5 Reasons NFTs Should Disrupt the World of Philanthropy
Last month, our organization, StreetCode Academy, was honored as a California nonprofit of the year for our work bridging the digital divide in one of our history’s toughest seasons. Surprisingly, as we were being celebrated for our work, we simultaneously faced homelessness as we struggled to find an affordable location. (We ultimately landed a temporary home at New Sweet Home Church in East Palo Alto, CA.)
Being in a region flush with wealth, yet not having enough resources to secure a permanent home is a sad irony shared by many non-profits. The work we do benefits the world, but our ability to do it depends on support from wealthy companies, foundations, and individuals — many of whom are distant from the causes and communities we serve.
In a world that is moving and changing fast, philanthropy, like so many institutions we depend on, is in need of innovation and disruption. The digital world of NFTs offers a solution.
On Wednesday, September 15th, StreetCode is launching a new NFT-based fundraising model and creating the world’s first series of pNFTs (Philanthropic Non-Fungible Tokens). This series will include one-of-a-kind digital prints featuring a few of our most influential supporters.
StreetCode‘s’ new NFT-based fundraising campaign features some of our most influential supporters such as songwriter and producer Swoope (above), VSCO Chief Creative Officer Greg Lutze, former NBA player and Stanford standout Josh Childress, and NY Times Best Selling Author Julie Lythcott-Haimes.
A pNFT is any NFT where a percentage of the sale (aka the “royalty”) goes directly to the non-profit organization that created it. The revenue generated is then used to advance social good which, in our case, means supporting our efforts to provide free tech resources to communities of color.
As with all charitable donations, the funds that flow to the nonprofit can be counted as a tax write-off for the buyer of the pNFT. This is a major plus and cannot be overstated. Standard NFTs, unlike Philanthropic NFTs, come with no tax benefits because the money is going to an individual instead of a registered non-profit. This added incentive is going to unlock a ton of funding.
To summarize, Philanthropic NFTs are just like regular Non-Fungible Tokens except they’re linked to a nonprofit, so the money goes toward the greater good and the buyer is entitled to a tax write-off.
As a tech-based nonprofit in the heart of Silicon Valley, we feel a responsibility to lead the way with tech innovations that serve our community. Here are five reasons why we believe pNFTs will usher in a new era of disruptive philanthropy.
1. Technology is already a powerful force for social good, and NFTs are the latest tech tool at our fingertips
As we’ve seen in emergency mutual aid fundraising, crowdfunding, and appeals for funds that go viral on social media — technology has become a vital tool for raising awareness and fundraising. NFTs can do the same thing.
NFTs (non-fungible tokens) are like unique, collectible trading cards, except in a digital format. They have existed since 2014, but this is the year they exploded. In the first half of 2021 alone, NFT sales increased 200 times: up from $13.7 million in the first half of 2020 to $2.5 billion in the first half of 2021. Now is the time to put this tech to good use by redirecting some of those funds towards philanthropic causes.
2. NFTs are a flexible format
Rather than being tethered to a single type of format, an NFT can embody any number of digital formats. Almost anything digital — from a tweet to a piece of music — can be bought or sold as an NFT. This opens up tremendous possibilities, allowing organizations and nonprofits to use their networks to create different types of products to use in fundraising campaigns. This tool is tailor-made for creative people and is only limited by the imagination.
3. NFTs can unlock financial capital from social capital
An NFT is social by nature: it is both visible and publicly traded. Because an NFT has the ability to travel through social networks, it can tap into the financial capital of a network as it circulates. Recall how the ALS Ice Bucket Challenge permeated every corner of social media, bringing global awareness to an obscure disease. Nonprofits can leverage their social networks — who they know — to help create pNFTs with great potential for visibility.
In our case, having former NFL athlete Brice Butler, or NYTimes bestseller Julie Lythcott-Haimes endorse our efforts allows our NFT campaign to travel through their worlds — extending our organizational reach and connecting us with new support networks.
4. NFTs have the potential to generate continuously through royalties
Traditionally, when a donor gives a gift to a non-profit or a cause, it is a one-time transaction. For example, when NBA player and global icon Jeremy Lin donated his shoes to our cause, we were only able to leverage this once, through a charity auction.
However, each time an NFT is sold, the original creator receives a percentage of the sale. If Jeremy Lin donates his endorsement to create an NFT, as it resales, StreetCode will continue to benefit from proceeds.
This system of royalties means that a pNFT can continue to generate revenue indefinitely without the organization expending any resources, and thus has the potential to radically change the way nonprofits fundraise.
5. Philanthropists can showcase their portfolio
There are some donors who want to show their support publicly and bring attention to a cause that they believe in. Others simply want quiet recognition for their contribution (like having their name engraved on the brick of a building they helped fund). With NFTs both are possible. Each time an NFT is purchased or transferred, an indelible record is created. So, if Oprah Winfrey purchases a StreetCode pNFT, she will forever be listed on the NFTs historical log — much like a digital brick in our building. She could also display that same pNFT publicly via social media as many collectors often do.
By the way, Oprah, if you’re reading this, we’ve got a pNFT with your name on it…
Philanthropy as we know it is way overdue for innovation. The current model is inaccessible to many of the smaller organizations doing powerful day-to-day work in their communities. Many community-based organizations do important work but are limited by a lack of resources needed to complete lengthy grant applications or engage deeply with private donors. Ultimately, it takes resources to gain more resources, and fundraising campaigns distract from an organization’s mission. Technology is changing that.
As we’ve seen in recent years, technology has become a strategic tool for affecting social change. Take for example, the Instagram meme account that raised over $7 million in mere days to help transport Afghan citizens to safety last month. Or how Louisiana citizens sprung to action as Hurricane Ida approached the Gulf Coast, engaging mutual aid networks for immediate and direct distribution of resources in the wake of the storm.
Our goal is to demonstrate NFT’s massive potential as an innovative fundraising tool by raising $100K in our landmark pNFT launch this month. We are laying the groundwork for an entirely new model of fundraising — one that will unlock capital and open doors for smaller organizations. This new technology has untapped, transformative power when used as a force for good. There are billions of dollars pouring into the NFT market right now; imagine the effect if just a portion of those dollars made it into the hands of organizations like ours. What kind of impact would that have on the world?
But right now, we need both your imagination and action. Join us in this historic moment as we utilize technology and creativity to disrupt philanthropy. To learn more about how you can play a part in this movement, visit www.streetcode.org/pnft.
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