The following is a conversation between Adam Nash, Co-founder & CEO of Daffy, and Denver Frederick, the Host of The Business of Giving.
Denver: Daffy, which stands for Donor-Advised Fund for You, aims to change the way we approach philanthropy by making it more accessible and habitual for everyone, not just the affluent. By integrating technology and simplicity, Daffy enables users to support any legal charity in the US with ease, encouraging more frequent and thoughtful generosity.
The man behind this innovative approach is Adam Nash, the founder of Daffy. With a rich history in leading product and growth at major tech companies like Dropbox, LinkedIn, and eBay, Adam has leveraged his extensive experience to tackle the unique challenges in the nonprofit sector.
Adam Nash, Co-founder & CEO of Daffy
Welcome to The Business of Giving, Adam.
Adam: Denver, thank you for having me.
Denver: Daffy is built around the concept of making charitable giving a regular part of everyone’s financial planning. What was the key moment or realization that led you to focus on this particular mission?
Adam: There’s always threads that go back in your life. I think Steve Jobs gave that commencement speech 20 years ago about looking backwards and connecting the dots of your life, but the real… you know, for Daffy itself, it’s really a story that came out of the pandemic. It was 2020. I left my previous role at Dropbox. I was at home. My co-founder and I had talked for years about starting a company, starting an organization, but hadn’t landed on the idea.
But what we really noticed is how much people in communities were focused on supporting each other. And we started thinking a little bit about why technology had missed this market that clearly matters so much to people, to families, to households, and is arguably one of the biggest sectors in financial services.
And I’d had the good fortune in my career. I’d been the CEO of a company called Wealthfront, which was very successful in bringing sophisticated financial advice to people. I’d been on the board of this company called Acorns that had this app that helped millions of people save and get started on a healthier financial life. And I just said, if we can do this for spending and saving and investments, so much innovation in fintech, why can’t we do it for giving?
And so we went back and forth on that basic idea and started talking to real people across the country about how they think about giving. And just got very excited about this idea of taking this financial product, the donor-advised fund, that really lived in this world of kind of the ultra-wealthy and kind of high-end wealth managers and financial offices, and turning it into an app or a service that any of those 60 million households across the US that give to charity every year could use.
“…a donor-advised fund is another type of tax-advantaged account in the US, right? We have 401(k)s and IRAs for retirement. There are 529 plans to help you save for college, and a donor-advised fund is a tax-advantaged account where you can put money aside for charity, immediately get the tax deduction.”
Denver: Yeah, yeah. Dig a little bit more into that. Tell listeners first: what is a donor-advised fund, and then how you see Daffy fitting into that ecosystem.
Adam: Yeah, so I think you mentioned it. Daffy stands for the Donor-Advised Fund for You. There’s some liabilities, I guess, in having an engineer do the marketing and naming. It’s kind of on the nose, so it is what it is.
Denver: I like it. I actually like it.
Adam: Yeah, no, it’s a good app name. I mean, we were very proud of the fact that we were the first donor-advised fund in the Apple App Store, fully functional there for people to use.
But for people who don’t know what a donor-advised fund is, I first say, Don’t worry about it. That’s not an accident. The industry has been too focused on a few high-end wealthy people rather than most of us.
But the way I usually explain it is that a donor-advised fund is another type of tax-advantaged account in the US, right? We have 401(k)s and IRAs for retirement. There are 529 plans to help you save for college, and a donor-advised fund is a tax-advantaged account where you can put money aside for charity, immediately get the tax deduction. You’re trusting it to another nonprofit.
And then when you’re ready to donate, just with a few taps on your phone, you can make a recommendation. Those funds can go to any organization that’s a legal charity in the US. And so that’s the basic idea behind a donor-advised fund.
Denver: Mm-Hmm. What’s your take on that debate that goes around donor-advised funds? You have one camp that says this is an incredibly powerful vehicle for charitable giving, and then you have another camp which says basically: Where’s the disbursement or warehousing funds and things of that nature? That thing has been going on and on. What’s your thinking on all that?
