Helen Brown Group

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Crypto, DAFs and Fundraising – Oh My!

We’ve talked a bit in recent months about both cryptocurrency and DAFs here on The Intelligent Edge, and this week my colleague, Kenny Tavares, pulls the two together in a thought-provoking piece. What do these two vehicles have in common, and how do they impact fundraising and prospect research? Read on…

Kenneth Tavares

                      Kenny Tavares

Let me start with a disclosure: I’m a skeptic. When the media starts to buzz about new investment approaches and how it might benefit nonprofits, I see red flags. So, you can imagine how I must feel these days with a drumbeat of favorable stories about cryptocurrency (crypto) and donor-advised funds (DAFs). It’s not that I don’t support new ideas. However, I do worry about the consequences of not being more thoughtful about these changes.

In July 2021, Paul Sullivan of The New York Times, in a story about nonprofits handling gifts of cryptocurrency, noted that Fidelity Charitable Gift Fund, the largest donor-advised fund (DAF) in the United States, had already received $150 million in crypto this year, an increase of more than 435% so far. A number of other donor-advised funds, including those run at colleges and international institutions, have announced that they also accept crypto.

Blockchain technology, which cryptocurrencies run on, have made some transactions easier to track and more cost effective, providing more money for the nonprofit organization. But the skeptic in me wants to know why crypto gifts to donor-advised funds are surging. How will the growth of these two vehicles affect fundraisers and researchers? First, I think we should look at why each of these might be attractive to investors. [Read more…]

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European-style foundations come to the United States

Bethlem Hospital, London, 1677. Engraving.
Credit: Wellcome Library, London. Wellcome Images (http://wellcomeimages.org)

Foundations have existed in Europe for over 600 years. The oldest is likely Bethlem (aka “Bedlam”) Royal Hospital, which has been taking care of the mentally ill without interruption since the 1400s in London. Even though it’s a charitable organization, it’s called a foundation because that’s the legal way it was set up.

The way foundations are set up in Europe is different in the law than the way foundations (as we know them) are set up here in the US. (At least, until now – I’ll get to that in a minute). [Read more…]

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Interview with a prospect development crypto miner

This week we have a real treat of an article: HBG’s Associate Director for Consulting, Tara McMullen-King, interviewed Amy Begg, former NEDRA board president and an Ann Castle Award recipient. Amy is also an active cryptocurrency miner (with a heart of gold!). Tara and Amy had a fascinating discussion about crypto mining, and Amy generously shared her knowledge and experience about what it means to mine cryptocurrencies. Huge thanks to Amy for taking the time to explain it all for us! ~Helen

tara

Tara McMullen-King

It is clear that the demand for cryptocurrency and crypto mining is not subsiding any time soon – as of August 2021, the combined value of the world’s cryptocurrencies stood at about $2 trillion. Not only are more people investing in crypto, but an increasing number of donors are using cryptocurrencies like Bitcoin to fund their charitable contributions. According to a recent article in the New York Times, there has been a significant increase in cryptocurrency donations to donor-advised funds – for example, Fidelity Charitable received $150 million in cryptocurrency in 2021, up from $28 million in 2020 and only $13 million in 2019. And in May 2021, it was reported that a $5 million anonymous gift in the form of Bitcoin had been made to the Wharton School at the University of Pennsylvania – the largest cryptocurrency gift ever made to the University.

Amy Begg

While many nonprofits are still not set up to accept gifts of cryptocurrency, more and more are beginning to put the internal infrastructure in place to do so, or signing up to accept crypto gifts through donation platforms like The Giving Block – in part because of some of the benefits. Donors can benefit from tax write-offs since cryptocurrency is classified as property (which means no capital gains tax and a fair market value deduction). They are also cost-efficient for organizations involved in international transactions since they eliminate the usual costly associated international banking fees. And with close to half of Millennial and Gen-Z investors owning cryptocurrencies, making the choice to accept crypto donations will also potentially provide an opportunity for nonprofits to engage with a new generation of younger donors in the future.

