Charities are increasingly considering expanding their use of blockchain technology in their fundraising.
Already charities inviting donations using blockchain powered crypto currency.
Now they are adopting the technology, which creates unique or trackable digital codes, to carry out fundraising auctions and sales of NFTs.
But using NFTs in fundraising is not without problems, particularly environmental concerns, as World Wildlife Fund UK (WWF UK) found out after launching an NFT fundraiser earlier this month.
Here we explain what NFTs and the benefits and pitfalls for charities.
What are NFTs
NFTs stands for non-fungible token and is a form of crypto technology that gives items value. One of the most common uses is for digital art, whereby the holder of the non-fungible token for the item is the unique owner, in the same way the only Mona Lisa by Leonardo Da Vinci is in the Louvre in Paris.
Blockchain technology, which is used to create the unique code, is used in a different way for cryptocurrency. While NFTs are non-fungible which means unique, crypto currencies such as Bitcoin are fungible, as they can be traded for another unit of the currency.
Benefits for charities…
A key benefit for charities is that it opens a new form of fundraising, by staging charity auctions and sales of digital items.
Among NFT fundraising pioneers is youth charity One Young World.
It is collaborating with NFT specialist artist Soy Fira to sell and auction five crypto-art pieces to help fund scholarships for young people to attend the charity’s summit later this year in Toyko.
It is looking to raise £15,000 through the sale of the art, which is via digital marketplace OpenSea.
We've joined forces with our Ambassador and crypto-artist @soyfira to create 5 exclusive NFTs to raise funds for our new One Young World Scholarship for women in STEM.— One Young World (@OneYoungWorld) January 10, 2022
This January you have the chance to buy these on OpenSea ➡️ https://t.co/wYmKs3IVdK
See thread for more 👇 pic.twitter.com/QikS09I4BO
“As a charity, it is important for us to consider the ways we can innovate our fundraising efforts through the use of technology,” said One Young World founder David Jones.
…and the pitfalls
Among the chief concerns of using NFTs is their environmental impact. A large amount of energy is used to create the unique token or crypto currency blockchain.
It is estimated that one transaction that uses the Ethereum crypto currency has the same level of carbon emissions as several thousand Visa card transactions.
Such concerns can result in a backlash around the ethics of a charity using such environmentally unfriendly technology. This is particularly the case for conservation charities.
Earlier this month WWF UK launched its #WWFTokensForNature fundraiser using the same of NFTs using the #OxPolygon blockchain platform.
The charity claimed each transaction “has the equivalent carbon emissions of a glass of tap water”.
But environmentalists and academics remain unconvinced and have taken to social media to protest. Computing and social responsibility expert Dr Catherine Flick of Leicester’s De Montfort University and journalist and campaigner George Monbiot are among those to raise concerns on social media around WWF’s move.
When the "solution" becomes indistinguishable from the problem. https://t.co/GRfYxpQzL2— George Monbiot (@GeorgeMonbiot) February 2, 2022
Chartered Institute of Fundraising head of policy and external affairs Daniel Fluskey urges charities to ensure that any transaction or donation is in their best interest and carry out due diligence to ensure it is lawful.
Talk of charities and Non-fungible tokens this week.— Daniel Fluskey (@danielfluskey) February 5, 2022
As with nearly all new developments, the tech is created & innovation happens, with guidance or regulation playing catch-up.
But as new ways of working there are some key things to bear in mind (thread)
The NCVO, in its Road Ahead 2022 report, also urges charities to be cautious around using blockchain technology.
This is particularly the case for NFTs, especially until the environmental impact of the technology can be addressed.