NFT creators continue to contribute auction proceeds to charities around the world
If you have eyes and an internet connection, you’ve probably seen the buzz about NFTs. The recent influx of wealth and interest in NFTs has resulted in a tsunami of NFT related cryptocurrency donations. NFTs have even sold for $69+ million which is leaving some creators with a large tax bill. Many of those artists have come to us looking for ways to offset some of their tax burdens. It isn’t surprising to hear that traditional art donations are common in the world of nonprofits, in large part due to the tax benefits of donating appreciated property.
Some of the nonprofits working with us have raised over $100,000 from NFT related cryptocurrency donations alone.
— Lindsay Lohan (@lindsaylohan) February 13, 2021
What is an NFT?
Before we get into how you can use NFTs to support charity, we need to ask, what is an NFT exactly?
An NFT is a “Non-Fungible Token”, not exactly the most glamorous name for something hitting close to $70m USD at a Christie’s auction house.
An NFT is a type of data, often consisting of art or music that is stored on a blockchain (the same technology behind cryptocurrencies such as Bitcoin, Ethereum, etc). This data is in the form of a token that can be bought and resold, often each time it is sold a royalty can be paid to the original artist (or beneficiary such as a nonprofit/charity) in a cryptocurrency such as ETH.
Why would someone donate crypto or an NFT?
To do good of course. And also save on their taxes at the same time. Donations of property (like stocks, cryptocurrencies, and art) are typically tax-deductible in many countries like the US and UK.
The best part? When donating appreciated property, the donor does not have to pay capital gains taxes and gets a fair market value deduction on their tax return. And as long as you’re donating to a registered charity (like the ones working with The Giving Block), the charity doesn’t pay any taxes either.
So, how does it work in practice? Say you bought $10,000 worth of BTC a few years ago. You HODLed and now it’s worth $50,000. If you sell your BTC, you trigger a taxable event and are left with 30% less than the sale value. If you donate the BTC directly, you get to donate the full amount, write-off the full amount, and the nonprofit gets to keep the full amount. That means you are donating 30% more, the charity gets 30% more, and your write off is 30% higher. Wins all around.
At The Giving Block, we’ve seen an outpouring from NFT creators and platforms wanting to support charitable causes. The first question we get: How can I donate my NFT to charity?
In short, we recommend auctioning off your NFT and donating the proceeds to a crypto-friendly nonprofit. Most nonprofits aren’t set up to accept an NFT donation directly due to the tax complications with the valuation, before the auction is done. Donating the auction proceeds in crypto is the next best option!
Show me some examples then!
The Giving Block has been involved with charitable giving and NFT’s for quite some time:
- We started with our first Covid Heroes drop on Nifty Gateway last year with art that was based on crypto influencers to help fund the fight against COVID19.
- In September 2020 The Giving Block partnered with Showcase allowing creators on the platform to donate the proceeds of their NFT sales to over 100 nonprofits The Giving Block supported at the time.
- We’ve partnered with NFT platform Cryptograph to make it easy for creators to donate to charities with NFTs in perpetuity.
- Cyberkongz NFTs donating ETH to Orangutan Outreach.
Other examples of NFT’s being used for charities include:
- Twitter CEO Jack Dorsey donating the proceeds (over $2.5m) of his NFT Tweet to Give Directly on the Valuables by Cent NFT platform.
- Denny’s donating proceeds from an NFT tweet to The Giving Block supported nonprofit No Kid Hungry in March 2021 using the Valuables by Cent NFT Platform
- Beeple (who recently sold an NFT for $69m at Christie’s auction house) to sell an NFT to benefit climate change charity Open Earth
- Calgary Flames NHL player Matthew Tkachuk auctioned off NFTs to benefit St Louis Children’s Hospital and Alberta Children’s Hospital
- Kansas City Chiefs quarterback Patrick Mahomes released an NFT where part of the proceeds was donated to the Boys and Girls Club in Missouri and Kansas.
- New York Times journalist Kevin Roose created an NFT to donate the proceeds to the Neediest Cases Fund
- 55+ NBA Top Shots NFTs donated to Special Olympics Illinois via Twitter
If I’m an NFT creator, how can I donate my NFT proceeds to charity?
- Auction your NFT on your preferred platform like you normally would
- If the platform allows you to, set the payout address as the nonprofit’s cryptocurrency wallet address
- These can be generated through The Giving Block’s widget for the 200+ nonprofits we support.
If I’m an NFT platform, how can I help my content creators donate NFT proceeds to charity?
- Contact us! We’re working with platforms to build in native functionality for allowing automatic payouts to nonprofits.
- Alternatively, allow your content creators to set a charity payout address for a portion (or all) of the proceeds when they set up an auction.
You can donate the proceeds of your NFT sales in crypto directly to 200+ nonprofits here.
I’m a Nonprofit, how can I accept donations from NFT creators?
The easiest way for a nonprofit to accept donations from NFT creators is by accepting donations of cryptocurrencies (such as Ethereum and other ERC-20 tokens) using The Giving Block. Once you have an account with us, it’s as simple as providing the creator with your unique wallet address and they can donate the proceeds to you directly, which you can hold as an endowment, or immediately convert to cash. It’s that easy!
NFT Donation FAQ
- Can I set a charity’s ETH donation address as a payout address for an NFT auction I’m doing?
- Yes! The key part is to make sure you are only sending ETH or one of the supported ERC-20 tokens. Do not send the NFT directly to the nonprofit!
- Can I reuse donation addresses generated in The Giving Block widget?
- Yes! Even though our widget uses a dynamic wallet address and each wallet is freshly created for each donor, you can use the wallet generated in the donation widget as often as you’d like. Whichever email you use the first time will receive all future tax receipts automatically too.
- Can I donate NFT proceeds to nonprofit organizations in the United States?
- Yes! There are hundreds of amazing charities, universities, and faith-based organizations in the US that you can support with cryptocurrency donations like Ethereum.
- Can I donate NFT proceeds to international charities?
- Yes! At The Giving Block, you can donate cryptocurrency to support nonprofits in the United Kingdom, Europe, Africa, Asia, the Middle East, South America, Canada, and New Zealand. Make sure to check your countries tax rules related to donating crypto before you give. Or, feel free to connect with us at The Giving Block for more information about tax rules where you live!
Want to learn more? Whether you are an NFT Platform, Creator, or a Nonprofit looking to fundraise effectively with cryptocurrency, contact the team at The Giving Block here to learn more about the intersection of NFTs and charitable donations and fundraising.