But how does cryptomining work? How do people get started in the field? And what even IS cryptocurrency? To try to get some answers to these questions, I sat down for a conversation with Amy Begg, Managing Director of Prospect Management at Harvard University, who is a miner with a wealth of knowledge and insight about all things crypto! [Read more…]

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The overlooked generation

There’s a puzzle that I’m trying to figure out. Maybe you’ve got some insight and can help me.

When I got started in my career in prospect research, it didn’t take me long to figure out that we were concentrating on people (okay, mostly men) who were in their 40s to 70s. These were the donors who were in their prime earning years or recently retired, finally able to spend their spare time on volunteering and their spare cash on donating.

We didn’t ignore their kids, of course, but since there’s only so much time in the day, it was the Boomers that got the majority of our prospect identification and research attention. It’s just Sutton’s Law.

So, okay, those Boomers are aging out of prime giving now. Most are now fully in retirement mode, so it makes sense that we look to the next generation who are in their prime earning years or recently retired.

In the press (fundraising and general audience), you can’t open a newspaper or magazine without seeing articles like Millennials And Charitable Giving: A New Approach To Philanthropy, How Millennials Are Changing Philanthropy, and How to Appeal to Millennial Supporters.

Which is great.

But that’s not the next generation after the Boomers. Gen Xers are. [Read more…]

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Making remote work work

They’re calling it “The Great Resignation.” Millions of folks who have worked from home productively through the pandemic aren’t ready to give up their new quality of life for employers who will require them to go back to an office. According to the US Labor Department, a record 4 million people quit their jobs – and that’s just this past April.

For some professions it’s really not an option. It’s difficult for a surgeon and her team not to be in the presence of the patient, although not impossible, apparently.

But for fundraising, it’s a no-brainer. Old school ways of insisting that everyone has to be in the office all the time are losing their credibility. And for good reasons.

Keeping great staff [Read more…]

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Hope and Charity

In the Before Times, we were more at leisure to have philosophical discussions about the nature of philanthropy and income inequality and taxation and due diligence and ethics and the confluence (or colliding impact) of all of those things.

With the daily grinding worry of every sorry aspect of the COVID pandemic starting to recede for many of us (in countries with leisure classes), those discussions have started anew – but with the added grit-filled lens of 20/20 in our hind-sight.

It’s a time of social upheaval we’re living through right now, and maybe we’re lucky to be living through it, because after the awfulness, we can hope that good things will come. World wars, influenza pandemics, suffrage, civil rights, gay rights – you can’t say that those were good times for the people who moved them forward, but they were working with hope for a better future. And better things did happen.

Philanthropy is about nothing if it’s not about hope. I have said that phrase so many times over the years and it has only ever had one meaning to me. But looking at our sector now I see with more clarity that it’s actually about two things.

It’s about when philanthropy is about nothing. And when it’s about nothing but hope.

I have two things that I want to tell you about that led me to that realization, because I was struck by how philanthropy can actually be about nothing.

Earlier this month, the Boston College Law School Forum on Philanthropy and the Public Good released a report called “Impact of the Rise of Commercial Donor-Advised Funds on the Charitable Landscape 1991-2019.” (Honestly, take a look. It’s not a boring report. Ray Madoff and James Andreoni wrote it, and there are awesome visualizations by Helen Flannery).

Here are some meaty takeaways:

  • Since 1981, charitable giving in the United States has stayed steady at about 2 percent of disposable income.
  • Fidelity established the first commercial donor-advised fund (DAF) sponsor, Fidelity Charitable, in 1991. At that time, about 5% of giving went to foundations with the rest – 95% of giving – going directly to charities.
  • By 2019, 13% of all giving went to donor-advised funds and 15% went to foundations, so that means only 72% went directly to nonprofits.
  • Private foundation assets have grown over 500% over the past 30 years, from $165 billion in 1991 to $996 billion in 2019. From 2007-2019, total donor-advised fund assets grew over 300% from $32 billion in 2007 to $142 billion in 2019.
  • Madoff and Andreoni, in collaboration with analytics firm Data Lake LLC, crunched numbers from Giving USA and form 990s to find out what would have gone directly to charities if it wasn’t for DAFs and foundations. Their calculations show that between 2014 and 2018, nonprofits missed out on about $300 billion.

