Innovate fundraising for NGOs through tokenized business models

Exploring the potential of tokenized fundraising: A new approach to digital business models and fundraising strategies.

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A token, which may have many meanings, always represents something. It can also have a symbolic representation that serves to convey and carry a message which fits into the narrative of the herein referenced blockchain token. The question is: How can NGOs navigate through increasingly difficult fundraising opportunities by embracing new technologies such as blockchain-based tokenized business models? This may include creating tokens that represent value or ownership to support NGO fundraising made possible on a particular blockchain platform to engage donors and supporters in unique and transparent ways.

NGOs can use tokenized fundraising as a way to improve their fundraising efforts in an ever-changing and competitive donation environment. In addition, fundraising through blockchain-backed tokens can be a new way for NGOs to raise funds in a potentially revolutionary way while using blockchain technology, which in turn represents the value of a particular donation to a project or within a project, and also gives donors the right to digital ownership. In the case of an NGO, these tokens can represent funding phases of a project, such as labor or materials. All phases are then governed by a smart contract that governs the release of funds at each milestone, again based on the blockchain, providing better governance and efficiency within the fundraising process.

NGOs are looking for specific use cases in a highly technical environment, while navigating and mitigating the risks. Technology and consulting partners have not always spoken the same language on how to achieve these goals together.

This means that focus is key, especially when it comes to communication. The challenge may still be how to communicate the benefits, technical complexities, and long-term impact to NGOs both internally and externally.

However, NGOs and the public want to understand the implementation and use of tokens as they both become more digitally mature and interested. NGOs that prepare well in advance and know how to educate their donors and the public about what tokens are and how they can be used to create positive change will do well.

The benefit message should be clear and focused. Why should someone support a cause with a token? How does it add value to what we are trying to achieve? Good examples are needed to make progress.

Overall, there are still too few NGOs that have successfully integrated token-related projects into their fundraising models. Learning from successes and mistakes will allow all NGOs to develop a more effective approach.

Implications for practitioners
1. Learning from successful and unsuccessful token-related projects in the NGO space can help all NGOs develop a more effective approach to integrating tokens into their fundraising models.

2. NGOs need to identify specific use cases for tokens in their operations and understand the risks involved in a technical environment.

3. Focusing on clear communication and highlighting the benefits of tokenization to a cause can effectively engage supporters and create positive change.

4. Building effective partnerships between technology and consulting partners is critical to aligning goals and overcoming language barriers when implementing tokens.

5. As people and organizations become more digitally savvy and interested in understanding token implementation, NGOs must proactively educate and communicate with their donors and the public about the purpose and potential impact of token-based fundraising.

Literature research was conducted by fact-checking publications from 2019 to 2023. In addition, qualitative research was conducted over a 6-week period to gain insights into the value proposition of token based fundraising. This included online surveys of 48 potential donors and 1:1 interviews with 15 experts, whereof six were completing the survey and follow-up communication was done with the remaining six. A total of 86 NGO fundraiser contacts were collected and narrowed down to 15. Two NGOs declined, four completed the online survey, and nine were contacted for further qualitative insights. Interviews were conducted via video, phone, and email.