Adam: Well, I think some of the critique of donor-advised funds comes from a good place, right? Like in the end, there are a lot of people that say, Hey, listen, there’s a lot of people who need help. We want these funds to get to them as soon as possible, and it’s hard to argue with where that’s coming from.
But I think the mistake, or at least the two mistakes that some of those critiques make is: One is: they kind of confuse the behavior of the ultra wealthy, of the billionaire class, with what most of us do. So I can understand that if you are worried about billionaires putting aside billions and getting a tax deduction but not actually putting the money to work…
Denver: Yep.
Adam: …I hear you. But that would be a little bit like judging retirement accounts by being upset that Peter Thiel has billions in a Roth IRA, like that’s not a problem with the IRA. Like there might be limits at the high end.
But more importantly, I think… you know, I teach this class at Stanford University called Personal Finance for Engineers. I’ve taught it for seven years. And one of the things we focus on in that class is behavior and emotion and how that drives our financial actions. And the truth is, most of us would not save wealth for retirement if it didn’t happen automatically, if there wasn’t some separate account to put those funds aside. Same thing for any financial goal.
And the research says the same thing about giving. The research says that if you set a goal for your giving, you automate it… you put it aside regularly, you will end up giving 32% more. And so, the problem I have with a lot of the critiques of the donor-advised fund concept has to do with the fact that if we want to help people give as much as they want to, it is so useful to have a tax-advantaged account, a separate place to put that money aside.
And so, I actually say the opposite with donor-advised funds. I actually think that everyone who cares about giving to charity, like everyone who gives regularly should have a separate account put aside for charity, so that when the urge strikes them to give, when they’re inspired to give, they don’t have to ask that really difficult question of: How much can I afford to give?
Denver: Yeah. Yeah.
Adam: The money’s already there. They can use it, and hopefully use it for good.
Denver: Yeah, no, having a default setting makes all the difference in the world. I remember reading in Australia about organ donations, and so few people gave them until they made it the default setting on the license and you had to opt-out, and it went from like 9% to 90%. So, you just look to do these things automatically.
And I think DAFs got a bad rap in a lot of ways. Even foundations come down on them pretty hard, but foundations… around 5%, maybe 10%, what they give away. DAFs are 20%, 30%. People are not warehousing it. And I hate to see laws made for a few bad actors when the great preponderance of people are really using DAFs in a responsible way.
So Adam, walk us through this process of a DAF. Let’s say, what does a person need to do to get started, and how does it serve them?
Adam: Yeah. Well, happy to, and I can give… you know, the donor-advised fund has been around in the US for almost a hundred years. I think it goes back to the 1930s. But like I said, most people haven’t heard about it until recently, and it is a very fast-growing account type.
I think the number of donor-advised funds in the US have now grown to over 2 million. It wasn’t so long ago, just less than a decade, it was a million. So it’s really growing quickly as people find out about it, but it’s not that difficult. Most incumbents, most banks and brokerages– the Fidelities, the Schwabs, the Vanguards– offer this account type.
And if you want and you open it, they won’t really push it on you. They don’t promote it too heavily. But if you go there and open one, you can. Now, the problem with a lot of these accounts is they tend to have high minimums or high fees. Vanguard, which I love. Wonderful organization. Financial products, the index fund, even their donor-advised fund has a minimum of $25,000 and a fee of 0.6%. Really quite large.
With Daffy, we tried to make it as simple as just downloading an app from the App Store or going to daffy.org and signing up. And so, if you open a donor-advised fund with Daffy, the first question we ask you might surprise most people, but we ask a simple question like: How much do you want to give every year? What’s your goal?
I mean, we have budgets for everything. Most people have a budget for their groceries and rent and utilities and that sort of thing. And this is not that hard a question. Most people know what they gave last year, right? You fill it out on your taxes, or maybe there’s three or four organizations you support.
But whatever the number is, we’re not judgmental. We try to set it up so that it’s very easy. Do you want to put the money in now? Do you want to put aside $10 a week or $25 a month? And we use all of the modern technology where you can link your bank account; you can use a debit card, a credit card. We even let people use Apple Pay if they want. Whatever they want, just to put money aside.