Three. Hundred. Billion. Dollars.

So there’s money moving into “philanthropy” but it’s not going to the nonprofits that do the work. This is when philanthropy is about nothing, and certainly not about hope. This is about amassing assets and control. It’s the business of philanthropy.

A really interesting overview

The second thing I wanted to point you to today is a piece from BBC Radio 4 in the UK called “Tainted Money.” It’s well worth your 27 minutes and 45 seconds.

It’s presented by Dr. David Cannadine, a specialist on the history of business and philanthropy and professor of history at Princeton.

Cannadine distils the concerns and struggles within the charitable sector today – the growing importance of due diligence research, ethics in fundraising, income inequality, and the nature of unequal power in philanthropy.

Along the way he interviews or features audio clips from several people who are well-known within philanthropy circles including Dr. Beth Breeze, Prof. Rob Reich, Anand Giridharadas, and billionaire philanthropist Stephen Schwarzman, among others.

The segment brings up some great questions, including:

  • If we put on our nonprofit’s no-fly list anyone who could possibly be (or have been) tied to some form of tainted business, at what point is there no one left for us to ask?
  • What causes should billionaires (not) be allowed to influence with their largesse? Who decides?
  • Are tax evasion/avoidance, income inequality, and the business of philanthropy inextricably interconnected or are they separate but concurrent problems?

These are fascinating and difficult issues for us to be aware of and we all, from our unique perspectives, have a part to play in figuring out how we move forward, whether that’s in our own department, our own nonprofit, as leaders within our regional and national professional associations, and as caretakers for the future of our sector.

We have to work with hope, and we have to work at it.

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Is your nonprofit missing out on a huge crypto-tunity?

Want to know who’s cooler at using technology to raise money than your average well-funded university or nonprofit?

Malala, that’s who.

Also, the United Way.

The Count Basie Center for the Arts, Wake Forest University, Cushing Academy, and 200+ other nonprofits that have signed up with The Giving Block to accept cryptocurrencies.

“Oh, cryptocurrency. Pfft!” you might be thinking. “That’s not going to be a thing.”

If you were working in fundraising in the late 1990s, you might remember that the same thing was said about taking donations online. Using credit cards! Over the internet! Like it was space age tech from Mars. Online giving? No way.

Way

Accepting cryptocurrencies is the same thing, and it’s already old news for some (especially considering the length of the news cycles these days).

Back in December 2017 an anonymous philanthropist called “Pine” set up the Pineapple Fund to give away their 5104 bitcoin that had exploded in value to $55 million. Although cryptocurrency donations weren’t unheard of then, Pine’s announcement that nonprofits could apply to be grantees was a turning point moment. Applying for funding from a foundation-y sort of entity was familiar. Some nonprofits started to see the opportunities in being ready to receive cryptocurrencies.

Like UNICEF. Since the UNICEF Crypto Currency Fund was launched in October of 2019 it has received over $5.5 million. That’s during a pandemic yet.

Accepting crypto is an already large and yet still rapidly growing opportunity for nonprofits. According to Alex Wilson, co-founder at The Giving Block,

Cryptocurrency donations really took off in 2017 after bitcoin hit $20,000 for the first time. In 2017, we estimate that over $100M in crypto was donated to the few organizations who were ready to accept bitcoin. Since then, we’ve continued to see cryptocurrency donations increase and estimate that $200M-$300M per year is being donated in crypto. This year is on track to break those records.”

Wow.

The donor advised funds at Fidelity Charitable is one of the places where all of those bitcoin, bitcoin cash, Ethereum and Litecoins are being warehoused. Paul D’Allesandro, author of The Future of Fundraising: How Philanthropy’s Future is Here with Donors Dictating the Terms, said in a recent podcast with Andrew Olsen that Fidelity’s stack of coins is $100 million tall.

One hundred million is just…a lot.

But it’s not as much as a billion. Which is the amount reported yesterday that Ethereum crypto founder / billionaire / philanthropist Vitalik Buterin donated in one fell swoop in coins to help with Covid relief in India. Depending on if the coin retains its value, of course.

