The demographics of giving are changing, with younger donors who increasingly identify as philanthropists donating more, and more often, than past generations. This new wave of donors coincides with major adopters of blockchain-based web3 technologies, presenting an opportunity to engage a particularly generous and dedicated donor base.
Considered one of the greatest chess grandmasters of all time, Gary Kasparov has long made the blockchain a significant part of his operations as chair of the Human Rights Foundation, accepting Bitcoin donations as far back as 2014 — well before cryptocurrency had become a household name.
This man, tasked with always thinking a dozen steps ahead, has a history of recognising the next trends in technology, and a willingness to grapple with it, as he famously did when becoming the first world champion to lose a chess match to a computer in 1997. And when it comes to the philanthropy world, it has been clear to Kasparov for some time that web3 will continue to be a powerful tool for empowering individuals and organisations alike.
“Cryptocurrencies become an inseparable part of our progress, because the whole world is moving digital,” he told CoinDesk last year. “And if the economy becomes more digital, so does the money.”
The Human Rights Foundation used to be an outlier in the charity sector, but this is no longer: major nonprofits, including UNICEF, American Cancer Society, and WaterAid, are not just accepting cryptocurrencies, but testing other ways to use the blockchain to enhance their operations — with Save the Children beginning to do so at around the same time as HRF.
The Giving Block helps more than 2,000 non-profits fundraise cryptocurrency donations and other noncash digital assets. It reports that more than 200 “blue chip” charities, those operating with annual budgets surpassing $100 million, are already on the crypto giving platform.
Yes, they now have access to a truly global donor pool in this interconnected world, but they must also compete for attention with a world of nonprofits. That dynamic creates enormous potential for charities that can stand out online, but also a significant downside for those that do not (consider that 86% of donors give to three charities or fewer each year).
Reaching this new giver demographic may be challenging, but “web3 is the biggest skeleton key for getting non-profits access to a younger donor demographic,” says Pat Duffy, co-founder of The Giving Block.
Doing so is particularly valuable for charities, considering that cryptocurrency donors are, in general, a particularly generous group — in 2020, nearly half (45%) of cryptocurrency owners (which comprise a full fifth of the US population and a tenth of Europe’s) donated more than $1,000 to charity, well above the portion of non-crypto investors doing the same (33%).
Recognising the immense potential for web3 tech to enhance community building, transparency, and efficiency in the charitable sector, these blue chip charities have myriad reasons for welcoming digital currencies. Most of all, they understand that these technologies are driving the future of giving — and that by implementing them early, they can unlock a new generation of donors.
“Charities must make sure to operate in community spaces, and those communities are moving online,” says Linda McBain, Chief Digital Officer at Save the Children UK. “The challenge is asking ‘how do we show up there,’ to really engage with that digital audience.”
“Web3 is the biggest skeleton key for getting non-profits access to a younger donor demographic.”
— Pat Duffy, Co-Founder, The Giving Block
It all starts with understanding who that digital audience is. Over the past decade, philanthropic trends have shifted in several meaningful ways, particularly as millennials have become the single largest demographic of givers.
Millennials are more likely to identify as philanthropists. Three-quarters of American millennials identify as philanthropists — compared to just half of the American population writ large. And this phenomenon is not relegated to the United States. In the United Kingdom, 81% of those under the age of 40 donated to charities in 2021, which compares to a mere 62% of those aged 40 and above.
While younger generations donate more, they do so online. Nearly three quarters of millennials made a charitable donation in 2020, a higher portion than any other generation, and nearly half of those who donated did so online.
“The tangible thing we have seen from web3 is that it is raising millions of dollars.”
— Linda McBain, Chief Digital Officer, Save the Children UK
Finally, millennials are likely to expect transparency and accountability. Fidelity Charitable found that 66% of millennials said that they actively tracked the results of the non-profits they supported, compared to just 40% of Gen Xers and 32% of baby boomers. “Younger donors view a donation as an investment in a solution to a problem they see,” Fidelity Charitable concluded in its 2021 Future of Philanthropy report.
In essence, the new generation of givers is not satisfied with simply sitting out on the sidelines while nonprofits take care of the rest: they want to play an active role. Charities have a tremendous opportunity to engage with the community, but they also face significant challenges to harness that energy.
On top of this, charities often find that this demographic differs from their typical donor pool, meaning that nonprofits that accept cryptocurrencies don’t just shift to giving online, but actually create a new well to draw from.
“The audience is totally different from our core donor base: it is skewed male, and it’s younger,” Linda says of the communities that Save the Children has been able to access since they began accepting crypto donations. “We are also seeing donations coming from countries where we don’t have such a significant brand presence, but where donors may have found us through our engagement with web3 communities.” But how can charities better engage with web3 communities?
Education is one answer. According to Fidelity Charitable, “more than one-in-three cryptocurrency investors (38%) are not aware that selling digital assets is a taxable event. Similarly, there is significant confusion about donating these assets to charity.” They note that a “tax-savvy strategy” to minimise the investor’s tax burden can include donating crypto assets directly to charity, though most people are not aware that this is an option.
Non-profits that want to access youngers givers will not just need to be crypto savvy, they’ll need to be able to explain to millennials how their crypto assets can be used to donate, and the benefits of doing so. For those that can make the shift, the rewards are large.
“The tangible thing we have seen from web3 is that it is raising millions of dollars,” Linda says. “That goes directly to our programming and changes children’s lives for the better.” Save the Children raised more than $5 million in crypto donations in 2021, whilst their 2022 #WeAreUkraine NFT fundraiser helped bolster the charity’s efforts to help families most impacted by Russia’s invasion of Ukraine.
Society is about to witness an unprecedented wealth transfer of $84 trillion over the next few decades. Of that transfer from older generations to younger ones, $12 trillion is expected to be donated to charities, according to The National Association of Planning Advisors. As such, it is pivotal for charities to be proactive in reaching the new generation of givers — the blockchain is one of their best tools for doing so.
To learn more about how we think charities can prepare for the future of the internet, read our Culture3 report, Unlocking Opportunity for Charities in Web3.