But the whole idea is to have this separate account so that when you want to give, you can. And when you put the money aside, of course, you get that benefit that qualifies most people for an immediate tax deduction. It’s a charitable donation. And then the money is invested tax free.
At Daffy, we offer 15 different portfolios ranging from conservative portfolios, all the way to ESG and crypto, if that’s what you prefer. But we try to make it very easy for people to put money aside, know that it’s growing over time so that when you want to give, you just pick the charity. There’s almost 2 million in the US. And we send the money to them.
“But from our point of view, we’re not judgmental. We really focus on one thing and one thing only, which is helping people put that money aside for charity so that it’s available to give.”
Denver: Wow. So I can do stocks or crypto, or all those different things I can do on Daffy?
Adam: Yeah. So our mission at Daffy is to help people be more generous more often. And so a part of that philosophy is that whatever helps people put money aside for charity, we will help them do it.
So if you want to use Apple Pay, use Apple Pay. If you want to give us stock, we’ll take stock, ETFs, mutual funds. We support every crypto that Coinbase supports. Anything you want to give, we will help you give. And then, of course, that money is invested tax free. And so we also have that flexibility on the investment side.
Some people want to keep money for charity very conservatively invested– cash, money market funds, bonds. Other people take the mentality of like, Hey, if I grow this money to be even more, that’s even more to give. And so the idea of starting with a little and ending up with a lot is appealing to some.
But from our point of view, we’re not judgmental. We really focus on one thing and one thing only, which is helping people put that money aside for charity so that it’s available to give.
Denver: You said a moment ago, Adam, that DAFs are nearly a hundred years old. But a concept which is a little newer than that would be gift bunching, and talk about what gift bunching is and how it can really help an individual with their taxes.
Adam: Well, yeah. So bunching is a very big deal, and it actually is a relatively recent phenomenon because what happened in 2017 is they raised the standard deduction. So for a lot of people now, the good news is that standard deduction is larger. That does help you save money on taxes. That’s not bad news.
But the problem is if you have a lot of deductions you were used to taking, you may not qualify for them anymore unless you get over this limit. And the idea of bunching takes advantage of the fact that actually, most Americans have different incomes, different years. They have good years and not so good years. There’s volatility there.
And so the idea in good years of putting more than one year’s worth of giving aside for charity, right? If you give a few a hundred dollars, a few thousand dollars, whatever you give, the idea of putting that money aside in one year into a donor-advised fund, qualifying for that tax deduction, and then having the money tax free to give when you want to, the math is incontrovertible, right?
Like if you give a small amount every year for five years, you might never qualify for the deduction. But if you put all that money aside in year one, you qualify for that deduction, and then the money is there available for you those other five years. It’s really a win where you save money on your taxes, and it ends up with more money to give to charity.
Denver: Yeah. That’s fantastic and it makes so much sense in a gig economy because people, particularly now more than ever, have good years and bad years, and it really is in the forefront.
You also have launched a workplace giving program. Explain the benefits of this program, both for the employee and the employer.
Adam: Yeah. I’m glad you brought that up. We call it Daffy for Work, and it’s one of the wonderful things about working with technology, is you learn so much from your members, from your users. They pull you in new directions. When we launched Daffy, it was just for individuals to use for giving, but we had one member who said, “I run a company, a real estate office in New York, a hundred people. I want to build giving into my culture. I want to give Daffy to all of my employees.”
And so we’re a small team, but we said, Hey, we can do this. And we built a new product that we call Daffy for Work, which allows your employer, the employer, to pay the Daffy membership fee, which is very low. It’s $3 a month. It’s as we say in Silicon Valley, it’s Diet Coke money.
But as a result, companies can match contributions. They can do incentive programs, et cetera. If you work here, everyone gets a hundred dollars a month to give to the charity of their choice just by putting the deposit in.