Starting the conversation

If you’re a nonprofit fundraiser, you might be wondering: how do we open up this conversation with donors who have cryptocurrency? (or who we don’t know have crypto?)

In a CASE podcast featuring Jay Goulart, former VP for Institutional Advancement at Gulliver Schools, now founder of the consultancy Big Philanthropy, Goulart describes what happened when his school approached a donor – a commodities trader – who had mentioned owning cryptocurrencies.

 We realized with this guy that we had to speak in terms of coins and not in money. So in other words, he didn’t see things in the same way as, you know, would you do a million, would you do five million, or whatever the number is.

We asked him for what was the equivalent of five million dollars in coins, which was about 500 coins. That’s not what he wanted to end up doing, he did about half of that. But he said I’ll do it over a period of time. Now when we first met him, bitcoin here in the States was just under $10,000 a coin…so…we’re just shy now of what’s left of 8 figures in terms of a gift from this person.

Now, it’s really not the way that most people would venture into this because, you know schools want to liquidate and they don’t want to hold and they don’t want to speculate. [It’s] all very logical and it all makes a ton of practical sense. But sometimes there’s moments when you meet someone and they’ve never really played in our arena, and you’ve got to find a different avenue. And sometimes we have to take a little bit of risk ourselves.”

So part of the answer is being open to trying a new way of receiving donations.

A first step could simply be getting a wallet set up to accept cryptocurrencies and publicizing it on your website’s giving pages so that donors can see that it’s even an option.

Another way is being more purposeful about it.

Marketing your Mission

United Way Vice President of Innovation Edwin Goutier recently published an engaging article on the nonprofit’s blog highlighting how easy it is to donate a variety of cryptocurrencies to the organization. For each currency he directly tied a donation level to its very specific mission impact at United Way. It’s a brilliant, effective piece of marketing.

What does the average cryptocurrency holder look like? Maybe not what you’d think. According to a study by London-based crypto custodian Copper.co, 56 percent of bitcoin holders are investors and 80% of those are long-term holders. So that means, for them, cryptocurrencies aren’t a fluke – they’re a part of their investment portfolio and they take it seriously.

It also means that when a long-term holder divests of some their cryptocurrency, they will likely incur capital gains.

Unless, of course, they donate them.

We know that tax incentives aren’t the main reason why people give to nonprofits, but they’re certainly a consideration. If people donate cryptocurrency under their real names (as opposed to anonymously), they can claim a tax deduction. If they can avoid capital gains tax as well it’s a double win. Being able to help a mission they care about? Win-win-win.

Finding prospects

The question for us in prospect research is, how do we identify cryptocurrency holders? Especially when they go by names like Cryptochristoff, Madgreek, Twobadour, and MetaKovan.

Well, you can start with The Crypto Giving Pledge members – people who have pledged to give 1% of their cryptocurrency annually – and see if you have a match in your database. There aren’t a lot of them yet, but the list is sure to grow.

You can also use a search engine, search in social media, and check out forums to see what you can find. A quick Google search found that MetaKovan is actually Vignesh Sundaresan, CEO of Singapore consulting firm Portkey Technologies. Twobadour is Anand Venkateswaran. On Twitter I found two crypto-enthusiasts who go by the handles Madgreek and Cryptochristoff. Could it be that simple? Maybe.

See if you can match names to social media handles you already have on constituents in your database. And, of course, as you’re researching someone generally it’s a good idea to see if they follow or knowledgeably discuss cryptocurrency on their social channels. This could be a clue that they hold crypto.

Primary source prospect research is key here also. This is a great topic for frontline fundraisers to bring up in face-to-face meetings with donors and board members. “What do you think about our nonprofit accepting cryptocurrencies?” could be a good opener for a discussion.

It’s certainly not a bad thing to ask for advice about. And you know the old fundraising adage about asking for advice, right?

