A growing list of international charities are turning to cryptocurrencies and NFTs to reach new donors, find alternative funding sources, and explore faster and more cost-effective ways to raise and disburse money. Save the Children, WaterAid, and CARE are just some of the nonprofits raising millions of dollars through crypto to respond to a range of crises, from conflict in Afghanistan and Ukraine, to drought in Somalia, and extreme weather events in the United States.

According to The Giving Block, a US-based crypto platform, half of Forbes’ Top 100 Charities now regularly fundraise using crypto and artworks in the form of NFTs (non-fungible tokens), and within the next decade, total crypto donations are tipped to exceed US$10 billion.

Transparency and immutability, lower transaction costs, and the ability to cross borders more easily have all played a part in the growing popularity of crypto donations. It is also a way for charities to connect with new donors.

The Giving Block says there are currently 300 million active users in the crypto market with an average age of 38 years – compared to regular charitable donors who are typically in their sixties.

Crypto donors also give more. According to Fidelity Charitable, a US-based Donor Advised Fund (DAF) provider, the average crypto donation last year was nearly 31 times larger than the average online gift ($204).

 “This is an incredible donor demographic to tap into,” explains Carly Evans, senior nonprofit partnerships manager at The Giving Block. “This a donor you could get in their thirties... and have potentially for their lifetime.”

This digitally-native cohort is also part of the so-called “next gen”, which is poised to receive an estimated $80 trillion in wealth transfer from their baby boomer parents over the next two decades.

“A lot of these Gen Z millennials are already playing in the cryptocurrency ecosystem, and you truly want to meet these donors where they are and be ready with the assets that they want to give,” Evans says.

In parts of the Gulf, the crypto scene is booming. Dubai alone is now reported to be home to more than 700 crypto companies and the governments of the UAE and Saudi Arabia are proactively working to create a supportive regulatory environment.

In early June 2023, Bybit, the world’s third largest crypto exchange, which recently moved their headquarters to Dubai, donated Dhs1m ($272,000) to the American University of Sharjah for a scholarship fund to support computer science and engineering students get into fintech and blockchain.

Yet regional interest in crypto philanthropy remains muted.

YallaGive is the first blockchain-enabled crowdfunding platform operating in the MENA region, and to-date it has raised closed to $19m from the hosting of 5,000 charitable appeals. It is currently exploring the possibility of accepting crypto donations, according to head of strategy, Nabil Boubker.

“The potential for making donations through cryptocurrencies is immense, as it provides unique opportunities in the realm of fundraising and financial transactions,” he tells Philanthropy Age.

Cryptocurrencies, he says, due to their “decentralised and secure” nature can “provide a means for individuals and organisations to engage in borderless, peer-to-peer transactions with reduced fees and increased transparency”.

In 2022, Al Jalila Foundation became the UAE’s first healthcare charity to accept crypto donations, which has so far included $16 million in tokens from the founders of Quint, a UAE-based Decentralised Finance (DeFi) firm, to establish the Quint Bone Marrow Transplant Centre at the Hamdan Bin Rashid Cancer Charity Hospital in Dubai.

In 2023, the foundation also announced its first auction of NFT artwork. “Fingerprint on Humanity”, created and donated by Emirati artist Maisoon Al Saleh, is a collection of non-fungible tokens in a total of 2,000 editions, depicting five medical conditions: cancer, cardiovascular disease, diabetes, mental health, and obesity.

Carla Duarte, Al Jalila Foundation’s director of corporate communications, said the NFT auction was an attempt to attract younger philanthropists and so-called Gen Z donors. “The NFT market has boomed over the last few years,” she explains. “Al Jalila Foundation decided to auction a collection of NFTs because it gives us access to raise awareness and funds through the Web3 space.”

Another reason that NFTs may be an attractive method of fundraising for nonprofits is that not only can they claim the initial sale value, but future re-sale royalties as well.

UNHCR, the UN’s refugee agency, has also experimented with NFTs to raise funds for Afghanistan. In November 2021, award-winning Syrian-Palestinian cartoonist Hani Abbas, who fled his home in Syria in 2012, donated his debut NFTs, a collection of seven images entitled 'Windows', which explored themes of memory and loss.

And last year, the agency’s Gulf office collaborated with a regional art-collective called First Arabs, who dedicated a portion of the sales from a collection of NFT avatars to the agency.