But we rolled out this product, and then our surprise was that a lot of very outstanding technology companies started adopting it. So if you start one of the hottest companies in the world right now, if you started OpenAI, or Acorns, or a number of other companies now, they’ll tell you, Oh, we have a 401(k) to help you save for retirement, and we have Daffy for Work, where you can put money aside for charity.
And so we hope this will be a benefit that more and more companies offer. We’ve tried to make signing up for it very, very easy for any business that wants to get started.
Denver: Yeah. That has got such huge potential, and it’s so good for the employer. I mean, this is their branding for people who want to come in. If I’m looking for a job and I hear a company’s doing that, it puts me favorably disposed to it: Hey, they have values that I share.
Adam: No, I agree with it. Giving is so important. Actually it’s not just one generation. Almost every generation has this push towards giving. The problem is most workplace programs are based on donation matching, which feels a little bit to people like expense reporting, which no one loves getting their expense reimbursed in that whole system.
But also there’s more anxiety about uploading somehow to your employer which organizations you’re donating to. Politics has kind of been infused into all these environments, and so this idea of just matching the contributions that people make into account. It’s hard to imagine a workplace program where you’d have to upload your receipts for your retirement spending to get reimbursed for them.
Denver: Right. Exactly.
Adam: And yet that’s what we do with donations. And so this idea of no, no, no, we like the retirement system where people put money aside, maybe the employer matches it. Let’s do the same thing for giving, let’s do the same thing for charity. And that’s where Daffy for Work, I think, comes from.
Denver: Yeah. Yeah, no, it is a great modern twist on it. And as you say, almost every contribution these days makes a statement, and a lot of times people just don’t want that statement to be made. They’ll give to the charity and just not bother with the match because you never know what leadership is thinking.
How are you getting the word out about Daffy, Adam? I mean, other than The Business of Giving right now. And are there any strategic partnerships or collaborations beyond the workplace that have been pivotal?
Adam: We’re still very young. We just filed our year in review for 2023. It was a huge year. We grew more than 425%.
Denver: Congratulations.
Adam: Oh, thank you. Well, I mean, it’s all good if we get more people to give, put more money aside for charity. But we’ve been very open, and the word’s been getting out. I think a lot of the word, to be honest, has been word-of- mouth. People really love it. It’s meaningful for them.
People have been very excited. We offer a lot of features that other platforms don’t. This industry’s been around for a long time, but we were… you know, we offer a family plan. A lot of people want to share their giving with their children or grandchildren or nieces and nephews or siblings.
And so I think that’s led to people talking about it. We’ve had a wonderful reception in the nonprofit industry. A lot of excitement, a lot of awards won for innovation in the space, and that’s been fantastic.
Denver: I see Fast Company just recognized you.
Adam: Yeah. But a lot of our outreach has actually been from financial advisors, accountants, a lot of people who are familiar with taxes, familiar with donor-advised funds, and saying, Wow, are you telling me instead of having to pay a percentage of the assets we put aside, that you just charge a small membership fee, like a nonprofit? Or it’ll be our support– mobile support, technology support, or that support, as you mentioned before, for things like stocks or mutual funds or crypto?
So I think that’s been a lot of the word, but we’re actually very open. We have a lot of companies that approach us and want to work with us or do campaigns to raise money for different organizations. And we try to be supportive of as many of those efforts as possible.
“So my leadership philosophy is very much one of empowerment, where leadership invests in making sure that everyone’s looking at the right information and has the right framework for making decisions, and then opening it up as much as possible to let those ideas come in…”
Denver: Yeah, yeah. Well, you got a lot of fans out there, and just like the workplace guy who gave you the feedback, you just have to listen to people, and that you got the wisdom of crowds really working for you because good ideas, they’ll catch on. And you don’t have to worry about it too much. They just will have a life of their own.
You’ve been a part of a lot of start-ups, Adam, but I believe this is the first organization that you have founded. Can you share your leadership philosophy and how it guides your approach in steering Daffy?
Adam: Well, there actually is some commonality between how I think about leadership and running organizations and Daffy’s product itself. And it comes down to focusing on people, their motivations, their incentives, what they want to do, what they’re incentivized to do.
