NFT fundraising provides a one-of-a-kind digital asset. NFTs represent real-life objects and can be valuable tools for organizations and nonprofits. Looking to launch unique brands? Build a community around your cause and generate funds with digital currency.
NFT fundraising could provide companies with the capital for expansions and more. As non-fungible tokens, NFTs are unique digital assets that represent real-life objects like art. Investors typically buy and sell them online with cryptocurrency. Thus, the NFT marketplace has become a hotspot for finding fast funds.
Understanding NFTs and how they can help with fundraising is essential. You must discover how these digital assets work and why they’re perfect for raising money. What are the pros and cons, and when is the best time to strike? Here is everything you need to know.
Table of Contents
The acronym “NFT” stands for “non-fungible token.” It is a one-of-a-kind asset on the blockchain with unique identification codes and metadata. That information helps distinguish it from similar assets. Meanwhile, NFTs represent real-world items through a process called “tokenizing.”
These assets can represent artwork, real estate, individuals’ identities, and even property rights. Creating a digital token to describe these objects on a secure network, such as the blockchain, makes buying, selling, and trading more accessible. These digital transactions also come with exclusive ownership claims.
Like real money, cryptocurrencies are fungible. That means they can be traded or exchanged for other currencies. One Bitcoin or one Ethereum is always equal in value to another. However, NFTs are the opposite.
As the name states, NFTs are non-fungible. Each token is exclusive, so one can’t be equal in value to another. These valuable digital assets are also extensible, meaning two can be combined to create a third token.
Most NFT fundraising centers on collectibles such as artwork, sports cards, and other limited-release rarities. These digital collectibles often sell for millions of dollars. Take Jack Dorsey’s version of the first tweet, for example. It sold for $2.9 million. Thus, NFT fundraising has some legitimate potential.
NFTs are essentially an evolution of how traditional cryptocurrencies work. Allowing for digital representation of assets, like real estate, could significantly reimagine the structure of the modern financial system. It could revolutionize investing, fundraising, and more.
Real-life assets become NFTs through minting, which turns the digital files of a specific object into a crypto asset on the blockchain. These crypto-assets can be even more valuable than cash, especially when combined with the security of the blockchain and smart contracts. Essentially, they help prevent fraud and tampering.
DID YOU KNOW: Most non-fungible token trading happens on OpenSea.
NFT fundraising has become a viable option for generating capital, specifically for nonprofits or charitable organizations. These entities typically do raise money with NFTs in two ways:
- Standard selling to turn a profit
- Raising money for a specified cause
Funds generated through the sale of digital assets give sellers more options. They can take their earnings and donate a portion to a charity or cause. This promotes moral investing, with purpose and potential baked right into the cause. It can also help attract more buyers interested in joining the blockchain.
The one-of-a-kind nature creates significant value because there’s a minimal quantity. Nonprofits and other organizations looking to fundraise can leverage this. Many create digital art that aligns with their mission. Dainty Dolphins created art that showcases marine life to raise awareness for endangered species. Meanwhile, 25% of their profits go toward charities supporting and protecting ocean wildlife.
Knowing how valuable NFTs can be for generating funds, it’s essential to understand how to best leverage them. Successfully fundraise for your organization or chosen cause with these five best practices for using NFTs to fundraise:
- Connect with an artist, creator, or project
- Leverage NFTs as novelty items
- Build a community
- Get yourself, your board, and your supporters familiar with the process
- Prepare for the launch date
You can turn almost anything into a digital asset for NFT fundraising. If there’s a digital file, you’re good to go. Have it minted and uploaded on the blockchain to start. Use company logos and branded images for increased market recognition.
Creating, minting, and uploading an NFT is a straightforward process that virtually anyone can do. However, some NFT artists and creators could handle the process for you. Think about what’s best for your company.
NFT fundraising offers a unique opportunity to reach underrepresented audiences. They also provide a sense of utility that you can leverage for nonprofits and other organizations. Then, you can reward participants when they raise a specific amount of money for your cause.
Novelty rewards can be more valuable than cash or otherwise. Many consumers prefer not to get another T-shirt or coffee mug from money-hungry entities. They want something more practical, even if the value is a matter of perception.
The concept of NFTs is still emerging and could be one that many people aren’t familiar with. Not only is it crucial to conduct research and familiarize yourself with NFTs, but your board and supporters will need help, too.
These are some key talking points to bring up when discussing NFT fundraising with your crew:
- The global crypto user base steadily grows, making it a worthwhile practice to get into.
- NFT fundraising is already happening and has successfully generated funds for causes like Dainty Dolphins.
- As they continue gaining popularity and generate more excitement, innovation is inevitable.
Having a conversation with your board and supporters about implementing NFTs will help ensure a smoother transition when you officially launch your new project.
NFTs can also be a great tool to build a community around your cause. Linking your digital assets with some utility is a terrific method. For example, suppose your organization has a yearly event. You could sell an exclusive NFT to ensure buyers have an annual ticket to the event.
At their core, nonprofits thrive on their ability to build an engaged community and maintain it over several years. Because NFT fundraising offers novelty, utility, and intrigue, it is a valuable tool to leverage to attract new supporters and expand your organization’s community or support network.
To successfully launch an NFT fundraising campaign, you must be fully prepared beforehand. This starts by educating yourself, your board, and supporters about non-fungible tokens. Try to launch your campaign around special occasions, or holidays for first-time buyers. Those customers will be more inclined to purchase unusual items.
