A common thread that ties the artist community together is the willingness to give back. The same is true for many creators of non-fungible token (NFT) projects, such as Beeple, whose work reportedly raised $6 million for the OpenEarth Foundation, and artist-led NFT communities like CowgirlDAO, which reportedly donated more than $70,000 for abortion access organizations this year.
Web3 is unlocking a new set of tools that enable artists to build compounding online support around shared values. “We raised $30,000 in minutes,” said CowgirlDAO founder Molly Dickson of her inaugural NFT drop Computer Cowgirls. That kind of immediacy, said Dickson, would not have been possible “if I was just shilling prints to my friends and family to raise money.”
Dickson launched a second NFT collection earlier this year in response to a leak from the U.S. Supreme Court indicating that Roe v. Wade, the landmark ruling that recognized the right to abortion, would likely be overturned. The collection earned some $44,000 for Fund Texas Choice, a nonprofit organization that covers travel accommodations for out-of-state abortions. Revenue from secondary sales continues to grow.
If you’re a creator interested in raising funds for social causes through an NFT project, here are some tips from those who’ve successfully raised money with their art.
According to those who have navigated NFT fundraising efforts, the first step to a successful launch is coming up with your concept. Current events, social justice issues and personal connections may serve as inspiration for your collection.
Women Rise, a profile picture (PFP) NFT collection featuring colorful artwork, highlights diversity among women globally. The project donated approximately $120,000 to organizations supporting girls' education, including the Malala Fund founded by Nobel laureate and education advocate Malala Yousafzai.
Industry experts add that it’s important to consider practical questions too, such as whether you want your collection to be PFP-focused like Women Rise, one-of-one artwork or an entirely unique execution. For example, each NFT in the Computer Cowgirls collection was assembled by Dickson individually rather than by using a computer algorithm.
Launching the project
After the artwork is created, generating buzz in your community is key to raising awareness. While marketing tactics are important, both Dickson and Abidi were able to tap their existing followers’ goodwill without hiring a public relations firm for the initial drop. Instead, they released their projects on the popular NFT platform OpenSea and spread the word via Twitter, Instagram and other social media platforms.
“We try to put the project out there and represent ourselves however we can,” said Abidi. “We're very focused on making sure that we have a social media presence.”
It is often a good idea to inspire your followers with a mission-driven narrative before inviting collaboration around a “road map” – a popular term within the Web3 space for building a long-term strategic plan.
“We’re reaching out constantly, connecting with other businesses and looking for bonds to build in this community and space,” Abidi said.
New branches of activism can be created from newly-formed relationships. For instance, Dickson’s community of buyers evolved into CowgirlDAO, which now works together to vote on profit allocation and establish necessary legal payment rails for donating crypto. This organic development helped propel CowgirlDAO forward as a fundraising community, eventually with more formal structures.
Some charitable NFT projects offer special perks for holders referred to as utility, which can come in the form of private Discord channels, live events and virtual meetups for community members.
NFT holders may find satisfaction in knowing they are making a positive impact. Community meetups, whether virtual or in person, can also be a meaningful way to connect supporters around a shared mission.
Owning a coveted piece of art can also be a motivating factor for seasoned collectors, particularly if a project has embedded rarity traits into the collection.
Experts we spoke with encourage socially minded collectors to find a project they trust that is linked to a cause about which they are passionate. Dickson explains that both donors and project founders can learn and adapt as the creation, minting and fundraising process unfolds, leading to a collaborative exercise in community building.
“Web3 gave me an outlet to raise money that I didn't have,” said Dickson. “If we have a whole new way of fundraising that activates people who weren't activated before, that's kind of amazing.”
Launching an NFT project comes with many legal considerations, especially when you add elements of fundraising.
First, there needs to be careful navigation around payment structures. Dickson and CowgirlDAO set up the appropriate structures through Endaoment, a tax-exempt nonprofit that facilitates crypto donations to charitable organizations. The Ethereum-based platform enables donors to connect a crypto wallet and donate almost any crypto or digital asset, which is then exchanged into USDC (a stablecoin pegged to the U.S. dollar) via the decentralized exchange Uniswap and deposited into a selected fund's smart contract.
That said, artists who want to form a decentralized autonomous organization (DAO) as Dickson did might also consider seeking legal nonprofit status as a complement to the DAO structure. Doing so allows a community to accept traditional donation methods in addition to crypto ones, a benefit for social causes that are looking to expand their Web3 payment options.
“We have both on-chain rails and off-chain rails,” said Christian Narvaez, co-founder of Web3 Familia, a Latinx education community that has both a nonprofit operations branch as well as an LLC branch that earns revenue. At the same time, the founders are also building a DAO, an approach that he calls something of a “trifecta.”
“We got fiscal sponsorship from the Blockchain Acceleration Foundation,” explained Narvaez. Because the organization is a 501(c)(3) focusing on Web3 education, Web3 Familia’s sponsorship allows it to accept traditional donations through credit cards and checks as well as crypto funds generated through its core activities. According to Narvaez, partnering with or forming a legal nonprofit entity allows Web3 projects to “transact with legacy institutions that may not understand what Web3 is yet,” but still want to support your work.
Presently, donating proceeds from NFT sales doesn’t trigger any regulatory red flags. However, if your project uses NFT ownership as a membership of some kind, it’s important to avoid promising positive appreciation of the asset’s value. Promises of profit derived from the effort of others mimic the structure of a security, and it may attract buyers who view your NFT as an investment, not a charitable donation.
Ultimately, buyers will decide to donate to your project for different reasons. Similar to a physical art auction, some collectors will be attracted to the artwork itself while others will see the art as a nice bonus alongside the opportunity to donate.
“Who knows why people are incentivized to buy,” said Dickson. “All that mattered to me is that we raised $30,000 and donated it from that first collection.”
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