Renowned Silicon Valley operator Adam Nash thinks you want to donate a lot more than you do, and he’s about to make it very simple for you.
That’s the message we got when talking late last week with Nash, whose most recent full-time roles include vice president of Dropbox and president and CEO of financial advisory firm Wealthfront and who also serves on the boards of auto e-commerce. commerce platform Shift and with the Acorns microinvestment application.
In fact, it’s this latest paper with Acorns that informed what he’s building now, which is a new financial platform for donations called Daffy Duck. Newly backed by $17.1 million in Series A funding led by Ribbit Capital, with participation from XYZ Capital, Coinbase Ventures and over 50 notable angel investors (Reid Hoffman, Aaron Levie, Amy Chang, the list to be continued), the idea is to help people be more generous, more often, Nash said.
How exactly? Daffy is essentially providing access to what it claims is the lowest cost and lowest friction way to set up and use a Donor Advised Fund (DAF), a sort of 401(k) for charitable giving. With DAFs, you donate some money (or shares, or even cryptocurrencies), receiving a tax break at the time of contribution, and that donation is transferred to a managed investment account (think Fidelity or Vanguard), where you are expected to grow over time. At some later date, you direct the funds to the charity or charities of your choice.
DAFs have become extremely popular as a means of avoiding unrealized capital gains taxes and are used by both the extremely wealthy and those who may not be billionaires but aren’t struggling to pay their bills either. In fact, according to the National Philanthropic Trust (NPT), the average donor-advised fund account had US$ 163,000 since last year, and there are now enough DAFs (over $140 billion) that DAF donations to qualifying charities totaled an estimated US$ 34.67 billion in 2021, a 27% increase over 2019. The NPT called this a “high watermark”.
Nash said Daffy intends to open that funnel so that many more people across the economic spectrum can participate. First, he said, Daffy charges less. Considering that a customer Schwab or faithfulness or Vanguard can create a donor-advised fund, each of which charges a management fee of 0.60% of assets, which can increase over time. (Vanguard also has a minimum donation requirement of $25,000 to get started.)
Meanwhile, Daffy requires users to make a minimum one-time contribution of $100 (or $10 a week until they get there), and only charges $3 a month, or $36 a year, regardless of the amount of assets. that someone is investing. (It charges $20 a month if a user also donates stocks or prized cryptocurrencies, which have “more expenses attached” to them, Nash noted.)
Just as importantly, he said, Daffy is as easy to use as many consumer apps and, like many of them, is now available for download via the Apple App Store. (The company says it’s the first “full” DAF now available on the platform, and that users can “open an account, make contributions, invest the contributions, and make donations, all with just a few taps.”)
As for where donations will (ostensibly) grow, Daffy currently directs users to nine different backgroundsbut Nash said he expects many more to appear on the platform over time.
Daffy isn’t the only one dealing with this big and growing chunk of the economy. Charity Vest, a recent graduate of Y Combinator’s acceleration program, is chasing similar clients, for example. But unlike some of these rivals, Daffy is offering its product directly to consumers, rather than trying to work through employers or other corporate partners as well.
The question is how. Specifically, we wonder how Daffy can deliver the services it promises at such a low cost. After all, it seems possible that the young company could attract more and more customers to the platform who traditionally use a more expensive DAF product but who want to save hundreds, if not thousands, of dollars in administrative costs. Asked about this, Nash, who noted that Daffy already has clients with “seven-figure” portfolios, insisted that Daffy welcomes clients with any amount of assets.
He likely sees them as loss leaders. Indeed, like many financial services startups, DAFs appear to be Daffy’s first step towards many other product offerings.
“It’s definitely a wedge for something bigger, but not geared towards financial services,” Nash told us last week. “This is not a megabank move. Our mission is to help people be more generous more often. [and to make it easier for] all proactively putting money aside for those less fortunate than themselves.” There are “a lot of ways that people donate there and a lot of ways that organizations raise money, and these are all areas that we are very excited about,” he continued.
In the meantime, Nash will be happy enough if Daffy becomes a habit for his users, as ambitious as it may seem.
“We’re seeing more and more apps and services that are trying to help people live the life they want, whether it’s Calm or Headspace or some of the religious apps out there,” Nash noted. “More people are using the services to be the kind of person they want to be. We see no reason not to apply to generosity, philanthropy and charity.”