It could also be helpful to frame your fundraiser and the impact it could have. For instance, if someone buys one NFT, what effect could that have on your mission and overall fundraising goals? Doing this can help you appeal to your audience more effectively, thus increasing your fundraising.
Several successful NFT fundraising campaigns have implemented best practices. They launch money-making events to generate substantial funds. They also make a difference in their specified causes. Some of those successful NFT fundraisers include:
- Open Earth
- Alex’s Lemonade Stand Foundation
- The Make-A-Wish Foundation
- Pandamonium World
NFT4Good is a fundraiser created to raise money for members of the Asian-American Pacific Islander (AAPI) community, and 100% of the proceeds from the campaign were donated to #HateIsAVirus and #StopAsianHate charities. The campaign creators partnered with 88 AAPI influencers to develop collect cards sold through MerchNFT.
Open Earth is an NFT fundraiser that revolves around climate change measures and tracking global progress on improving climate efforts. Open Earth is unique in that it worked with the Social Alpha Foundation, or SAF. This philanthropy group sponsors social impact projects with cryptocurrency.
SAF helped Open Earth hire NFT artists to create eight tokens depicting various environmental protection and sustainability elements. Their unique digital asset was sold through the Nifty Gateway platform for $6 million.
Last year, Alex’s Lemonade Stand Foundation (ALSF) launched three levels of NFTs for a fundraiser. ALSF funds cancer research, awareness, and support for families of sick children.
Level one of the NFTs available for the fundraiser costs 0.02 Ethereum, equivalent to about $41, and funds one hour of pediatric cancer research. Level two, which costs 0.1 Ethereum, equivalent to about $207, funds five hours of pediatric cancer research. And level three, which costs 0.2 Ethereum, equal to about $414, funds 10 hours of pediatric cancer research.
The Make-A-Wish Foundation is a massive, well-known organization that fundraises to make dreams come true for children with critical illnesses. They’re also newly entering the NFT space.
They partnered with the Macy’s Thanksgiving Day Parade to create 10 NFTs that showcase iconic balloons from the parades. Macy’s then donated all the proceeds from the auction to Make-A-Wish. Additionally, Macy’s minted 9,500 more NFTs to add to their collection that is available on the market.
Pandamonium World is like Dainty Dolphins in that each NFT depicts a different uniquely designed panda. With Pandamonium World, each panda is fully customizable, allowing each NFT to be personalized to the buyer.
Pandamonium World fundraises and makes donations to causes via The Giving Block. This platform hosts nonprofits accepting crypto donations like the Ukraine Emergency Response Fund and the Crypto for Women’s Rights Campaign. 30% of direct sales from Pandamonium World NFTs are donated to The Giving Block.
NFTs are a valuable space to invest in, especially for organizations looking to fundraise. There are other key benefits to getting involved with NFTs, including:
- They’re available to anyone
- Blockchain makes it secure
- Can diversify investment portfolios
NFTs are widely available to anyone interested in them. There is no significant barrier to entry, making them available to anyone with the means to obtain one.
Blockchain and smart contract technology are very secure and serve as an excellent way for buyers to keep track of their assets and signify their ownership in a digital space. Information on the blockchain also can’t be altered or deleted.
NFTs are not traditional investments like stocks. This makes them a unique addition to any investment portfolio.
There could be potential disadvantages to getting involved with NFTs that are important to note. Some of the cons of NFTs include:
- They don’t generate income
- Digital asset generation is a very energy-intensive process
- NFTs could potentially lead to fraud
Because NFTs aren’t traditional investments, like stocks that pay dividends or bonds that generate interest, there’s no way to make a profit from owning an NFT. They are essentially collectibles. This means their value is more subjective and solely based on appreciation.
NFT generation requires an immense amount of electricity. Most NFTs are housed on the Ethereum blockchain, an energy-intensive operating protocol. This means that NFT generating could have a negative, long-term impact on the environment over time.
The blockchain is secure. However, the notion of NFTs is that they are meant to authenticate a piece of physical art digitally. The assumption then is that whoever owns the NFT also owns the original artwork. This could become fraudulent if there is no link to the original painting, meaning the NFT is subject to mass reproduction.
NFTs are one-of-a-kind digital assets on the blockchain that represent real-world objects, like art pieces. The NFT market has become increasingly popular, leading to significant profits, making NFTs a viable option for fundraising.
The novelty, utility, and rarity that NFTs possess make them valuable to nonprofits and other organizations looking to fundraise. Leveraging NFTs also yields the ability to foster community and build up a more extensive, more substantial support base for your organization’s mission and cause.
About the Author
Jonathan Hung is one of the most active angel investors in Southern California; his mission is to drive value creation within each portfolio company. In support of this mission, he serves as Co-Managing Partner at – Unicorn Venture Partners.
He and his team target investments in US companies with global market potential, focusing on long-term growth expansion to East Asian markets.
As a Managing Member for his family office fund, J Heart Ventures, Jonathan developed his investing prowess, making investments in start-up companies such as Gyft, ChowNow, Miso Robotics, Clover Health, and Bitmain, to name a few startups he funded.
Jonathan has various degrees from the University of Southern California, London School of Economics, Massachusetts Institute of Technology, and The Wharton School at the University of Pennsylvania.