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Why Crypto Donations Are Surging in 2024

source-logo  coindesk.com 09 July 2024 15:00, UTC

In 2021, the nonprofit sector quietly became the most crypto-friendly arena in the world. Millions of dollars were being donated, and thousands of nonprofits had active initiatives to partner with crypto philanthropists.

When crypto markets tanked in 2022, the nonprofit sector started thinking the crypto philanthropy party was over. After a record-setting 2021 in which my organization, The Giving Block, facilitated $69 million in crypto donations, crypto-based charitable giving slowed down as FTX collapsed.

Pat Duffy is a co-founder of The Giving Block, a platform that helps investors donate cryptocurrency to charities, educational institutions and faith-based nonprofits. The views expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates.

Today, market caps are climbing again and, in turn, crypto donations are pouring in. We’ve spent the last few months helping crypto investors give tens of millions of dollars to charities, faith-based organizations and Universities, from ocean conservation charities to refugee aid organizations.

If anyone thinks that this is simply business as usual, you’re sorely mistaken. Crypto philanthropy is back in a big way. And what makes this surge unique is the diversity of giving modalities, driven by much more than the price of BTC, ETH and so on. The current Web3 charitable-giving trends were built during the last bull cycle, battle-tested, and optimized through the bear market, and are now reaching maturity as the market approaches a period expected to shatter previous all time highs.

Here are some of the under-discussed ways that Web3 and the crypto community are changing the nonprofit world for the better.

Memecoin Fundraising

When we launched The Giving Block six years ago, we knew that Bitcoin and Ethereum donors were here to stay. The generosity of meme coin holders, however, has surprised us.

In the last cycle, we thought the rise of Dogecoin and Shiba Inu donors would be a fad, with DOGE becoming the most donated cryptocurrency of the $30 million Team Seas campaign led by Mr. Beast and Mark Rober. But memecoins remain a genuinely valuable source of charitable funding today. This time around, some new memecoins have burst onto the charitable giving scene to make a difference.

The Baby Doge team has donated over $500,000 to support animal shelters and other animal welfare programs around the world. Baby Doge is even launching an API to enable crypto donations easily from their community, as they appear to be making charitable giving a part of their DNA. They’ve even set a Guinness World Record for most pet food donated in 24 hours.

Meanwhile, BONK was one of the most donated cryptocurrencies when the price took off earlier this year, as their community immediately turned gains into impact. The BONK community is in the process of developing an on-chain program and decentralized application that allow users to donate crypto to animal-focused charities working with The Giving Block. The application handles the donation process, burns a small percentage of BONK tokens, and matches donations. We’re hyped that a community that’s up 8,000% on their investment in the past twelve months has been inspired to make a long-term commitment to charitable giving.

Quadratic Funding

We’ve always said that crypto philanthropy is a two-way street. Meme coin projects demonstrate how crypto communities grow by funding social causes, creating a mutually beneficial cycle of growing awareness for the token and the cause they support. But these relationships don’t exist in a vacuum. Some philanthropic strategies coming from Web3 have a real opportunity to change how legacy nonprofits fundraise systemically, as some organizations have begun to embrace quadratic funding.

It’s well known that Ethereum co-founder Vitalik Buterin co-devised quadratic funding, which has been called a “mathematically optimal way to fund public goods in a democratic community.” Over time, it’s become one of Web3’s favorite methods of funding projects of all kinds.

In December 2023, the Gitcoin community’s quadratic funding round garnered 2,971 donations from 1,058 donors to fund six projects that will advance the American Cancer Society’s lifesaving work.

For nonprofits seeking ways to engage new communities of donors, quadratic funding presents a path forward, a way to break the mold with traditional fundraising methods and embrace innovation.

In a similar vein, more and more humanitarian organizations have piloted delivering aid via stablecoins, from UNHCR to Mercy Corps Ventures. With each test, the impact sector is getting closer to embracing more of crypto and blockchain’s most promising use cases.

NFT and Influencer Fundraising

We’re also seeing the legacy of NFT fundraising continue. During the last bull market, innovative projects like Women and Weapons, which donated six figures to Malala Fund, which supports girls' education, set the stage for a culture of charitable giving. We even saw major charities and global brands collaborate on NFT initiatives, as was the case when brewery Stella Artois tapped Gary Vaynerchuk’s Vayner3 to launch an NFT drop to support Water.org, a group that promotes clean water and sanitation initiatives

Today, bitcoin-based ordinals projects such as NodeMonkes are expanding the borders of NFT charitable giving. Creators including Jack Butcher have empowered collectors to understand the positive impact they make with each NFT purchase.

We have also seen an increase in Web3 influencers asking their communities to donate crypto for good. One example is the Crypto Twitter personality known as Leap, who raised over $100,000 in Ethereum and Solana donations for cancer care and research.

Bottom Line

Billions of dollars have been donated to nonprofits using cryptocurrency, and tens of billions of dollars will be given as the market matures and donors take advantage of the tax breaks it offers. As a result, crypto fundraising has become a major focus in the nonprofit sector, and as long as crypto continues to grow as a major asset class, nonprofits will continue to bet on crypto donors as a pillar of their strategies for thriving through the Great Wealth Transfer from elder generations to Millenials and Zoomers.

Some nonprofits will find the kaleidoscopic diversity of the crypto donor community daunting. Despite the fact that the majority of the Forbes Top 100 nonprofits are fundraising crypto today, many small and mid-sized nonprofits are not even equipped to accept major assets such as Bitcoin and Ethereum, let alone navigate topics like NFTs and meme coins.

Forward-thinking philanthropists across the Web3 ecosystem will continue to provide incredible opportunities for the nonprofits at the cutting edge. These efforts will set the stage for some of the most exciting crypto philanthropy programs in the years to come. But I’m equally excited about the crypto philanthropists who are slowing down to meet charities where there are.

With more nonprofits accepting crypto than ever, the crypto investors who take the time to educate their favorite organizations about Web3 basics will play one of the biggest roles in driving continued adoption in this sector.

There are more nonprofits fundraising crypto today than ever before, but that’s only because of the people in the Web3 community who continue to step up and make the donations and opportunities that attract them to our sector.

Today’s trifecta of nonprofit adoption, Web3 innovation, and bull market conditions has primed us for crypto philanthropy’s most exciting chapter yet. And if we continue to be innovative in the philanthropic projects, patient with our philanthropic partners and generous with our philanthropic contributions, crypto will remain one of the fastest growing donation methods in the nonprofit sector.