Charities wade into NFT craze with mixed financial results

On GivingTuesday, officials at New Jersey-based health care charity Sostento learned they would receive a donation of roughly $58,000 by the end of the week.

The donation was unlike any the nonprofit had received before. It was derived from the proceeds of the sale of a nonfungible token, or NFT, for a digital artwork called “The NFT Guild Philanthropist — Healthcare Heroes.”

You’ve likely heard of NFTs. They’re built on the same technology that underlies digital currencies like Bitcoin and Ethereum. These digital assets shot into the limelight in March 2021 after Mike Winkelman, known by his artist moniker Beeple, auctioned off an NFT for $69 million at Christie’s. Think of an NFT as a deed or token associated with a work of digital art, like an image, an audio recording, or a video. That token can be used to keep track of the file’s provenance and sale history, allowing someone to prove ownership of the asset.

While the technology was created to give artists more control over their work, NFTs have spawned a frenzy as collectors look to cash in. As that speculation intensifies, a growing number of charities have begun to explore fundraising efforts tied to NFTs. Although some NFT charity auctions have yielded eye-popping sums, others have had limited success. Complicating matters, NFTs use new technologies that are generating lots of questions for accountants and regulators.

The “Guild Philanthropist” NFT sold for 6.3 Ethereum, the equivalent of roughly $28,000. The artist provided a donation to match the sale price. For Sostento, accepting the donation was fairly simple. The organization worked with Giving Block, a nonprofit that helps other charities accept cryptocurrency, to convert the crypto into U.S. dollars. The NFT will also continue to benefit charities in...