NFTs have moved into the ecosystem of charities, donations and good causes. NFTs can be minted and sold either as standalone art or as a vehicle linked to some physical reward. A smart contract can allow a good cause to receive additional income as its creator if the NFT is subsequently sold on. Any buyer will in part be looking at the NFT product as an investment but will also see it as a donation for good works so could be willing to invest more than the perceived value of any ‘charitable’ product. Any purchase or further trade in an NFT is automatically documented in the Blockchain facilitating donations to be claimed back against income tax in the UK
The whole process of buying, selling and collecting funds can be handed through an established major player such as OpenSea. A number of initiatives have been launched that are specifically aimed at the ‘good cause’ sector. These could offer specialist expertise related to this market and lever tax laws to present an attractive platform choice. There will be fewer items available than on the larger markets but because these all follow a common theme it should be easier to attract the right buyer. On the other hand experience is important and the efficiency of a Blockchain depends on a large number of nodes and not being overloaded with updates. Unfortunately there is also a problem of inexperienced or under-funded operations not being able to provide the service they promise.
Consider a story from 2001 about NFTs used to provide funds for Save the Chimps, a business based in Florida. This organisation is still running and continues to describe how to buy their NFTs on the Truesy platform. It all looks good but Truesy seems to have vanished leaving an insecure website and social media that has not been recently updated, no tweets have been sent since 2021. There is no evidence of fraud or mismanagement; Truesy seem to have simply packed up and left.
Enterprises that are still going include the charity NFT marketplace Maxity and the fundraising engine Panxpan. Maxity runs in the Polygon based currency MATIC. 2% of the initial NFT sale price is taken as Maxity’s commission. The seller can also set a percentage (usually 5% or 10%) of additional royalty income from secondary sales. In all cases there will also be Gas fees and further costs to convert any cryptocurrency to traditional funds. Panxpan is not in itself a marketplace but a service aiming to maximise the benefits to a good cause from a NFT based fundraising campaign.
Any organisation considering raising funds through NFTs needs to consider the minting and transaction fees against the potential income from exposure to donations. A donor might not be primarily concerned about any future value of their investment but does need to consider where their money is eventually going. In the UK a charity is a strongly regulated body. So much so that many good causes opt to avoid setting up charity status. Even amongst registered bodies some might be considered more worthy than others. In some cases the costs of organisational overhead outweigh any benefits passed on to the needy.
Unfortunately there are also cases of deliberate fraud hidden under seemingly genuine banners. A whole organisation might have been set up purely to harvest the good will of others. A much cheaper plan would be to steal the credentials of a ‘trusted’ brand. How can a potential supporter know their cash is going to the body they expect? Any genuine good cause needs to be aware that someone could be spoofing them as a NFT creator; defrauding donators and misappropriating funds that should be due them. Any such fraudster might also leverage harmful smart contracts to further defraud the buyer and harm the original brand.
SecureWeb3 strongly recommend that any organisation including good causes actively search out copies and fakes exploiting their brands on Web3. Our brand protection platform will search for NFTs on popular marketplaces and metaverse platforms and initiate processes to take down offending items. We will also examine existing for Web3 domain names to ensure that none have been set up to potentially spoof existing brands.