Over the past couple of years I’ve found myself beginning to change my tune on the impact of bitcoin and other cryptocurrency donations as a transformative source of charity over the short- to mid-term, from negligible to fathomable, meaning that there may be some depth to it.
Look, I’m intrigued by the proposition of digital currency that is highly transparent with additional layers of security in a globalized economy especially given the impact it could have in philanthropy, but see parallels with that of virtual reality, where it seems to have been around for a while now, is part of our lexicon but still hasn’t hit the heights we expected at this point in it’s evolution.
I would tend to agree with the following statement from Nils Smith, the Chief Strategist for Social Media & Innovation over at Dunham+Company who recently shared his thoughts on where crypto donations currently are:
“I believe that we’re in a similar moment as to when non-profit organizations began to accept credit card gifts. We were used to cash and checks and knew how to process them and what to do with them. Credit cards had a stigma and we were confused on what to do with them. So most non-profit organizations avoided them for seemingly as long as they could. And they missed out on many potential gifts because of it.
Cryptocurrency is different than credit cards and it’s unlikely that the majority of your giving will be via cryptocurrency anytime soon, but don’t miss out on the potential gifts that individuals do want to make to your organization.
Unlike the transition to credit card giving years ago, cryptocurrency giving is much easier to integrate. Utilizing a platform like Engiven allows you to accept crypto, receipt donors and instantly liquidate cryptocurrency into USD or the fiat currency of your choosing. It really is that easy.”
The fact is that it isn’t a mainstream proposition for the sector as yet. I’m bullish however on some real advances for the technology more broadly over the coming years and am excited to see some new trends breakthrough or garner more attention through 2022.
Donations – expansion continues to gather momentum
This is an easy prediction to make. Donations will continue to increase based on current trends:
- 45% of the cryptocurrency holders donated $1,000 or more to charities in 2020 compared to 33% of other investors, according to a new report by Fidelity.
- According to CoinGecko, cryptocurrency now represents more than $3 trillion in value
- Engiven shared that the average cryptocurrency donation on their platform is over $7,500 in value.
- The Giving Block led #CryptoGivingTuesday which was the year’s biggest one-day celebration for crypto fundraising and giving. Around 1,000 nonprofit organizations participated this year, almost 10x more than in 2020 – $2.4M was raised with an average gift size of $12,600
At the end of the day non-profits will need to be prepared to accept cryptocurrency donations moving forward and that will require a couple of things organizationally – so, get informed through resources that can be found on The Giving Block, get yourself a wallet, but don’t invest a ton of time or capacity into actively chasing it – we aren’t quite there yet.
I think we are going to see a lot of experimentation in the space and that’s the beauty of this emerging technology – there is no way to predict which of its applications will revolutionize the nonprofit sector. I can see a new and defined cryptocurrency that has a real charitable bent rather than as a meme spin-off.
A new cryptocurrency for the sole purpose of donating it could be on the cards. And that’s something we could all get behind. Much like the Australian ‘donation dollar’ which became the world’s first legal tender designed to be donated. The Royal Australian Mint created a Donation Dollar for every Australian, creating twenty-five million reminders to donate.
We will also see alot of the buzz around non-fungible tokens (NFTs) and how they relate/can be used by nonprofit. At the moment it is mainly seen through the evolution of fine art collecting, only with digital art (think silent auctions & donations of artwork – it’s a speculative asset after all). The theory is that anyone can buy a van Gogh print yet only one person can own the original.
Every NFT is a unique token on the blockchain and while it could be like a van Gogh, where there’s only one absolutely legit actual version, it could also be like a trading card, where there’s 5 or hundreds of numbered copies of the same artwork. So the original art piece could reside at the organization for which the gift supported but each donor could carry ‘a piece of it’ as a family heirloom.
NFT’s will also expand beyond art, at least in terms of conversations about its future. A terrific article on The Conversation really set the stage on what might be for society:
“NFTs goes much further because they completely change the rules of ownership. Transactions in which ownership of something changes hands have usually depended on layers of middlemen to establish trust in the transaction, exchange contracts and ensure that money changes hands.
This has the potential to completely transform markets like property and vehicles, for instance. NFTs could also be part of the solution in resolving issues with land ownership. Only 30% of the global population has legally registered rights to their land and property. Those without clearly defined rights find it much harder to access finance and credit. Also, if more of our lives are spent in virtual worlds in future, the things that we buy there will probably be bought and sold as NFTs too.
There will be many other developments in this decentralised economy that have yet to be imagined. What we can say is that it will be a much more transparent and direct type of market than what we are used to. Those who think they are seeing a flash in the pan are unlikely to be prepared when it arrives.”
I could also see potential plays and extensions on the term perpetuity – and for organizations that might become more virtual as a result of COVID. As you might know, “Non-fungible” means that the item is unique and can’t be replaced with something else. It’s one of a kind. This could come in the form of gala prizes, donor recognition pieces and ultimately the replacement of that traditional ‘donor wall’ we have all been grandfathered into.
Gamification to drive insight into new habits.
