Perpetual NFT royalties could be a useful tool for philanthropy

 

Tom Mizzone

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Non-Fungible Tokens (NFTs) have already proven themselves to be a useful tool for organisations to raise funds. These one-of-a-kind, blockchain-based tokens are highly programmable and contain unique data making each one entirely distinct and non-interchangeable – or non-fungible. Each comes with its own verifiable history and can be tied to digital and physical items or collectables.  

By leveraging some of the unique abilities of these digital assets – such as built-in royalty distribution – philanthropic entities, including nonprofit organisations and wealthy donors, can ensure that utilising NFT campaigns can become long-term sources of perpetual funding. This idea is still in its infancy, but it could become a leading strategy in the near future for virtually all charitable campaigns.

Where technology meets giving

In many ways, NFTs act as an extension of traditional charitable auctions or sales, often harnessing either real physical items or other tangible experiences to raise money for a worthy cause. 

The realm of philanthropy is quite broad, and there’s no shortage of worthy causes. Some philanthropists give out of the good of their heart or because they are working for a better future. Whatever the motivation, unique NFT goods can be created that are imbued with traits that highlight the underlying call to action. 

Websites like The Giving Block – an organisation for donating crypto assets to charities – empowers artists to auction off their work as NFTs in order to raise funds for virtually any cause they choose. 

There’s no shortage of examples of social good achieved via NFT drops, but thanks to the inherent programmability of this tech, these campaigns can go so much further. For instance, NFTs can be developed so that the secondary sales of the collection deliver a continuous stream of royalties to charitable entities. 

This is possible because the smart contracts that define a given NFT can be written specifically to transfer a set percentage of all future sales to a predetermined address. In our example, this would be an address held by the charitable organisation. By harnessing this quality — and combining it with fundraising campaigns — new and perpetual revenue streams can be created, compounding the long-term benefits of these assets. 

It’s perhaps important to remember that these organisations aren’t trading NFTs themselves, only receiving boundless royalties on NFTs they release. This means whether the price of the NFTs goes up or down, they will continue to see money flow into their coffers.

The movement has already begun

This isn’t just all theory, either. Already, NFTs are being leveraged as sources of income for prominent names and important causes. For example, in November of 2021, Macy’s held their 95th annual Thanksgiving Day Parade. As part of the festivities, 9,500 unique digital assets were released to coincide with the event, with proceeds going directly to the Make-a-Wish Foundation. Importantly, the campaign coded the collectables to ensure that 10 per cent of all future sales would be funnelled to the Foundation as well. 

In a similar vein, automaker Kia America recently released a run of ‘Robo Dog‘ NFTs that tied into a Superbowl Promotion for their new EV6. These digital companions were also designed to send 90 per cent of all primary sales and an additional 10 per cent of secondary sales directly to Petfinder, in an effort to support the organisation and help real animals find their ‘forever homes’.

Truly, the possibilities for creating philanthropic NFTs are almost endless, and it will be up to the imaginations of those working with them to find the best ideas for engaging donors. However, when they are paired with the ability to generate royalties on all future sales, there is a powerful opportunity to revolutionise fundraising here if organisations can just begin exploring it. 

This paradigm shift is in its early phases, and every cause will have to adapt their strategy around who they are and what works for them, but ultimately the upsides are too big to ignore. One day soon, it may be standard practice for fundraising to be accomplished via digital assets, but today it is an exciting idea, just waiting to be leapt upon. 

Tom Mizzone is the Chief Executive Officer at Sweet, a flexible Non-Fungible Token (NFT) platform and marketplace.

Tagged in: Next Philanthropy


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