- TechFin Consulting
Art for Good: How NFTs Are Driving Social Impact
In recent years, non-fungible tokens (NFTs) have drawn considerable attention and intrigue due to their distinct characteristics that set them apart from traditional digital assets. The unique digital tokens have been the subject of scrutiny by both admirers and critics alike, sparking discussions and analysis from various perspectives.
Moreover, the NFT ecosystem has witnessed significant developments, introducing novel concepts and mechanisms that have sparked concerns among newcomers to the space. For instance, peer-to-peer NFT lending platform Blend was launched in May 2023, allowing traders to lease out their NFTs to collectors interested in buying blue-chip NFTs with smaller upfront payments. Since collectors are allowed to purchase tokens with funds they don’t have, platforms like Blend may create liquidity risks down the line when cryptocurrency prices fall. Hence, creation of such platforms and other advancements potentially bring forth a set of challenges, especially for those new to NFT trading and its associated protocols.
While there are potential risks associated with the NFT market, there are also a multitude of new opportunities that these digital assets can unlock. In particular, NFTs have emerged as a powerful tool not only for investment opportunities, but also promoting social good and driving positive change. Through the use of NFTs, social organisations can leverage the power of digital art and collectibles to highlight important social issues and even generate funds for meaningful causes. Here are a few ways in which NFTs can drive social impact:
Traditionally, fundraising efforts relied heavily on physical goods, like merchandise or artworks, to incentivise donors. The use of NFTs offer a new digital medium for artists and creators to showcase their talent while raising funds for a good cause. By minting and selling unique digital assets, creators can work with social service organisations to engage the public directly and offer them an opportunity to support their cause. Perhaps the most unique advantage of using NFTs for fundraising is their potential to create secondary markets. Once an NFT is sold for fundraising purposes, subsequent buying and selling of that same NFT at higher value can generate additional funds for the cause, depending on the NFT’s individual smart contract. This funding mechanism increases the long-term impact of the initial contribution.
For instance, children’s charity organisation Make-A-Wish Foundation created a series of NFTs featuring artwork from young artists at NFT Kids Magazine, coined “Tokn of appreciation”. Donors to the foundation would receive a unique redemption link to mint their Tokn of appreciation. The token was minted to the Ethereum blockchain, held in a secure Tokns wallet, and could be viewed on marketplaces such as OpenSea. Ownership of the tokens even unlocked access to future NFT drops made available through the partnership. The retention of such ownership over donor tokens fosters a sense of exclusivity and rarity, incentivising further donations to the cause.
Among the artists who created artwork for the collaboration included Big Deebok (artwork featured above) from Thailand, an eight-year old artist who is also a leukaemia survivor, as well as many children and youth around the world. The use of NFTs enables collaboration between different creators and organisations across borders, leading to powerful fundraising campaigns that capture the attention and support of wider audiences.
Besides generating funds for causes, the power of NFTs can also be harnessed to enhance donor engagement in fundraising efforts. By providing donors with tangible and exclusive rewards instead of a generic token of appreciation, donors feel a deeper connection to the cause. The digital assets they own also serve as badges of honours that they can showcase in their digital wallets and social media profiles. This public display of support signals the donor’s commitment to the cause, which enables them to connect with fellow donors and encourages others in their circle to join in.
Online platforms and social media channels dedicated to such communities allow donors to connect and share their experiences with the cause or organisation. The shared sense of belonging felt within the community strengthens the donor’s bond with the cause and fosters long-term engagement and loyalty.
An example of the use of NFTs for donor engagement is the Wildlife Tokenization Project by Coorest. Coorest is a Netherlands-based decentralised carbon credit exchange that is best known for operating a CO2 compensation system that rewards buyers with NFTrees. They collaborated with conservation consulting firm PLCnetwork to tokenize real endangered animals at game reserves and privately owned conservation areas in Africa. Holders of their NFTs could sponsor an elephant, lion, cheetah, or rhino, and profits from the sale would go towards care and conservation of the animals they represented.
Coorest builds long-term relationships and engagement with holders by providing monthly updates of the animals. The metadata of each NFT bought contains detailed information like species, age, and gender, allowing holders to feel stronger connections with their tokenized animal. Holders were even invited to visit the wildlife reserve and meet the animals, further strengthening loyalty to Coorest’s cause.
By leveraging the unique properties of NFTs, organisations like Coorest can create meaningful and immersive experiences to deepen donors’ connection to the cause and inspire long-term engagement and support.
Another unique property of NFTs is its ability to be accessed and participated in by anyone with an internet connection, regardless of where they are physically located. This eliminated geographical barriers that may exist in traditional fundraising efforts and donor gifts, allowing people from all around the world to contribute and support social causes. This significantly broadens an organisation’s donor base, and attracts supporters who resonate with the cause but who may not have had the chance to contribute previously.
NFTs also have a lower barrier of entry compared to traditional fundraising campaigns that sometimes require a minimum donation amount, excluding individuals who may want to contribute but have limited financial resources. Instead, NFTs can be created and purchased at different price points according to the organisation and the creator, allowing a greater variety of donors to engage with and contribute to the cause. To facilitate this, NFTs can even be divided into fractional ownership, allowing multiple individuals to collectively own a portion of an NFT. This thus enables micro-donations, where individuals can contribute small amounts towards an NFT, empower those who want to support social causes but may not have the means to make significant contributions. These micro-donations can then accumulate to make a substantial impact for the funds raised.
One such NFT project that leveraged on collaboration around the world was UNICEF’s data-driven NFT collection launched in December 2021 for the organisations’ 75th anniversary. The digital collectibles were sold directly by UNICEF, using the ethereum blockchain. This was the organisation’s first global collection of data driven NFTs, and it aimed to directly support their global efforts to help give every young person access to the internet. Proceeds from the sales would go towards their initiatives like Giga, which has connected over 3,000 schools benefitting over 700,000 children to date.
The collection of NFTs was named “Patchwork Kingdom”, incorporating data on more than 280,000 schools from 21 countries, with each artwork representing a subset of these schools. The collection focused on the “connected” and “unconnected” schools, with the pale reflection city representing a lack of connectivity. Each Patchwork Kingdom not only sought to raise funds for the meaningful cause, but also raise awareness for the need to increase greater access to the Internet for children around the world.
Last but not least, a major benefit of using NFTs for fundraising efforts is the greater transparency in donations. Since NFTs are recorded on the blockchain, every transaction is publicly visible and cannot be altered or deleted. This transparency allows donors to verify the impact of their contributions and holds organisations accountable to following up on their initiatives. Such transparency inspires greater trust and confidence among sceptical donors, making them more likely to participate and support the cause.
By leveraging the unique properties of these new digital assets, social organisations can improve inclusivity, accessibility, and unique engagement opportunities that far surpass that of traditional fundraising methods. It is undeniable that NFTs have the power to revolutionise the way we approach fundraising and philanthropy, so it is important for organisations, creators, and even donors to harness their potential responsibly and ethically.
Moving forward, we can expect to see NFTs reshape the landscape of fundraising making it more inclusive, engaging, and effective than ever before. Curious about what other sectors of society or business NFTs can be utilised in? Sign up for our SMU Academy Advanced Certificate in Web 3.0 to learn more about the potential applications of these unique digital assets.