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Charities have been caught up in NFT enthusiasm with various financial results

On GivingTuesday, employees of the New Jersey-based health care charity Sostento learned that they would receive a donation of approximately $ 58,000 by the weekend.

Donations were different from those previously received by nonprofits.It was derived from the revenue from the sale of non-fungible tokens, or NFT For digital artwork called “NFT Guild Philanthropists β€” Healthcare Heroes”.

You’ve probably heard about NFTs.They are bitcoins and Ethereum These digital assets came into the limelight in March 2021 after Mike Winkelmann, known by artist Monica Beeple, auctioned NFTs at Christie’s for $ 69 million. Think of NFTs as certificates or tokens related to digital art works such as images, recordings, and videos. You can use that token to track the source and sales history of a file and allow someone to prove ownership of the asset.

This technology was created to give artists more control over their work, but as collectors tried to raise money, NFTs became enthusiastic. As that speculation grows, more and more charities are looking for NFT-related funding efforts. Some NFT charity auctions have generated spectacular amounts, while others have had limited success. Complicating the matter is that accountants and regulators are being asked a lot of questions as NFTs use new technologies.

The “Guild Philanthropist” NFT was sold at 6.3 Ethereum. That’s about $ 28,000. The artist made a donation according to the sale price. Accepting donations was fairly easy for Sostento. The organization has worked with Giving Block, a non-profit organization that helps other charities accept cryptocurrencies, to convert cryptocurrencies into US dollars. NFTs will continue to benefit charities. It was created with a clause that requires the proceeds of future sales to be donated to charity.

However, there is still a sharp learning curve associated with NFTs and cryptocurrencies, said Joe Agoada, CEO of Sostento, which develops software and communications products for the healthcare industry. Accountant He advised Sostento to warn against accepting NFTs and other cryptocurrencies directly. It was important to work with intermediaries to convert NFT revenue from 1s and 0s to dollars and cents.

β€œIt took us a long time to figure out how to do this,” says Agoda.

Last week, Sostent wasn’t the only one to see a plunge from tokens in these novels. A Giving Block official said he helped process a charitable donation of about $ 1 million on GivingTuesday from the proceeds of the NFT auction. And on December 7th, the Giving Block will start its first NF Tuesday. This is a day focused on promoting philanthropy derived from NFTs.

Some nonprofits are participating in the NFT battle as a way to reach a wider audience.

In July, staff at Save the Chimps, a chimpanzee shelter in Fort Pierce, Florida, scanned finger paintings by three residents, Cheetah, Clay, and Toothy. From those scans, they created a series of NFTs and put them up for auction on the NFT marketplace, Truesy. Think of it like a photo print. They were priced to sell at a value equivalent to about $ 25. Save the Chimps has set up an NFT to provide loyalty to charities for future sales. What have you been doing so far? Only a few hundred dollars.

“The exciting part is that they were all the first donors,” said Sarah Harpert, Group Marketing Director.

This is appealing to the NFT world, and more broadly to many charities that have begun to work on cryptocurrencies. Pat Duffy, CEO of GivingBlock, said these collectors and investors could be a valuable new audience for fundraising activities. They tend to be very active online, wealthier than average, and economically savvy young donors.

“These are the people that major gift officers should contact and discuss,” Duffy said.

It’s not uncommon for donors to provide NFTs directly to nonprofits, but that’s happening as well.

Earlier this year, entrepreneur Eduardo Burillo donated an NFT entitled “CryptoPunk 5293” to the Institute of Contemporary Art in Miami. Part of the 10,000-piece series, this piece depicts a short bob haircut, pink lipstick, and a pixelated avatar of a person with a Mona Lisa-like look. At Thanksgiving, the average selling price of CryptoPunk was just under $ 500,000.

While NFTs may seem novel as a means of philanthropy, the assets associated with tokens are similar to other forms of temporary art, such as performance art, video art, and art installations, ICA. Alex Gartenfeld, Artistic Director of Miami, said.

The ICA Miami case is unique, at least so far. Other museums have not yet accepted NFTs into their collections.

The biggest challenge for nonprofits, especially those who want to keep NFTs as assets, is that existing accounting rules don’t really support NFTs, said Ohio State University’s accounting professor focusing on nonprofits. Brian Mittendorf, who is guessing, says. NFTs are technically different from the artwork itself. The artwork itself raises headache questions about what is valued, what is not valued, or what can be considered part of the museum’s collection.

“It captures both the challenges of charities getting into the territory of cryptocurrencies and the challenges of charities trying to raise money from things that are difficult to value,” Mittendorf said. “From an accounting perspective, I have unanswered questions.”

Regulators, including the Securities and Exchange Commission, are beginning to consider when and how to treat NFTs as collectibles or securities. The end result of these decisions can affect philanthropic accounting firms.

Charity We are also experimenting with NFT-based financing in ways that go beyond the realm of digital art.

Beneath the Waves, an environmental group focused on marine conservation, has auctioned dozens of NFTs, each representing a real shark tag, with starting prices ranging from $ 500 to $ 20,000. Owners get the right to name tagged sharks and receive up-to-date information on shark movements as they pass through the ocean. One of the NFTs gives owners the right to participate in the group’s marine research activities in the Caribbean. The bid closed at $ 23,000.

A new organization, Rewilder.xyz, is using NFT auctions to raise money to buy land for tree planting activities in Amazon. For each donor making a minimum donation of 1 Ethereum worth about $ 4,400, the group will create an NFT that qualifies the owner to receive regular updates on the land that supported the purchase. So far, this effort has raised about 60 Ethereum. That’s about $ 241,700 at the time of this writing.

“Basically buy a photo of the land,” said Endaoment, a charity that sponsors a donor-advised fund built on the Ethereum blockchain and helps other organizations accept cryptocurrency gifts. CEO Robbie Heeger said. Endaoment helped Rewilder establish the campaign.

“This is basically another way to involve the donor community in terms of attachment and ownership of the work being done by nonprofits,” Heeger said.

Save the Chimps had environmental issues with NFT funding. The computing process for keeping a record of crypto transactions consumes a lot of energy. These concerns have led some organizations to reconsider accepting digital currencies as donations. Earlier this year, Greenpeace announced that it would stop donating Bitcoin, for example.

Save the Chimps has chosen to list NFTs on Truesy. It is traded on Tezos, a digital currency network that uses less energy-consuming processes than Ethereum to perform the complex computing needed to prove ownership and provenance of digital assets. In other words, these NFTs are more environmentally friendly than average.

Charitable organizations continue to be interested in the future of NFTs and their usefulness for philanthropy, said spokesman Seth Adam. Whether that means taking up NFTs at annual auctions or collaborating with other artists, he said, “We are always looking for new NFT opportunities.” ..

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This article was contributed to The Associated Press by the Chronicle of Philanthropy. Michael Theis is a chronicle writer. Email: michael.theis@philanthropy.com. APs and Chronicles are backed by the Lily Foundation for philanthropic and non-profit organizations. AP and Chronicle are solely responsible for all content. For all coverage of the Associated Press’s philanthropy, please visit https://apnews.com/hub/philanthropy.

Charities have been caught up in NFT enthusiasm with various financial results

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