Empathy is born when we can see, hear, and feel the needs of others. Nothing has pushed the ability to empathize more than social media.
The rise of smart phones and social media platforms have made everyone a reporter, bringing us face-to-face with tragedy and need around the world. We no longer empathize with just those who live near us. Our digital identities have enabled a widening of our purview and perspective, which has in-turn, shaped our in-person identities.
Unfortunately, easier access has not meant easier giving. Although we want to help those around the world, support has been filtered through a series of large organizations, sometimes with little clarity on who is actually benefiting from our resources.
The difficulty of donating to those in need around the world has been onerous… until now.
Web3 (what is web3?) has brought about a new frontier for charitable giving.
The New Charitable Powers of Web3
Web3 enables coordination, cash transfer, and congruence. These three C’s are the foundations to the future of charitable giving, unlocking new strategies such as NFT giving, gamified giving, staked yield giving, and more.
We know that digital tools become socially interesting when they are technologically boring (Clay Shirky). With the further adoption of digital wallets and successful examples of money raised, charitable giving is already dramatically changing.
Coordination
🟣 Quick Coordination Over Social Media
Gandhi challenged us to “be the change you want to see in the world”. Fortunately, we no longer have to wait for an organization or government to take action toward a cause because web3 allows optimized coordination between individuals.
Web2 of course enabled this through social media. But now, you can transact just as quickly and the community ethos of web3 is amplifying messages at a higher multiplier than ever before.
This dynamic is already at play in Ukraine. Individuals have given over $100 million to Ukraine with instant cryptocurrency transactions. That is 2/3rds of what USAID has sent in humanitarian aid.
It is not hard to see the power of decentralized giving when just over 1% of the world uses crypto and yet is already giving at this level.
Crypto is powering the coordination of other resources as well. The over five million refugees from Ukraine have inspired amazing acts of generosity in the real world. Clothing, toys, strollers, and food are being donated to those fleeing to neighboring countries. Individuals are virtually enlisting on the ground support, and receiving donations of cryptocurrency from well-wishers to continue this support. This is the connection between armchair activism and true impact.
These decentralized ways of coordinating are further strengthened by Decentralized Autonomous Organizations (DAOs).
Numerous DAOs have emerged to facilitate humanitarian support. UkraineDAO accumulated 18,000 followers on Twitter within a month, facilitating millions in humanitarian aid.
🟣 Incentivized Coordination with NFTs
When a donor makes a large philanthropic gift, they receive recognition. It might be their name on a building, a press release, a social media post, or a personalized thank you note from the benefactors.
Digital giving elevates social recognition and credibility up a notch, with NFTs.
NFTs have enabled the coordination of people toward charitable giving through additional incentives. From Afghanistan to Ukraine, NFTs have helped quickly move money to those in need, but with the added benefit of providing supplemental value.
NFTs allow the donor to signal to the world that they care about a social cause. It provides the social acknowledgement that encourages more donation.
And if NFTs provide additional value in the form of communities, artwork, and airdrops, the desire to donate escalates to a point that demand for that NFT surpasses supply.
🟣 Entertainment Driven Coordination through Gamification
Gamification of social experiences, learning, and business strategies (like marketing) exploded in web2 because the internet could hold and track data, connect people globally, and access content with one click.
What if we add instant gratification via blockchain to that?
Quick access to global currencies, digital assets worth utility beyond their file type, complete ownership of IP generated, and experiences in a metaverse space… Web3 has enabled a new generation of gamification where industries are doubling down and where people are even relying on gaming as an income source.
So why not apply this concept to charitable giving?
Remember the ALS ice bucket challenge? It raised $100m in 30 days. From this, we can learn that people are motivated by tangible fun, novelty, & group engagement.
Gamifying charity with chance, competition, level tracking, extrinsic rewards, points, countdowns, rewards, are all great ways to increase the engagement for donors. And with web3, it’s easier than ever.
NFTs and DAOs are already making a dent but we can also leverage:
🕹 video game competitions and in-game asset purchases
🏅 blockchain badging and POAP awards
🎪 metaverse events
Cash Transfer
🟢 Transparent Cash Transfer
Web3 increases the liquidity of resources. Now, an individual can give any amount to anyone around the world, small or large, with little to no fees.
As taught in this crypto class, this is a big differentiator from other forms of cash transfer.
Additionally, all transactions are completely transparent, so we immediately know the money was received and anyone can verify philanthropic support. Transparency is created on both sides here - for the giver and the receiver. Donors “follow the money” on blockchain to see how the funds are used after the donation.
🟢 Incentivized Cash Transfer through Staked Yields
If you’re a crypto investor, you’re probably using your crypto funds to earn passive income through staking or yield farming. Staking allows crypto holders to provide liquidity to a blockchain currency by lending crypto. Yield farming does the same but earns an intermediary token.
