The Federal Election Commission (FEC) has issued an advisory opinion that could clear the way for non-fungible tokens (NFT) to enter the mainstream of political fundraising. Nonprofit fundraisers might want to take heed as well.
The FEC, in a Dec. 15 memorandum, gave the green light for digital technology firm DataVault to begin selling customized NFTs to political campaigns for use as nonmonetary “thank you” gifts to contributors and campaign workers.
Doing so won’t run afoul of campaign finance laws or violate the prohibition on in-kind political contributions so long as a firm selling NFTs does so “at the usual and normal charge, and under the same terms and conditions as its non-political clients,” the FEC wrote.
The development is significant because it effectively opens the door for DataVault and others to begin marketing the use of NFTs to political campaigns, which could employ them as a staple of their campaign and fundraising operations similarly to how campaign hats, buttons, and other such souvenirs have long served this function.
If the idea catches on in the political realm, could the world of nonprofit fundraising might not be far behind.
It’s probably too soon to tell, but cryptocurrency – which admittedly has its detractors – is now accepted by many nonprofits for donation purposes. The difference is that cryptocurrency is fungible, meaning one unit of Bitcoin can be have the same value as any other unit of Bitcoin and can be traded or substituted accordingly. This same fungibility is what allows multiple cryptocurrencies – say, Bitcoin and Ethereum – to be swapped and traded for one another on open exchanges the way dollars, euros and other currencies are exchanged.
NFTs, by contrast, are non-fungible: Each constitutes an original digital image with a secure digital code that is impossible to duplicate. As with a photo negative, multiple prints can be copied from the original – but just like Leonardo da Vinci’s Mona Lisa has been copied many times over from the original painting he created 500 years ago, only one original remains and only one original will ever exist.
The valuation of NFTs — a form of crypto art, if you will — varies wildly. A single NFT can have a market value ranging from zero to potentially tens of thousands of dollars or more that may be fetched from the auction of a single NFT created by a celebrity actor, artist or athlete. The proceeds were then donated to charity in a number of cases.
Most nonprofits lack access to that type of star power, but even a small organization can still consider minting and commissioning its own NFTs as token gifts for donors to incentivize giving.
In an article he wrote last year for GrantStation – an online funding resource for nonprofits – journalist and data specialist Sid Davis discussed how NFTs can support charitable fundraising efforts.
“Since anything digital can be minted into a certified-unique NFT – an artwork, a tweet, a screenshot, a song, even an asset within a video game – the possibilities are constrained only by a creator’s imagination and the buying market,” Davis wrote.
One nonprofit – Alex’s Lemonade Stand Foundation, a pediatric cancer charity – customized the concept by commissioning a suite of NFTs from the artwork of childhood cancer patients and then auctioning them off during last year’s Childhood Cancer Awareness Month in September.
Even if their monetary value would otherwise be zero, NFTs of this type can play a vital role in nonprofit fundraising “and offer the added attraction of being unusual,” Davis wrote.
“Not all nonprofits have the capability to work with NFTs or even accept them as gifts,” he added. “But it may be prudent to explore the technology and see if there’s a fit. Change happens quickly in the digital world, and it’s usually better to be out front than trying to catch up.”
The National Council of Nonprofits has since republished Davis’ article, which can be viewed at https://www.councilofnonprofits.org/thought-leadership/fundraisers-turn-their-sights-non-fungible-tokens.
The FEC memorandum referenced above can be viewed at https://www.fec.gov/files/legal/aos/2022-22/2022-22.pdf.