“Cryptocurrency allows for new and innovative ways to fundraise and transact,” explains a member of the group, which has chosen to remain anonymous. “So much has been made of these innovations purely for profit (but) we really see an opportunity to utilise the technology for more impactful areas as well.”

Although the campaign only raised US$20,000, Houssam Chahine, UNHCR’s head of private sector partnerships in MENA, feels the initiative was still worthwhile. 

“Around the world, there are now more than 110 million displaced people, so it is crucial that we find alternative methods for support and to engage new types of donors,” Chahine tells Philanthropy Age. “The [generation] we have been missing out on is Gen Z… We've always wondered how to talk to them, and this is a way to do that.”

However, according to Rami Shishan, UNHCR’s head of strategic partnerships in the UAE, early hype over NFTs and other forms of crypto philanthropy is already fading. He attributes this to a lack of understanding about how crypto works, as well as some hesitancy about the potential risks of getting involved with this as-yet largely untested approach.

“When we’ve tried to engage some of our influencers or celebrities, they have been hesitant and didn't want to associate their name with that,” he says. “I think they feel like they can't really link their name to something they don't have much knowledge about.”

Indeed, for all the enthusiasm about crypto philanthropy, and its great potential to tap into new donors, it is not risk-free. One issue is the volatility of cryptocurrencies, which are not regulated by central banks.

At the time of writing, one Bitcoin was worth $25,917, down more than 62 percent from its all-time high in November 2021. Ethereum, meanwhile, was trading at $1,752, down 64 percent from its highest valuation of $4,815 also recorded in November 2021.

These wild fluctuations can lead to thousands of dollars being wiped off fundraising totals in a matter of days and can be off-putting for cash-strapped NGOs working towards careful targets.

Moreover, while blockchain ledgers guarantee transparency and immutability, confidence in unregulated exchange platforms is in shortening supply.

In 2022, the digital asset industry was shocked to its core in when Sam Bankman-Fried, the founder of crypto exchange posterchild FTX and crypto trading company Alameda Research, was arrested for alleged fraud.  

The collapse of FTX was dubbed crypto’s “Lehman moment”, comparing it with the downfall of the investment bank in 2008 which played a part in triggering the global financial crisis. It sparked widespread withdrawals and wiped-out millions of coin valuations.

Then, in June 2023, US regulator, the Securities and Exchange Commission (SEC), has also announced it was investigating Chinese-owned crypto asset trading platform Binance, which has recently opened a headquarters in Dubai, for alleged irregularities in relation to its registration and investor communication. Binance has denied any wrongdoing.

Nonprofits, which already face a myriad of compliance challenges, feel understandably wary about engaging with these funds and potentially exposing themselves to reputational and financial risk.

“Cryptocurrencies, despite their advantages, are relatively new and can be subject to volatility and regulatory uncertainties,” explains Boubker from YallaGive, who says it is crucial that proper safeguards and regulatory frameworks are put in place to “harness the full potential”. Greater awareness through education about how to use cryptocurrencies to donate and fundraise will also be key, he adds.

There is also the environmental footprint to consider.  According to a New York Times report, during the 2021 winter storms, when more than 40 people froze to death in Texas due to power outages, close to three dozen crypto mines across America (10 of which were in Texas), were busy using electricity to generate $170k every 10 minutes by mining Bitcoin. One Texas mine was using up enough electricity to power the nearest 300,000 homes, the article said.

Some NGOs have rejected crypto donations altogether as contradictory to their mission due to the impact crypto mining has on the environment. In a 2023 statement, Greenpeace described Bitcoin, one of the most popular crypto currencies, as “a substantial and growing barrier to slashing carbon emissions and phasing out fossil fuels” and said digital mining’ was now responsible for more emissions than many small and mid-sized countries.

Despite these concerns, Pat Duffy, co-founder of The Giving Block, remains confident in the future of crypto and how it can enable philanthropy.  “Uncertainty like this is nothing new for crypto,” he writes in an article for CoinDesk, and he believes that the sector had not just weathered the storm following the FTX collapse, but in fact “thrived”.

“We all know the cycle: every few years, crypto is declared dead as prices drop… But there’s one area of the crypto ecosystem that continues to grow strongly, despite the ups and downs in asset prices: philanthropy. (And) through rain, sleet and SBF, nonprofits continue to march uphill to fundraise crypto,” he notes. – PA