Daffy.org Pioneers Family Options For Giving – Innovation In Philanthropy And Giving

By: Christos Makridis

Philanthropic contributions totaled nearly $485 billion in the US last year, according to the Giving USA Foundation, totaling roughly 2% of gross domestic product. However, only 52% of Americans have faith that nonprofits will “do what is right,” according to the 2019 Edelman Trust Barometer.

Daffy.org, the first full-feature mobile donor-advised fund (DAF) app, is launching Daffy for Families to provide families of up to 24 members a platform where they can select causes most meaningful to them, request donations to specific organizations to be approved by the organizers of the family fund, and receive notifications whenever anyone in the family requests, approves, or makes a new donation.

Behavioral economists have found that many people fail to give in part because of forgetfulness and myopia: even if a desire exists to give, it is not enough of a priority and target aspirations are missed. Hundreds of studies have since documented that many individuals struggle to control their spending and save as much as they would like, and many of them are willing to accept help (eg, reminders), including over giving to charity.

Daffy allows users to make giving a habit by setting up recurring contributions and donations with cash, Apple Pay, stock, or 120+ cryptocurrency options tax-free – now extended to families.

“If we can make it easy and fun to collectively form a community around giving, then the norm is that everyone should be putting money for those who are less fortunate than them,” said Adam Nash, chief executive officer and co-founder of Daffy . “We give people tools – for example, we will show you how much people in your own zipcode give to charity. Then, as you make donations, we keep you honest and on track with your giving goals,” Nash continued.

The Daffy app is consistent with four best practices identified by social psychologists for giving, including create a commitment mechanism, set goals and make plans, leverage social norms and identity, and bring attention to the choice, according to Northwestern professor Dean Karlan and ideas42 researchers Piyush Tantia and Sarah Welch.

Another advantage of Daffy for Families is that everyone in the family sees a donation when another member makes one, including any notes or statements associated with the donation. “Giving, unlike other savings goals, is a collective action where we build a community… we want even the children to be empowered to donate,” said Nash. Daffy’s business model relies on membership fees, rather than taking a percent of funds managed, which inevitably prioritizes larger clients.

“We’ve changed the business model… most DAFs make their money from taxes on contributions, but the problem is that the incentives kick in and you realize you make much more money on the bigger accounts,” Nash continued. Daffy’s business model is flat, drawing on a membership community and requiring a flat, transparent monthly rate for the whole family.

Daffy was co-founded by Adam Nash and Alejandro Crosa, two veterans in the technology sector. Nash has held leadership roles at LinkedIn, Ebay, and most recently Wealthfront as its CEO. Crosa has similarly held senior technical and product roles at LinkedIn, Twitter, Decision Mate, and most recently Slack.

Particularly with the growing salience of cryptocurrencies, functionality to accommodate crypto donations matters. “Nearly every millennial millionaire has cryptocurrency in 2022. As a result, the nonprofits who fundraise cryptocurrency are building meaningful relationships with the next generation of powerhouse donors,” said Pat Duffy, co-founder of The Giving Block.

While charitable donations are one of the most direct ways to signal support for a cause and help advance it, there has been an increase in purposeful investing and desire among the investment community to support causes. Between 2019 and 2020, impact-investing grew by 42.4%, according to a 2020 Global Impact Investing Network report.

However, that potentially underestimates the numbers. “All investing is impact investing. Every dollar we put to work has an impact on the world—good or bad. It’s increasingly critical, and possible, for people to be more thoughtful about that impact through new technologies and firms focused on helping them steward capital well,” said John Coleman, managing director at Sovereign’s Capital.

Experts suggest that what we are seeing is not necessarily an increase in impact investing, but rather heightened attention to how resources are allocated at scale. “We believe giving is often haphazard and boring for most people. Setting aside money purposefully in tax-smart ways upfront makes donors more thoughtful about where they’ll eventually give. DAFs enable this pattern, and we at Charityvest believe DAFs can be massively simplified for donors large and small, making them more of a joy to use and share with others. With modern fintech, there’s no reason why DAFs can’t be as ubiquitous as 401k’s,” said Stephen Kump, chief executive officer and co-founder of Charityvest.

Such considerations and attentiveness for purposeful giving elevates the necessity for organizations, especially non-profits, to deploy their resources transparently and remain accountable to their commitments. Scientific research also suggests that greater transparency also contributes to more donations. There is also an emergence of web3 tools, like decentralized autonomous organizations (DAOs), that offer new capabilities in galvanizing support and establishing greater accountability and transparency for the disbursement of philanthropic donations.

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