Charitable giving start-up Daffy on the growth of donor-advised funds

Charitable giving can feel like a win-win. You get to donate to a cause you’re passionate about, and you get a tidy tax deduction to go with it.

Daffy is an app designed to help users give more easily through DAFs

However, the donation process is a complicated one, and a whole fintech sub-industry has sprung up dedicated to simplifying it for donors and nonprofits alike.

It is in this tangled web of charitable giving that Daffy (short for Donor-Advised Fund For You) was founded in 2020 by veteran fintech executive and investor Adam Nash. Daffy is an app designed to help users give more easily and consistently through donor-advised funds (DAFs).

To better expand the platform’s capabilities, the burgeoning company has tapped Lorie Lambert to run the app and lead its continued growth. Before Daffy, Lambert spent 12 years working in a variety of roles for Schwab Charitable, where she led the development of Schwab’s own integrated DAF platform.

When asked about why she chose to go to Daffy after her time with Schwab, Lambert tells FinTech Futures: “When I met Adam, it sounded like he had this vision for what donor-advised funds could be… Specifically, working with charities and really building out a product that connects to charities and builds a community.”

Part of the complexity of charitable giving comes from the variety of options a donor has at their disposal. You can write a cheque, donate stock, or use an online platform, among others. Of these possibilities, DAFs are one of the fastest growing in the sector.

A DAF is essentially a charitable investment account operated by a nonprofit or not-for-profit organisation. Donations to a DAF are invested into assets like stocks for growth. As the name implies, donors can then advise the DAF on which charity the fund’s grants are given to.

DAFs have grown significantly in recent years. A 2021 report by the National Philanthropic Trust (NPTrust) revealed that DAFs gave $34.67 billion to charities in 2020, a record high and a 27% increase from 2019. Lambert cites DAFs’ ease of use as a possible reason for their rapid rise:

Lorie Lambert, head of DAF platform at Daffy

“I think donor-advised funds are just a very flexible way to give to charity… And they’re easy. A lot of ways you can give to charity are not as easy, and donor-advised funds allow you to get the benefits of the more complicated ways of giving to charity but make it super easy.

“For example, giving stock to charity is really difficult, but there is a great benefit because you receive a better tax deduction if you’re giving appreciated assets. But most charities are not set up to take stock donations, and donor-advised funds can just make that very easy for you.”

Lambert and Nash are both no strangers to working with nonprofits. Lambert spent five years as a board member of the Shih Yu-Lang Central YMCA in San Francisco, and Nash is currently co-chairman of the Israel Collaboration Network, a nonprofit dedicated to fostering business relationships between the Israeli tech industry and Silicon Valley. Prior to that, he had spent six years on the board of Oshman Family JCC, a nonprofit focused on supporting the Jewish community in Palo Alto, CA.

Nash believes Daffy’s fintech background gives them an advantage over competing providers and investors, and the firm is trying to bring a tried-and-true fintech solution to the industry: goals. In Nash’s words, “We’ve already used goals to help people with all sorts of tasks, including financial tasks. Saving for retirement, saving for college, saving to buy a home. But it hasn’t been applied to giving.”

Daffy CEO and co-founder Adam Nash

Daffy’s support of cryptocurrency is also one of the firm’s favoured selling points. On its website, it mentions being able to both donate in crypto and invest donations into crypto, if the user so desires.

This is in-line with another of Nash’s roles, advisor to and former investor in crypto-asset manager Bitwise. Index funds from Bitwise are part of Daffy’s crypto-focused investment options, alongside direct investment in Ethereum or Bitcoin via Coinbase. Coinbase Ventures is also one of Daffy’s investors.

Regarding his company’s implementation of crypto as an investment option, Nash says: “I realise there are some people out there who are very bullish about the future of crypto and Web3, and there’s some people who aren’t. The great thing about Daffy is, if you want to do it, we’re happy to help you.”

Whether or not Daffy’s platform will revolutionise the world of giving, they have made believers out of some. In February 2022, the firm managed to secure $17.1 million in Series A funding led by Ribbit Capital.