How Web3 is Disrupting Traditional Philanthropy
The application of blockchain technology is catching the attention of the nonprofit community.
By Bleu Blakslee
To survive the pandemic, nonprofits have had to navigate turbulent – and uncharted – terrain. According to a 2021 study released by philanthropy research group Candid and the Center for Disaster Philanthropy, approximately 30% of US charities are at risk of closing their doors due to the financial distress inflicted by the pandemic. In addition to financial strain, new donor wealth creation resulting from NFTs and cryptocurrency assets has rapidly emerged as an existentially important topic for the philanthropic space. Charities that have been able to successfully understand and accommodate these new markets have benefitted tremendously.
Web3 is here to stay, and a nonprofit’s ability to properly receive cryptocurrency and other digital asset gifts will grow increasingly crucial to boosting their fundraising power into the future. Building familiarity with crypto assets, learning the language of Web3, and developing the tools to efficiently process digital gifts will enable charities to maximize the positive impact they can make locally, nationally, and globally.
There is a growing group of start-up organizations helping to bridge the gap between crypto-savvy donors and charities seeking to serve them. Organizations like The Giving Block enable crypto holders and their favorite charities to come together and contribute to a mutual cause. Their platform provides donors with tax receipts, ensuring that donors meet documentation requirements to submit their charitable deduction claims to the IRS. As charities of all sizes incorporate blockchain-compliant technology into their fundraising systems, they can confidently onboard donors who wish to donate their digital assets to causes that matter to them.
The DAO, or decentralized autonomous organization, is another disrupter in the nonprofit community. Through DAOs, crypto owners can create Donor Advised Funds (DAFs) focused on causes they believe in. Endaoment is an emerging start-up that is helping to lead this effort. Endaoment allows crypto donors to use their assets to participate in a DAO DAF with a community of other crypto holders to support causes that matter to the collective, like pediatric cancer, the environment, or education.
Angel Protocol is another platform disrupting the traditional philanthropic endowment model by allowing donors to create an endowment fund using their crypto. Through Angel Protocol, donors’ principal investment grows at high-yield rates, and a portion of the endowment is released to charities for immediate access every month. Angel Protocol decentralizes the traditional nonprofit endowment model and puts more power in the hands of donors.
Developing the capacity to receive, process, and account for digital assets can have a powerful impact on the work charities do. It allows charities to meet crypto donors where they are and helps allocate their digital assets to important causes. The power of this technology, along with the capacity of charities to understand and accept these gifts, can have an enduring impact at pivotal moments in history, such as today with the war in Ukraine. The ability to quickly execute philanthropic funding with cryptocurrency allows socially conscious cryptocurrency adopters to support Ukrainians during this crisis. Over the first two weeks of the war, nearly $100M in cryptocurrency was deployed to bolster Ukrainian defense efforts and humanitarian aid, according to Alex Bornyakov, Ukraine’s deputy minister at the Ministry of Digital Transformation. These digital gifts are helping to save lives.
There are over 300 million crypto users in the world and approximately 27 million in the US. About 58% of crypto users are below the age of 34. To ensure their future longevity and appeal to future donors, charities need to learn the language of crypto and better understand how to engage with the crypto community. The time and effort that charities spend adapting to this space will reap huge dividends as they seek to drive the greatest long-term impact for the communities they serve.
This article was written in partnership with Realm Academy.
The Giving Block- thegivingblock.com
Angel Protocol- angelprotocol.io