Selva Ozelli is an international tax lawyer and CPA. She writes monthly Expert Take columns about the intersection of emerging technologies and sustainability.
Between Sept. 14-30, the United Nations General Assembly (UNGA), will hold its 76th annual meeting to bring together countries at a crucial time to take collective action to address the global environment crisis that has worsened the COVID-19 pandemic.
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The Intergovernmental Panel on Climate Change’s latest report, released ahead of the UNGA meeting points out that climate action is now urgently needed. This is especially true since publication of “Nationally Determined Contributions under the Paris Agreement.” The secretariat’s Synthesis Report shows that the world is still far from reaching the Nationally Determined Contributions to combat climate change, as required by the Paris Agreement.
In a joint statement, 200 leading journals in health released a statement pleading for global leaders to reduce greenhouse gas emissions and mitigate climate change.
Related: Blockchain technology makes sustainable development more possible
To ensure a sustainable green recovery from the pandemic, it is important to understand the connections between climate change and health and inequality. It is also necessary to implement ambitious climate change policies in line with the Paris Agreement. The 17 Sustainable Development Goals (SDGs) of the United Nations are a call to action for all countries and individuals to protect the planet and promote prosperity. These goals are crucial for a green recovery of COVID-19.
These goals were funded by blockchain technology and nonfungible tokens (or NFTs) during 2021, which was declared by the UN General Assembly the “International Year of Creative Economy for Sustainable Development.” This year has seen the rapid spread of highly transmissible COVID-19 variants amid the worst wildfire season in history.
COVID-19: Art charity, blockchain
The COVID-19 pandemic created both an economic and public health crisis. The pandemic caused disruption in lives, pushed hospitals to the brink, and caused a global economic slowdown that resulted in losses of over $1.7 billion just for the United States arts-cultural sector.
According to X4Impact, a data insights and research company for social innovation in America, over 457,000 nonprofit organizations continue to see an increase in demand for services despite a decrease in income. It is not clear how the coronavirus has affected America’s charitable sector.
Bundeep Rangar, CEO of PremFina in the United Kingdom, highlighted the urgent need to raise funds for artists and charities (SDG 3). He explained that Art & Co had held a blockchain-assisted charity auction last June. LuxTag Blockchain/NEM tracked the auction sales process, sold proceeds, and distributed proceeds to charities.
Since June 2020, when my first digital art exhibition was held inspired by climate change (SDGs 3, 13), NFTs have slowly seeped into the art world and charity world. This allows artists and museums to monetize and continue receiving payments for their work, even after it has been sold.
Related: Digitalizing charity: We can be better at doing good
COVID-19: Museums & Blockchain
Museums are one of the most affected sectors by the pandemic. They play an important part in raising awareness and providing reliable information (SDG 14) These institutions suffered huge financial losses and had to pay digitization costs in order to survive and reach the public during lockdowns.
Diane Drubay, the founder of We Are Museums as well as the minter of NFTs via Hic Et Nunc’s platform Hic Et Nunc — said to me that she sees clean blockchains such as Tezos as a fantastic opportunity for museums. “Low carbon footprint currencies and markets provide easy, fair, and ethical access blockchain and NFTs. This shifts the industry away from the high-energy-consuming, exclusive, and money-making spaces depicted in the media.”
“We are still at the education phase. Museums need to be blockchain-literate in order to fully comprehend its potential.”
She added: “But once that happens, they’ll discover fantastic ways to reach new young and creative audience ready to engage in purposeful projects, share collections through innovative interactive and immersive processes as well as create new models for self-sustain.”
The NFTs are a game-changer for digital artists and museums, as they provide them with new income opportunities that sustain them through COVID-19 lockdowns.
Related: NFTs can be a game-changer for independent musicians and artists
OpenSea, the largest non-fungible token marketplace, saw its NFT sales volume rise to $4 billion in August. The bearish correction that took place during September was followed by an increase in NFT prices. However, artists and museums are competing to tap into NFT markets to monetize their works.
In order to offset the ongoing COVID-19 crisis budget shortfalls, Russia’s Hermitage Museum sold NFTs for several masterpieces through Binance’s NFT Marketplace. The auction also included the sale of Leonardo da Vinci’s work for $440,000. According to Artnet News, New York’s Metropolitan Museum of Art is expected to sell 219 prints and photos to make up $150 million in lost revenue.