It’s arguable that many folks have already made their mind up about crypto and it’s very much based on their gut and/or risk tolerance and the who and where they receive their information. Are they genuinely curious about it’s potential or do they just see it as a ‘get rich quick’ strategy?
Either way, there are organizations out there who understand the need to educate consumers about it, and I predict that this will ramp up over the coming year through gamification. By creating a ‘gamified user journey’ the major players in the sector will be seen to leverage game mechanisms to influence desired behaviors and promote ongoing engagement.
Two examples I have already seen nudging the field towards greater understanding and adoption of crypto (by rewarding behaviors with the biggest impact on their business goals) come from Tokens for Humanity and Coinbase.
Coinbase is using gamification in a variety of ways. Firstly they are driving engagement and understanding by having potential new customers take part in a quick quiz to understand how it works and then give them some free Bitcoin for their time. They also recently gave users the ability to link the their accounts to the League of Traders which means that Coinbase users can link portfolios from different exchanges and partake in real time competitions, check out leader boards and, get view of the platform’s top rated traders’ portfolios – in the form of an asset distribution chart, risk and volatility assessment, positions currently open, and a growth chart.
TokenSpin is far more simple and comes from the Australian Tokens for Humanity team. It’s effectively a lottery for nonprofits to win Ether with its premise built around making charity lotteries enjoyable, straightforward, and, well, charitable. It is developed to enable greater efficiency and transparency in the charitable fundraising industry.
According to their website they “were inspired to create a product that would appeal to a new market of socially-minded players. TokenSpin is the first blockchain raffle to be offered in the Australian market and is subjected to high-standards of compliance (external financial audits annually, charitable regulatory compliance, et cetera)…empowering crypto users to make a difference and have fun.”
2022 is going to be an important year in getting the sector comfortable with crypto and blockchain and the reality here is that you will need to speculate (give bitcoin et al) to accumulate (users for your product). And with an increased usership and outcomes we will be able to drive more insights and…
We can’t truly talk about the potential impact of the blockchain in the social sector without the research, and the reality is that there simply isn’t enough of it out there. And I’m talking substantive research, not the vanity/pump-primed statistics that show a 850% increase in participation just because the number of folks that used your product went from 100 to 1000 people over a year.
In an article for the Harvard Business Review, associate professor of business administration at Tufts University, Alnoor Ebrahim, says there is a discernible trend in the social sector: “Claims about making a difference are no longer sufficient; evidence of how much difference you’re making is now required.”
Recently there have been some investments in this space with $3 million to Cornell; University of California, Berkeley; and the University of Maryland by the National Science Foundation to conduct wide-ranging research into the pain points of the current ecosystem. There is no doubt that considerably more investments will be made both publicly and privately over the course of the year.
Giving – New Applications
Giving is the act, the intention, and the culture around being charitable. The blockchain can play a role here, just as long as it can inspire a more meaningful narrative around the tech rather than the allure of the potential gains of cryptocurrency.
2022 is going to see some new applications for this tech in the nonprofit space and the start of ‘what could be’ rather than ‘what if’ discussions.
Giving cryptocurrency as mentioned above is, “easy” in the greater scheme of things, there is a real necessity here to ensure the blockchain and its boundless opportunities aren’t lost in the shadow of it’s more widely known application.
I feel 2022 is going to be the year of the token and an understanding of the notable difference between tokens and coins and what they represent. While crypto coins are essentially digital versions of money, tokens can stand for assets or deeds. You can buy tokens with coins, but some tokens can carry more value than any of them. For example, a company’s share.
And we are already starting to see what this might look like…
The Thoughts and Prayers Foundation (a quirky/clever moniker on a now widely politicized action (or lack thereof), is creating two new cryptographic tokens as part of the Thoughts And Prayers System. These new tokens are the Thoughts And Prayers (TAP) token and the Thoughts And Prayers Wish (Wish or TAPw) token. They are tangible, accessible, transparent and non-denominational crypto tokens, for folks to send their TAP to where they are needed – and essentially track their social impact.
This is typically where I would also talk about the potential for smart contracts too but I’ll be lifting up the advancement of these blockchain offerings in my grant making predictions article that will be out soon and form part of this series of tech predictions for the year ahead.
2022 is going to be a positive year of growth for cryptocurrency and blockchain technology from an impact, narrative and adoption standpoint, yet it has a long way to go. But to that point I wanted to acknowledge that organizations such as Silicon Valley Community Foundation, Square, and UNICEF are advancing grant programs in this space.
I’ve never used fruit as my final analogy for an article before, but the question is, is 2022 going to be the year that sets the stage for a new wave of philanthropic giving where gifts are more like the Pineapple Fund, which in 2018 saw an anonymous donor gift $55 million to sixty nonprofit groups via Reddit. Gifts ranged from $50,000 all the way to $5 million and included the ACLU, charity: water, and Pencils of Promise, to name but a few.
Or will it be more like the Banana Fund, which was found to be a crypto-crowdfunding Ponzi scheme? Ok, that last reference wasn’t fair, but it just goes to show what can happen if the sector doesn’t truly understand the tech and is looking at raising funds over building lasting donor relationships that will deliver real long term-impact.