Further resources:

 

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Musings on the digital economy and what it means for prospect research

Rick SnyderThis week we welcome HBG Senior Researcher Rick Snyder to the blog. I always appreciate Rick’s thought process and insight, and this week he shares what he’s been thinking about – about the economy, people who find themselves newly high-net-worth as a result of their investments in digital currencies, and what’s happening with all that money. ~Helen

In my last blog post I mused about my career in prospect research and the enjoyment I continue to find in learning about a broad variety of topics that shed light on how our prospects earn and spend their money.

A year ago, I was looking at the cost of hiring domestic staff.

Fast forward to today and researching the salary of a nanny seems downright quaint compared to what I’ve been reading lately. I’ve been focusing a lot on the economy and some of the changes we’ve seen over the past year. It seems that the pandemic has not only upended many parts of our personal lives, it’s also scrambled and rearranged how people are spending their money. It’s grabbed my interest and I’m trying to make sense of it all. What I’m offering here isn’t an explanation (I don’t have one), but a few observations and thoughts about what’s going on.

A recent cover of New York Magazine captured the spirit of our current times with the title “Can I SPAC My Stonks With NFTs?” The article inside, “There’s Nothing to Do Except Gamble”, referred to the “new money weirdness” and I can’t think of a better way to describe our current economy and our increasingly strange relationship to money. I believe that we are living through a transformation of our economy that is both exciting and a little bit scary, at least to me.

The SPACs and NFTs mentioned in the magazine were covered well by Helen in these pages already, so I won’t travel that road again. Not only did she explain them better than I can, but I have to admit that, try as I might, I still can’t wrap my head around NFTs well enough to offer a cogent explanation of them. I’m also not going to dive into the world of Reddit-driven “stonks,” though that’s also intriguing and entertaining. These are relatively new phenomena and indicative of how fast our economic world (and the language used to describe it) is changing.

My personal and professional interest in today’s economy is two-fold: First, I want to understand how we’ve reached the point where a person can spend $69 million for a piece of digital art (the buyer, a cryptocurrency billionaire who goes by the name MetaKovan, said he was prepared to pay even more and thinks it was a steal since it should be worth $1 billion).

Second, I can’t help but think the indicators are flashing red that we are somewhere near the peak of a bubble economy and wonder when that bubble is going to burst.

The first interest is almost voyeuristic – I can’t tell if we’re watching the prelude to a car crash or a butterfly emerging from its chrysalis – but the second is more serious and existential.

There are scores of brilliant people who understand the economy far better than I ever will and they don’t all agree on what we’re seeing. Some are warning that we’re cruising for a bruising and others are claiming there’s little to be concerned about.

The traditional indicators – things like the U.S. Treasury bond curve or the P/E ratio of stocks – either don’t apply any longer or aren’t as reliable as they once were. Unemployment is decreasing and GDP is rising, but there are still millions of people struggling with the economic effects of the pandemic. And in the midst of all of the good news/bad news, we’re seeing the creation of new ways for people to spend astronomical amounts on things that barely existed just a year or two ago.

The easiest explanation is that the economy is awash in money and it all has to go somewhere. Billions of dollars have been injected into the system over the past year. We are still living under varying forms of COVID restrictions, but that isn’t stopping us from spending what we’ve got.

The New York Times reported that Deutsche Bank analysts have estimated as much as $170 billion from the most recent round of federal stimulus will go into the stock market. Mortgage rates are at historic lows and house prices are rising. Redfin reports that 42% of homes have been selling for more than their list price – 16% higher than the same period last year – while at the same time Google reported that the search “When is the housing market going to crash?” had spiked 2,450% in the past month.

Bitcoin was trading at $6,853 a year ago. As of writing, it is at $53,545 and by the time this posts it could be thousands of dollars higher or lower. I assume that a good bit of what is driving the NFT market is that people are sitting on mounds of crypto that has appreciated wildly since they bought in. As a personal example, a few months ago I realized that I’d forgotten about a crypto wallet I’d left a small amount of money in a number of years ago. When I looked at it, I literally laughed out loud at the value. It wasn’t enough to be life changing, but for people who invested earlier than I did and paid just a few bucks for some Bitcoin, I can easily imagine why they’d have no problem spending some highly appreciated digital currency on a piece of digital art.

