NFT Considerations for Not-for-profit Organizations
Understanding exactly what NFTs are
Question: I’ve heard about other not-for-profit organizations selling non-fungible tokens (NFTs). What are these? and why would an organization do this? Are there tax implications that should be considered?
Answer: NFTs are unique, digital items that hold value and are recorded on a blockchain for their original creators to buy, sell or trade. NFTs can be a variety of assets including digital art, videos, games, avatars and event tickets. As NFTs are growing in popularity, many not-for-profit organizations and their supporters have begun to explore the idea of creating and utilizing NFTs as a fundraising vehicle. Below are some considerations when discussing the potential for the creation, receipt or sale of NFTs.
One significant use case includes creating and selling a piece of digital artwork. The artwork can be copyrighted, which provides protection from the recreation or duplication of the creator’s asset. The digital artwork can be sold with or without the copyrights. By selling the NFT without the copyright, the not-for-profit organization would then be able to collect royalty revenue from the subsequent owners of the asset. However, the organization could also auction off the NFT for a single lump sum fundraising opportunity.
Please select this link to read the complete article from OSAP Strategic Partner Clark Schaefer Hackett.