Despite the constant negative press surrounding cryptocurrencies, Fidelity Charitable has decided to invest in NFTs, or blockchain-registered digital images.
The largest charitable organization in the United States is holding a raffle until Tuesday in which fifty winners will each receive $1,000 to contribute to a donor-advised fund at Fidelity in exchange for claiming a nonfungible token (NFT).
According to Amy Pirozzolo, Fidelity Charitable’s head of donor engagement, “the reason we’re doing this is we really believe there’s a whole new generation of givers and philanthropists out there.” To further inspire their generosity, “we want to be where they are, on the channels they use, in the formats they use.”
According to a poll by the Pew Research Center last year, roughly 16% of Americans report having invested in virtual currencies. Men aged 18 to 29 were the most likely to have invested (43% of this age group).
The blockchain is the underlying technology for cryptocurrency trading; it can also track who owns various digital assets, such as photos, videos, and even Tweets. According to Fidelity, 50,000 individual wallets have signed up to make an NFT and compete for the chance to win the money.
According to Fidelity, the value of cryptocurrency contributions to donor-advised funds increased exponentially in the past year, from the equivalent of $28 million in 2020 to $331 million in 2021.
Fidelity Charitable’s president, Jacob Pruitt, had this to say about the NFT project: “It will be a novel approach to reaching out to young investors, in my opinion. I see this as another example of how Fidelity is pushing the envelope and entering uncharted territory.”
Contributors to donor-advised funds are eligible for a tax deduction for their charitable contributions without immediately distributing the money to a charity of their choice. DAF administrators, such as Fidelity Charitable, also process more complicated donations, such as liquidating assets and issuing tax receipts to donors.
Pirozzolo remarked, “Many of the nonprofits can’t take on these assets or they have to hire outside counsel or people to staff to do.”
One possible explanation for the trend is the increased value of cryptocurrencies donated until recently. The value of Bitcoin, the first cryptocurrency, reached an all-time high of around $68,000 in November of 2021, sparking a massive boom in the cryptocurrency market that year.
In the last quarter of the year, many cryptocurrency donors make large gifts, as noted by James Lawrence, co-founder, and CEO of Engiven, which facilitates cryptocurrency to nonprofits, including Christian ministries. The impact of the cryptocurrency market’s volatility on giving this year cannot be predicted. He doesn’t see any major differences between cryptocurrency donors and other types of donors.
A different asset is being donated, and according to Lawrence, it will be the most highly valued one possible.
Lawrence estimated that only 4,000 or 5,000 out of the more than 1.5 million U.S. nonprofits listed with the Internal Revenue Service could accept cryptocurrency donations directly.
There is a vastly untapped market there, he said. He has also noticed that the types of people who donate large sums in cryptocurrency (they facilitated one donation of $10 million in cryptocurrency assets) are the same as those who donate large sums in general and are not necessarily the younger demographics that are more likely to invest in cryptocurrency. The majority of the very large gifts we’ve handled came from “an older demographic that has a tradition of giving large gifts in multiple asset classes,” he said.
Pirozzolo claimed that the NFTs used in the Fidelity Charitable promotion do not belong in the cryptocurrency ecosystem. She explained that the project focused on the blockchain and creating a lighthearted platform for digital art celebrating charitable giving.
The organization claims to have compensated the artists who created the NFTs and covered the cost of creating the NFTs, which includes a “gas” fee that covers the costs of creation and registration. Participants in the NFT distribution must create a cryptocurrency wallet connected to the Polygon blockchain to claim their NFTs. To facilitate the Fidelity Charitable NFTs, OpenSea will serve as the platform’s host.
When participants sign up, they’ll be shown the NFT in their wallets, but the artwork and $1,000 prize winners won’t be announced until Tuesday, November 29.
Marine Corps Veteran-turned-national-tv-personality Eric Mitchell is a world leading expert in sports media, regularly appearing on the world’s largest outlets from BBC, MSNBC, Fox News, Bloomberg, CNN and more. His signature blend of snark and industry expertise landed him columns at none other than RollingStone, GritDaily, PopWrapped, Disrupt — and most recently — Editor in Chief at NFT Today Magazine. When he’s not making media appearances or running his empire at LifeFlip Media, he can be found entertaining his thousands of loyal followers on social media through his authentic filter-free content.