Because of the high yields in crypto (a result of high demand for crypto and market inefficiencies) and the quick speed of transactions, lenders are earning up to 2000% (yes, two-thousand!) on risky stakes and up to 12% on stable coins.
This is really, just free money.
What if an investor could choose a charity to support and redirect a portion of their yield to it? Anyone could contribute because they’d be spending $0 and zero time to make an impact.
EthicHub has brought this idea to life by creating the first DeFi protocol connecting unbanked smallholder farmers with yield farmers and lenders globally.
🟢 Community Driven Cash Transfer through Quadratic Funding
Philanthropy has long offered the matching of funds to incentivize giving. Quadratic Funding (QF) is a new model unlocked by web3 to incentivize giving and participation. It is a democratic and scalable way to match funds for public goods.
With QF, the match is “more aligned to the sentiment of the community as opposed to the sheer dollar value amount raised by any grantee. The number of contributors matters more than the amount funded” (Gitcoin).
QF has five major advantages over traditional grant programs according to Gitcoin:
- It is more democratic, allowing everyday community members to designate where the funding goes by providing the funding themselves;
- It scales, because a QF instance can review hundreds of grants per quarter as opposed to just a small handful with a centralized grants team;
- It allows communities to co-fund projects along with those holding the matching funds;
- It allows influencers to market and talk about the projects they care about, without being able to sway a single point of authority to fund - the community still decides if the grant is worth funding;
- And, it allows projects to separate signal from noise, and see what the surrounding community really cares about.
Using the web3 ethos, quadratic funding has moved from a concept to a protocol others can use.
Gitcoin created its quadratic funding grants protocol in the fall of 2021, leveraging the power of decentralized giving. Now any organization can build upon their work to leverage quadratic funding for their projects.
QF offers new ways to incentivize giving and shows the power of philanthropists building on top of one another’s work instead of competing with one another for contributions.
Congruence
🟡 Congruence of Crypto from any Location
With crypto, it doesn’t matter where the donor is located. There is a wide variety of cryptocurrencies that can be used from anywhere, across any project, and for any cause. Vitalik Buterin recently combined a variety of crypto (even SHIB!) to support a worthy cause.
Since crypto isn’t tied to any nation, the currency is impacted by global market value, and not the value of the local currency or events within a particular country. We don’t often think about what happens to the value of our donation when it is given in US dollars to a developing country. If the value of the dollar decreases because of political unrest, the value of that donation decreases as well. Volatility is true of any currency, and especially of cryptocurrencies in the beginning of their life-cycle, but they are agnostic to what happens in any particular nation. And because it is not held by a centralized bank, when politic strife closes down banks (like in Russia & Ukraine right now), people can still access their funds.
The Future of Giving is You
Organizations have long acted as the conduit to source and distribute funds. Web3 eliminates the need for a trusted agent in the middle. Now, individuals can connect with other individuals anywhere in the world.
What’s more, new developments in coordination, cash transfer, and congruence mean that the positive benefits of giving will be incentivized, shared, and improved. The web3 world of composability is a natural evolution for those who want continue to make the world a better place.
Charitable giving has already changed and this pace of change is only increasing. Organizations that can explore and adopt these new methods of giving will make an outsized impact in the world - an impact that donors can transparently see and support.
It’s time to build a better world.
This article is a part of a collaborative series exploring how web3 could impact education - what we call ed3. Authors Scott Meyer and Vriti Saraf look to prepare the education system for what is possible in the future of learning. Topics include: NFTs, tokens, DAOs, DeSo, XR, Metaverse, DeFi, & more.
Check out our previous articles:
- Web3 to Ed3: Reimagining Education in a Decentralized World
- How DeFi can Reform School Funding Model
- DAO.edu - The Future of Decentralized Learning
Where to learn more
Subscribe to the Metaverse for education newsletter, where web3 is contextualized for education. And check out this list of thought-leaders on Twitter.
Who wrote this?
Vriti Saraf (@vritisaraf), the founder of k20 Educators, is building the Eduverse on web3, a virtual hub for educators to connect, learn and earn, collaborate, trade assets, find jobs, and explore resources. She is also the co-founder of Ed3 DAO, the first DAO for educators, by educators. Vriti's goal is to break down silos among educators through web3. Vriti has served as a teacher, dean, & director in public, private, & charter schools both locally & internationally across k12 & higher education.
Scott Meyer (@MrScottMeyer) is an entrepreneur and former professor working to scale and democratize education. He recently launched Ed3 - an edtech studio working to scale education. Subscribe to learn more (http://digest.ed3.gg).