Crypto is redefining how charities raise money

Nonfungible tokens (NFTs), decentralized autonomous organizations (DAOs) and decentralized finance (DeFi) are redefining how charities collect donations and distribute funds to those most in need.

Through ever-evolving crypto and blockchain-related technology, cryptophilanthropists told Cointelegraph that they have witnessed “new wealth distribution mechanisms” never seen before.

“Philanthropy has traditionally been seen as a high-entry-cost, individualistic activity, but with Web3, collective decision-making bodies such as DAOs can use tools that streamline financial coordination and encourage more participation,” explained Omar Antila, Product Manager at Krypto for Charity.

“Crypto enables new innovative fundraising strategies, such as charitable NFT drop campaigns, or allowing people to pool their crypto funds in DeFi protocols that earn interest for a specific cause,” he added.

In October 2022, several breast cancer-focused organizations began implementing NFTs to highlight Breast Cancer Awareness Month.

Antila noted that he had seen many other philanthropic communities built around NFTs, which have raised support for many other causes in need, such as testicular cancer, human trafficking and the war in Ukraine.

Last year, UkraineDAO funded $6.1 million for a 1/1 Ukrainian flag NFT. The proceeds were donated to non-profit organizations in Ukraine to help those affected by the Russian invasion.

Meanwhile, Anne Connelly, co-author of “Bitcoin and the Future of Fundraising,” believes that the crypto charity sector will soon expand from Bitcoin (BTC) and Ether (ETH) as the leading cryptocurrencies for donations:

“Over time, however, we’ll see organizations accepting a much wider spread of tokens – the same way they would accept gifts of securities. We’ll also see gifts of NFTs and other tokenized assets like real estate or collectibles.”

“I think so once […] more organizations realize the philanthropic potential of this donor segment, every organization will have a crypto donation platform, the same way every organization accepts credit cards,” she added.

Antila said the far-reaching nature of crypto means the total addressable market for crypto charity is also huge.

Antila believes the “2 billion or so unbanked adults who exist in the world today” will soon have the tools “to participate in the global economy, trade and create wealth without third parties getting in the way or taking a cut.”

Related: Charities risk losing a generation of donors if they don’t accept crypto

This can be especially true for countries that suffer from a lack of trust in the government’s monetary system, where crypto adoption rates are also the highest.

Connelly said adoption rates are highest in underdeveloped nations — particularly Nigeria, Argentina, Vietnam and South Africa — because they simply cannot rely on the government’s monetary system:

“Over half of the world’s population lives under double, triple or quadruple inflation. For most, they cannot trust their governments to effectively manage the monetary system.

“Having the choice to use crypto is an important option for citizens, but also shows governments that if they want people to use their fiat currency, they need to clean up their act,” she added.