I also discovered that people are breeding and selling digital horses on the NFT market – one sold for $125,000 – and they’re participating in digital races. I had to check the date on the article to make sure it wasn’t an April Fools’ joke. If this isn’t a sign that people have more money than they know what to do with, I don’t know what is.

Along with the sea of money sloshing around in the system, we’ve seen over the past year that life is short and it should come as no surprise that people are willing to make riskier financial bets than before. Might as well YOLO your stimmies into some stonk while you can.

What does any of this have to do with our work? I can think of at least several ways.

First, the top tier of earners has done extraordinarily well over this past year, so we need to keep tabs on what they’re doing – that’s what we do every day, so there’s no change there.

Second, the flow of money into SPACs, NFTs, and retail stocks shows that there are a number of new players who are spending freely. How are we finding, researching, and qualifying them? Are you developing new ways of looking at people with names like MetaKovan and Roaring Kitty? We know they have millions to spend, so how can we add them to our prospect pools?

Third – and this is what I was thinking the most about when I began writing – if we are indeed in a bubble economy, that bubble will burst at some time and quite possibly in a very dramatic fashion.  Though we can’t really predict when the economy will take a downturn, it most certainly will.

When it does, it will affect charitable giving* and that affects each of us in our jobs as researchers. When development budgets shrink, prospect researchers may seem to some as an extravagant expense to some managers. It behooves us all to be proactive in researching or at least giving some thought to those in our donor pools who work in sectors that fare better than others in a down economy. Helen wrote about this in blog posts in April and December of last year, as well as in a white paper. They merit re-reading as you ponder economic trends.

* The Lilly School of Philanthropy and Vanguard Charitable wrote a 2019 report, “Changes to the Giving Landscape” [PDF], that shows a decline in charitable giving that began in 2000, but the drop accelerated at the time of the 2008-2009 recession. From 2000 to 2008, roughly 65% of households reported giving to charity. Total giving dropped by 7.2% in 2008, then by another 8% in 2009.

 

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Don’t miss these 3 things – International Research, Justice, and Seismic Fundraising Shifts

Hi there! Thanks for coming by the blog today. There are three really interesting and important things that I’d like to amplify this week because I really didn’t want you to miss them.

New newsletter!

The first is a brand-new newsletter by a prospect development colleague I recently met, Nan Nielsen Zhang. Nan is a due diligence / prospect research expert building a relatively new consulting business called Astra Due Diligence focusing on Asian individuals, companies, trusts, and foundations. Nan speaks Chinese (Mandarin and Wu dialect), Japanese, and Korean, (as well as English, Russian, and Spanish) and has built a thriving business because of her talent and unique access to due diligence/research resources in those languages. You can sign up for her free bi-weekly newsletter, China Philanthropy News, at the bottom of her company’s web page.

Bold article

Veteran fundraiser Armando Zumaya has written an important op-ed that was published in the Chronicle of Philanthropy last month. The article, To Achieve Racial Justice in Philanthropy, We Must Invest in Fundraising and Make It Inclusive, provides a roadmap with 5 key on-ramps of action, including making a long-term and deep investment in fundraising, and working to build diversity in the whole nonprofit ecosystem: staff, board, and donor base. In the article, Zumayo boldly and publicly poses a question that many in our sector have been reluctant to ask because of the power differential between donors and recipients: Why don’t foundations make grants that support a nonprofit’s infrastructure – including fundraising?

Seismic shifts

It’s a question that’s critical to the long-term… well, not even growth, but viability of our sector, and that Ford Foundation head Darren Walker is actually doing something about. In this 60 Minutes interview with Lesley Stahl, Walker makes a statement that probably wouldn’t have been uttered 5 or 10 years ago, and even now has not bubbled up into the consciousness of many foundations:

“It is both arrogant and ignorant to believe that you can give money to an organization for your project, and not be concerned about the infrastructure that makes your project possible.”

As a self-described capitalist and former bond trader, Walker views philanthropy from a business perspective, but he is also philosophical about philanthropy’s role in inequity, politics, and ultimately in the future of our country. But it’s not all talk – the Ford Foundation has made bold, extraordinary changes in the past few years to try and change that power differential between the foundation and the nonprofits it supports. Don’t miss the interview – it’s worth your time.

