens (NFTs) are unique digital assets that cannot be replicated. NFTs can represent many assets, including art, collectibles, and even real estate.

NFTs are a great tool to raise funds in a new and innovative way. Nonprofits could auction off an NFT representing a piece of art or a collectible. The proceeds from the auction could then be used to support the nonprofit's mission.

NFTs also create unique experiences for donors. For example, imagine a fine art auction backed by an NFT that raises money for a good cause. Creative fundraising engages potential donors and raises awareness for the nonprofit's cause.

Nonprofits can also improve brand awareness with NFTs. Remember the popularity of (red) campaigns in the 2000s? People wore their shirts, and you knew exactly what they represented. NFTs present a similar brand opportunity in the digital space.

If a nonprofit can create or optimize popular branding, NFT collections would be a great way to raise awareness about your organization, raise money without strings attached, and allow donors to reap the benefits of secondary trading.

DAOs make better donors

Decentralized Autonomous Organizations (DAOs) are organizations that run on smart contracts. Their members hold voting power and often contribute time, talent, or money to a common cause.

DAOs can be a great way for nonprofits to build donor retention. Today, nonprofits communicate with their donors via snail mail, email, and the occasional phone call or event. Creating a DAO can make donor circles more community-based rather than top-down. With DAOs, you can create feedback loops, voting campaigns, collective contributions for special projects, virtual spaces, discussion threads, and rewards for donors.

With a list of wallet addresses, nonprofits can target specific donors for outreach campaigns, run crowdfunding campaigns, propose grants, and hold democratized votes for organizational decisions.

Partnerships and collaborations are a critical part of the web3 ecosystem. Other DAO treasuries looking for tax deductions can look to nonprofit DAOs as an easy solution, sending quick payments to web3-friendly orgs that accept crypto donations.

With DAOs, the possibilities are endless.

Examples of nonprofit organizations in web3

The Giving Block

The Giving Block enables nonprofits to fundraise using Bitcoin and other cryptocurrencies. This technology allows all sizes of mission-driven organizations, charities, universities, and faith-based organizations to achieve their goals. They believe cryptocurrency is the fastest-growing donation method for Millennial and Gen-Z donors.

Every.org
Every.org is a trusted network of nonprofit organizations that facilitates donations on their platform. While users can donate to the organizations of their choice via credit or debit card, Every.org is crypto-friendly with a full suite of options for crypto wallet holders.

System Error
Partnered with Every.org, Life is Good Playmakers, Sustainable Surf, Noah System Co, and the Headstrong Project, System Error is a web3 project focused on “fixing the world’s system errors.” 50% of their NFT and online store sales proceeds will go directly to the nonprofit partners mentioned above. Look out for more projects like System Error to emerge in the space.

Bottom line on blockchain and nonprofits

As the world becomes more digitized, the nonprofit sector must adapt to new technologies to remain relevant and effective. Blockchain technology has the potential to revolutionize the nonprofit sector.

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