Introduction

NFTs represent a fascinating advance in capturing value. As a result of this, more and more companies, small businesses, and charities are inclining towards leveraging NFTs to generate funding. Being adaptable, flexible, transparent, and structured, NFTs enable the authenticated transfer of ownership of unique artifacts on the blockchain. This makes NFTs a viable alternative to corporate venture capital, equity sales, and debt financing as a way of raising capital. NFTs can also be used to raise funding for creating a social impact. For instance, UNICEF launched 1000 NFTs to commemorate its 75th anniversary in the United Nations to raise funds and awareness for education and children. Ukraine just announced via the Twitter account of their prime minister that the nation intends to issue NFTs to collect money for Ukrainian defense against the Russian invasion. Through the recent donation of more than 118,000 crypto assets, the nation just raised close to $60 million.

Why should you use NFTs for fundraising?

NFTs are an incredible way to raise funds through auctions. It allows organizations to raise funds transparently, alongside capturing a new audience and brand awareness. We know NFTs create immense value. There are two ways through which NFT value is determined. They are novelty and utility. NFT as a novelty item can be leveraged in the same way as organizational swag. NFTs can be used as a utility token as well. NFTs are very popular among GenZ and millennials. It is the perfect community to gain a support base and potential donors. All of this works well on a blockchain because it can be done online and in a decentralized fashion. This reduces the overheads that are involved in setting up an auction with the added advantage of better visibility and engagement due to social media. And since the transactions would take place on a blockchain, a decentralized ledger, it ensures transparency.

How do NFTs generate funds?

Most NFT fundraising revolves around artwork, sports cards, or limited-release tokens. There are two ways through which charitable causes and nonprofitable organizations can raise funds with NFTs. They are:

• Standard selling of NFTs for a profit
• Creating NFTs projects to raise money for a specified cause

In the first way, the funds generated by selling NFTs can be used for the personal earnings of the creator, or all or a portion of the funds from the NFT can be donated to a charitable cause. Jack Dorsey, founder and former CEO of Twitter, turned his first tweet into an NFT and sold it for $2.9 million, all of which he donated to GiveDirectly.

In the second way, NFTs are used to generate funds through projects created to raise money for a specific cause. There are NFT projects whose communities or founders include charitable giving as a cornerstone of their mission. Dainty Dolphins is one such NFT project whose aim is to raise awareness of endangered species in the ocean. 25% of their profits are directed towards charities supporting and protecting ocean wildlife.

For brands and small businesses, the approach towards generating and selling NFTs is more product and audience-oriented. It can be done in various ways. A few include creating NFTs tied to physical products, offering brand loyalty with limited-edition merchandise, improving supply chain management and so much more.

How to raise funds using NFTs?

NFTs for charities and non-profits

Raising funds through NFTs can

• Diversify the revenue streams for your non-profit
• Provide engagement with a young donor base of crypto enthusiasts
• Aid your cause using cutting-edge technology
• Provide collaboration with major brands and creators

With so many benefits to reap, let’s see how to achieve funding through NFTs.

Get equipped for cryptocurrency donations

The first step is to set up a secure way to accept crypto donations. You could use crypto fundraising platforms that can automatically convert crypto donations to cash, accept multiple cryptocurrencies, and generate donor receipts. Indiegogo, Mightycause, and GoFundMe are some of the available platforms.

Decide your campaign/fundraising strategy

You could:

• Find a big brand that is willing to utilize NFTs as a part of Corporate Social Responsibility.
• Link your fundraising effort to a celebrity and hold celebrity-driven auctions.
• Work with an NFT project that wants to donate a part of its profits to your cause.
• Run a charity auction with all profits directed towards supporting your mission.

Choose an NFT platform/marketplace and a launch date

Some of the best NFT marketplaces include OpenSea, Rarible, WazirX NFT, SuperRare, Foundation, and Nifty Gateway. Pick the right NFT marketplace, and launch date according to your need.

Choose a launchpad platform

Choosing a relevant launchpad platform can help you gain massive exposure at an early stage of your NFT project. Bandit Network is one such platform that features NFT projects from all major blockchains that are ready to mint through Bandit.

List your project on Bandit using this form.

Promote your cause and inform the donor base

Engage with your donor base through social media and promote your cause. You can also collaborate with celebrities and popular creators to promote the auction. Build a community around your cause.

Launch, engage, learn, and earn!