Drubay stated that she, along with other NFT artists will launch a new, sustainable blockchain-based platform called alterHEN. She said that alterHEN is a vibrant lab on emerging models in the art market and offers a new way to create, collect, sell, and exhibit art.
Charitable, sustainable NFTs to support the UN’s 17 Sustainable Development Goals
Twitter CEO Jack Dorsey sold the first tweet he ever sent as an NFT to a buyer for $2.9million and donated the Bitcoin (BTC), proceeds to GiveDirectly, which sends money to families affected by the COVID-19 pandemic in Africa (SDG 3). Valuables, a platform that allows people to make offers on tweets “autographed” by their creators, was used for the bidding process.
There are other platforms that allow artists to mint NFTs, showcase their creations, and sell them to raise awareness within the UN’s 17 SDG goals. These include DigitalArt4Climate and the Enjin NFT platform. DoinGud is where I will launch my first NFT, Recovery Roses, at the Origins Exhibition. All proceeds from my NFT will be donated to SDG-focused charities around the globe.
Manu Alzuru, co-founder of DoinGud, told me that the platform’s blockchain-based social network and marketplace was designed to facilitate charitable donations via NFT sales to vetted organizations of the creator. This will open up new opportunities for charitable causes that support the UN’s 17 Sustainable Development Goals, such as ending hunger and solving climate change.
William Quigley, a cryptocurrency investor and co-founder at NFT blockchain platform Worldwide Asset eXchange (WAX), and the first fiat-backed stablecoin USDT (USDT), told me about WAX’s new charitable initiative to address SDGs 13 & 14. The company, which offers an eco-friendly blockchain platform for NFTs and video games, has launched a new collection “Carbon Offset VIRL” NFTs. As Quigley said: “For every $1 ‘composted’ in WAX’s sustainability-driven collection, the National Forest Foundation will plant one tree sapling, each of which offsets an average of one tonne of carbon dioxide over its lifetime. WAX has officially set higher standards in the area of responsibility for blockchain. Our blockchain is energy efficient and encourages the community to think about the environment. We have worked tirelessly to make sure it does. We are confident that we can all make a huge, positive impact together with Carbon Offset(r) NFTs.
Related: NFTs and Prioritizing Humanity over Profits
Cryptograph is the first celebrity and luxury NFT auction platform that uses blockchain technology. It introduces a new way of doing philanthropy and makes charitable fundraising more efficient, global, and permanent. Tommy Alastra is a pioneer in blockchain technology and Cryptograph’s founder. He explained to me that Cryptograph is a breakthrough for charities looking to ride the wave of improved donations that are accessible from anywhere. Cryptograph will allow charitable foundations to continue fundraising and to receive a percentage of each NFT auction item, even if they are not in the resale marketplace on an ongoing basis.
Cryptograph sells NFTs by Vitalik Buterin and Emin Gun Sirer. Erik Voorhees and Evan Van Ness (the writer of “Week In Ethereum News”) are some of the people who have sold them. The proceeds go to organizations that work towards SDGs 1, 2, 4, and 14. Creators have the option to choose which SDG-focused charity they wish to support. The Autism Science Foundation, which supports and funds innovative autism research (SDG 3), has announced that it accepts cryptocurrency and NFT donations through Every.org.
NFT donations are treated differently in the United States.
An NFT is property in the United States and will therefore be valued at its current market value. Non-cash donations of NFTs exceeding $500 will require donors to file Form 8283, which is required for Internal Revenue Service appraisals. For the donor, the donation is tax-deductible as follows:
The fair market value of the gift can be deducted by the donor if the NFT was held as a capital asset for longer than one year. This is up to 30% of adjusted gross income. The donor can deduct the lessor of the fair market value or cost basis, up to 50% of their adjusted income, if the NFT was held as a capital asset (less than one-year) or ordinary income property. The fair market value at the time of receipt may be claimed by the donor if the NFT was received as payment for services rendered.
Similar: Legal perspective on nonfungible tokens
Charitable contributions which are not deductible in the current tax year because they exceed the adjusted gross income limit of the taxpayer can be carried forward for five consecutive years.
NFT donors are encouraged to investigate the platform from which they launched their NFTs in order to determine if they are eligible for a U.S. tax deduction.
These views, thoughts, and opinions are solely the author’s and do not necessarily reflect the views or opinions of Cointelegraph.
Selva Ozelli, Esq. CPA is an international tax lawyer and certified public accountant. She frequently writes about tax, legal, and accounting issues for Tax Notes and Bloomberg BNA as well as other publications such the OECD.