Thanks for letting me share those important and helpful voices with you today – please do check them out. Have a great rest-of-the-week!

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What the heck are NFTs (and why should you care)?

Reflections. Photo by Julie Kahn (c) 2021

Research Pride is a celebration of all aspects of our wonderful profession, and the thing I probably love most about prospect research is that we’re constantly learning. Lots of times it’s about odd things that you never knew existed but discover quickly that they are an up-and-coming thing. Take for example today’s topic, NFTs – non-fungible tokens.

I started seeing the acronym NFT flying through my social media feeds about a month ago. The articles were relating to wealth and art, and just like with SPACs a few months ago, when I start seeing a mystery acronym that pertains to wealth, naturally I have to know more.

What I found was that there is an increasing amount of digital artwork being traded via blockchain for astonishingly high amounts of money.

Okay, let me back up and start at the beginning.

I first saw the term “non-fungible token” or NFT in relation to an auction that Christie’s is doing of a work of digital art, The First 5000 Days, by Mike Winkelmann, an artist who goes by the name Beeple. Christie’s website touts that it is the first time they are offering at auction a piece of digital artwork, and it’s also the first time they’ll be accepting cryptocurrency – Ethereum, specifically – as well as more standard forms of currency from the eventual buyer.

Now, you might be thinking, “Wait. If it’s a piece of digital artwork, what’s to prevent it from being copied a billion times or displayed on the internet for free?” and in fact that’s a very good question because The First 5000 Days currently is being displayed on the internet and you can go see it for free. Go ahead and check it out. I’ll wait here ‘til you get back.

Here’s how it works: this specific piece of digital artwork is being sold as a token, a small piece of digital real estate on a blockchain, which forever authenticates it as being a unique thing, an intangible, tangible thing, in the same way that Bitcoins (and Ethereum, and Dogecoin, and all cryptocurrency) are also things – tokens on a blockchain with a value that’s determined by the market.

Because they’re tracked on a blockchain, these specific things can’t be forged or hacked. But while there are more than 18 million interchangeable (aka “fungible”) Bitcoins, there is only one original of any single piece of artwork, which is why they’re non-fungible: one piece of artwork can’t replace another one on a 1-to-1 basis. It’s apples to oranges – they’re both fruit/both art – but not the same thing.

So why do we care about NFTs?

Well, for one thing, within one hour of going up for auction on the Christie’s website, bidding on The First 5000 Days went from $100 to $1 million. As of March 5th bidding was up to $3.5 million but the auction closes today, March 11, so we’ll know the final price as soon as Christie’s publishes it.

UPDATE: It sold today for $69 million. SIXTY. NINE. MILLION. DOLLARS.

It’s clearly a hot new market for art lovers who are also tech savvy, like Elon Musk of SpaceX and Tesla, and Chamath Palihapitiya, the chief executive of the technology holding company Social Capital and former Facebook executive. Both are NFT collectors, and it’s clearly a fast-growing market, too.

In fact, the market for NFT art was $342 million. Last. Month. That’s more than all of the NFT sales in 2020 combined and up from $12 million just in December. NFT art sales are hot and moving like a high-speed train on a 700 mile-long prairie. People are even burning extant art to make NFT art!

But back on the ground, and perhaps more importantly for our purposes: nonprofits are benefiting. A Banksy-style artist (is it actually Banksy? He says not but the works are verrrrrry Banksy-like) created NFTs that recently sold for $900,000 and a portion of the proceeds went to Save the Children.

Also, part of the sale of a lightly-animated Wonder Woman NFT created by veteran comic book artist José Delbo recently sold at auction and netted a $23,196 donation to the nonprofit Girls Who Code. So philanthropic tech art-philes are finding creative ways to fund their favorite charities!

So check out NFTs and do some mining to discover if you have any prospects that love them. This might be a good time for your nonprofit to look into accepting cryptocurrency, too, if you haven’t already.

FURTHER READING

Post-sale explainer from The Washington Post: https://www.washingtonpost.com/technology/2021/03/12/nft-beeple-christies-blockchain/

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