NFTs for small businesses

The three major goals for small business and startup founders are: attracting investors, increasing market share, and maximizing exit value. NFTs can help achieve one or more of these goals.

But, how do you achieve them? Let’s find out.

Link physical products with NFTs

If you run a pizza shop, you can offer a free pizza for a group of customers who buy an NFT during the inauguration of a shop. This is a simple example of linking your offerings with NFTs to drive your business.

Use it as access to your digital services

You can create NFTs that your customers can use to access your digital services. Users that own your NFTs can access exclusive content and keep content pirates at bay.

Build trust, authenticity, and customer loyalty

To sustain your business, trust, authenticity, and customer loyalty are the trifecta you need to focus upon. Using NFTs, which are blockchain-based, takes care of the first two of the three aspects. You could use NFTs to create a brand identity by providing them as rewards.

Using NFTs for marketing

You could create NFTs that are visually attractive, creative, and eye-catching and trade them with the customers. They can view your content and sell it to someone. This becomes an excellent vehicle for marketing.

Build a strong community

Building a strong base of devoted clients is another approach to employing NFTs for the expansion of your firm. You may make the experience of customers who come to your business more engaging by rewarding them for arriving at each stop. Additionally, small firms can profit whenever someone purchases or sells their NFTs.

Potential risks to consider before using NFTs for funding

Are you a small business or a charity planning to raise funds using NFTs? Then it is also essential you understand the risks behind using NFTs for funding your business or charity.

• Security
• Economic Value
• Demand
• Environmental Impact

Security

Blockchain is a relatively new technology. Although blockchain platforms/marketplaces hold strong security measures, hacks can still happen due to weak passwords, no two-factor authorization, and email scams. NFT smart contracts could be exploited by malicious attackers. So it is essential to consider the vulnerabilities and security issues that might arise before you proceed with NFTs as a means for capital.

Economic Value

NFTs are experiencing a boom. A part of the population considers this a bubble phase and it could potentially burst. NFTs will be a financial instrument in the future, but we don't know if they are going to decline in value or remain at an all-time high. The unpredictability in NFT pricing is a noteworthy factor to consider too. Understanding this would determine the future of your capital flow.

Demand

NFT market size is expected to reach USD 3,57,316.3 million by 2030. There is an increased use of NFTs in supply chain and logistics. It is also predicted that NFTs could aid in industrial growth. If things go well for NFTs, the demand would get high. It is essential to consider the market for NFTs among the users. Once it is done, creating demand and finding buyers becomes easy.

Environmental Impact

Blockchain transactions are energy-consuming. However, advancements are being to reduce the emissions and consumption which result due to transactions on the blockchain.

Popular NFT fundraising projects

Open Earth

Open Earth is an NFT fundraiser that focuses on climate change and global actions for the improvement of the climate. They work with a philanthropy group, Social Alpha Foundation (SAF) which sponsors projects with cryptocurrency. With the help of SAF, Open Earth raised $6 million through the Nifty Gateway platform.

The Make-A-Wish Foundation

The Make-A-Wish Foundation is an organization that raises funds to aid children with critical illnesses. They partnered with the Macy’s Thanksgiving Day Parade to create 10 NFTs that showcase iconic balloons from the parades. The auction's whole proceeds were then given to Make-A-Wish.

Blazed Cats

Blazed Cats is an NFT project which offers a series of Cat NFTs with a multitude of customizations to make each NFT unique. 25% of mint profits go to Mental Health America. Each time a Blazed Cat is bought or sold, 100% of the secondary royalties, or 10% of the sales, go to Mental Health America. To this date, they have generated over $300,000.

ChangeDAO

ChangeDAO is a decentralized application built on Ethereum blockchain aimed at leveraging arts and NFTs as a weapon for change. They focus on people, the planet, and profit. They call this the “Triple P NFT” model. Each NFT supports a social cause such as minimizing energy consumption and carbon emissions.

Women and Weapons

Women and Weapons is a collection of 10,000 varied women NFTs, each of which is verifiably unique because of hundreds of different characteristics. 5% of all profits raised through the project support The Malala Fund, an organization that supports access to education for women around the world.

Conclusion
Utilizing NFTs as a financial instrument to fund your business, charity, or nonprofitable organization can act as an alternative source of income that is transparent and hassle-free. NFTs present a way to raise capital in which everyone can have a lucrative outcome.