FAQ

NFT stands for non-fungible token. In the most basic sense, a NFT is a way to store data on a blockchain* (such as Ethereum). 

Fungibility refers to an asset’s ability to be exchanged for something else of equal value. An example of a fungible asset is currency: a US dollar, for example, can be swapped interchangeably for another. Non-fungible assets are unique and require more complex valuation: things like real estate or art. Each NFT then, is a unique item whose value is determined by multiple factors and whose ownership is validated via the blockchain. 

A common type of NFT is digital art. In this case, NFTs are often thought to be the work of art itself, but rather, the NFT is the underlying technology where the art resides. This technology has enabled digital artists to mint and sell uniquely verifiable works. Think of an NFT like the deed to a house, rather than the house itself. Just like the holder of a deed can prove that they are the owner of the house, an NFT holder can prove that they own the asset in question. 

When a buyer purchases an NFT, they are granted a legitimate ownership deed, embedded deep into the blockchain where the transactions are verified. Once the records are made, they cannot be changed or altered in any way, which making the transactions traceable, transparent and trusted. 

Change is a constant in the world of nonprofit fundraising. In recent years, organizations have adjusted their donor strategies because of global disruptions such as the COVID-19 pandemic. Many nonprofits have also identified the need to embrace new technologies to connect with younger supporters. 

NFTs enable:

• New revenue streams, new fundraising tools
• Perpetual giving as royalties are reverted to creator even on secondary market sales
• Traceability, transparency and security in all transactions 
• Efficiency in fund deployment
• Innovative community-building tool
• Potential for donor anonymity

Any organization that wants to engage with NFT projects and collectors must first understand how to process the donations they receive. 

Cryptocurrencies can be a friction point for newcomers to the NFT space, so several marketplaces are now equipped to accept FIAT (‘standard’) currencies in addition to crypto payments. The platform facilitates the payment process and can either deliver the donations in the FIAT currency or exchange it to crypto. 

As such, for nonprofit organizations to receive direct charitable giving from the NFT community, accepting cryptocurrency donations is helpful, but not mandatory.

Tax regulations in some countries offer real advantages for donors and non profits giving/accepting donations in cryptocurrency. Accepting crypto donations is becoming more common as nonprofits realize the potential of this community as a donor base. Technology solution providers make it possible for nonprofits to fundraise multiple crypto assets, generate tax receipts for donors, and even embed donation widgets on their own websites to accept donations in cryptocurrency.

A blockchain is a distributed software network that functions both as a digital ledger and a mechanism enabling the secure transfer of assets without an intermediary. 

Just as the internet is a technology that facilitates the digital flow of information, blockchain is a technology that facilitates the digital exchange of units of value. Anything from currencies to land titles to votes can be tokenized, stored, and traced on a blockchain network.

In addition to the secure transfer of value, blockchain technology provides a permanent record of transactions and a single version of the truth – a network state that is fully transparent and displayed in real time for the benefit of all participants.

Foundations & NGOs: Innovative fundraising tool, community-building, new revenue streams, perpetual giving, increased efficiency and traceability.

• • Médecins Sans Frontières Received a AUD 3.5 Million-equivalent cryptocurrency donation from the sale of an NFT to an anonymous donor.
  • Noorah Health sold its one-of-a-kind NFT for USD 4.4 Million-equivalent in cryptocurrency. With this funding, the organization was able to advance its mission of saving thousands of lives with the most effective cure in healthcare: prevention.
  • RIP Medical Debt settled USD 7 Million worth of medical debt for low-income families thanks to sales from NFTs created by Dallas-based software developer Joshua Lapidus. The digital collection, entitled “Rainbow Rolls”, depicted cartoon images of toilet paper rolls in a self-aware joke about the NFT market.

Fully auditable chain of giving: NFTs give companies the ability to track their products/funds from manufacturing/fundraising through shipping and delivery. This gives all parties insight into overhead costs as well as maintaining transparency within supply chain. 

Banks & Financial Institutions: NFTs allow companies to record and transfer digital assets on the blockchain: data retained while protected from loss or corruption.

• • Goldman Sachs is exploring the tokenization of physical assets and is looking into NFTs in the context of financial instruments. 
  • JPMorgan has opened a lounge in the blockchain-based virtual world Decentraland and claims to be the first major lender to enter the Metaverse. The Onyx lounge is named for JPMorgan’s Onyx blockchain unit, which offers a suite of Ethereum-based services.
  • The Central Bank, in more than 100 countries (including 19 G20 nations) are now exploring their own digital currencies.

Governments: State Backed NFTs, digital currencies, unique rewards and recognition

• • Government of the United Kingdom in April 2022, then-chancellor Rishi Sunak announced plans to have the 1,136-year-old institution create a state-backed NFT to help the UK become a “crypto hub”.
  • Government of Japan issued NFT rewards to seven mayors for their initiatives to improve the lives of the citizens in their regions of governance in the modern technology space. 
  • Government of Ukraine has raised $63.8 million, through more than 120,000 crypto asset donations since the start of the Russian invasion.

Luxury Brands: Verified product information – ownership, authenticity, history – and customer loyalty programs

• • Panerai enhanced the experience of customers who purchased its ‘Radiomir Eilean’ watch with the minting of 50 Panerai Genesis NFTs associated with their unique crypto wallet. The digital asset unlocks exclusive content directly related to this edition of watches and will evolve as the experience unfolds to reveal a unique art piece.
  • Prada has launched the Timecapsule NFT Collection, in which limited edition physical products will be accompanied by a gifted NFT. 
  • IWC, the Swiss luxury watchmaker has built an entire Metaverse for a their community: the IWC Diamond Hand Club. As members, token owners can unlock unique and exclusive experiences.
  • Alfa Romeo’s Tonale SUV will come with a digital certificate that aims to increase the car’s residual value. The NFT will record vehicle data, generating a certificate that can be used to assure the car has been properly maintained: an additional source of credibility for owners or dealers.

Social networks: Proof of NFT ownership, Content ownership

• • Facebook and Instagram users in the U.S. can connect their crypto wallets with their accounts and share NFTs. All users in the U.S. also have the ability to cross-post the NFTs that they own across both Facebook and Instagram. Earlier this year, Meta began testing NFTs with select users on Instagram and Facebook.
  • Twitter users will be able to track NFTs and display tokens owned by others. Users can connect a cryptocurrency wallet to their account and import NFTs to use as profile pictures, which will be marked with a special icon validating the authenticity of the token. 
  • TikTok will release a collection of NFTs including six videos from the most popular & culturally significant TikTokers. NFTs in the form of videos will become art objects, displayed at the Museum of the Moving Image in New York, with proceeds distributed between authors and artists.