I gave this interview years ago, New York Times, C.O. Corner Office, about how you set organizations up for success. One of the things that’s different, I think, about technology as an industry than maybe some others.. although I think it’s more true than not in most places… is that actually the best ideas, many of the best insights about your customers and your product and your service, don’t come from the executive office.
They don’t come from the top, right? They come from the people who work every day with the customers, with your service. They do inventory, they do sales, they do recruiting. They actually talk to people.
And so I’ve always been a big believer in saying, Well, you want to have an organization that’s all rowing in the same direction, that has the same goal. And so setting up organizations where everyone has the same data, the same information, and the same frameworks, the same values, the same goals for what you’re trying to achieve…My experience is that if you give people the same information and the same frameworks to define success, you will be blown away with what they come up with.
Denver: Yeah, yeah.
Adam: You’ll be so impressed by how they work together. So my leadership philosophy is very much one of empowerment, where leadership invests in making sure that everyone’s looking at the right information and has the right framework for making decisions, and then opening it up as much as possible to let those ideas come in and really force the team to say, “Well, what are our best ideas now? What’s the next thing we’re going to work on?”
And in a funny way, the Daffy product reflects this, right? A lot of what we’re doing is saying, Hey, take the first big step of putting money aside for charity. That seems to be where most people get blocked. That’s the, as they say in tech, the zero to one moment.
Denver: Yeah.
Adam: But the empowerment of : Give to the organizations and causes you believe in most, of empowering individuals to make their own decisions about when they give and who they give it to, it’s in the product as well.
Denver: Yeah. Yeah, no, that’s a great philosophy. I mean, two things stand out, is number one, you try to have the internal culture match the external culture in terms of what the product is and democratizing this… you have a democracy within the organization.
Not that you don’t have leadership that makes decisions, but it is incredible that when everybody has the same information and the same framework, then every single person in the organization becomes a problem solver. And that’s not true in so many organizations. We think that they don’t need to know this, and therefore they only have a part, and they’re left out.
And as you say, some of the best ideas come really from the youngest people who are closer to what’s going on.
Adam: Look, I’ve had a very successful career, both as an angel investor as well as an operator. Not just investing in people, but yes, soliciting the best ideas can come from anywhere. That’s not to say that all ideas are good, right?
Denver: Yeah.
Adam: Like, but if you don’t have them on the table to evaluate, you don’t even know what you’re missing. And so that combination of empowering everyone to have ideas, but then collectively working together to say what are our best ideas, right?
In the art world, people will talk about curation. They’ll talk about editorial. And it’s interesting as an engineer in the software industry, it’s not as common for people to talk about this. That’s the creative world. And the thing I love about Silicon Valley sometimes is it can bring together both of those worlds if you let it.
Denver: Yeah.
Adam: But when it comes to people, I feel the same way. And like I said, I think organizations need a point of view. I think opinionated design. I think leadership has a lot to do with saying what we’re doing now, versus later, what our focus is as an organization, what our priorities are.
But those ideas, they’re not just going to all come from the CEO. They’re not going to come from your VP of engineering or your VP of product. It’s really something. A good idea can come from anywhere. I mean, Figma, one of the most successful companies in design right now. I mean, Dylan was an intern when I met him at LinkedIn. Phenomenal.
Denver: Mm-Hmm. Well, as they always say, the best ideas come from the most ideas. Just get the volume of ideas. There’ll be a good one stuck in there.
And so finally, Adam, how do you see technology, beyond the Daffy platform itself, playing a role in shaping a new era of donor engagement and participation, especially with younger generations?
Adam: Well, I think this is really the biggest dream I have for Daffy. And I often talk about Daffy as not just a donor-advised fund, not just a financial product, but as a community and as a platform. And that’s because the biggest problem that I see going on right now is that there are over a million nonprofit organizations in the US alone, let alone globally– almost 2 million.
And we already talked about, there are tens of millions of people who care about giving. They care about it for themselves. They believe that life is not meant to be purely selfish, that they put money aside for others. But there’s an unbelievable problem with millions of organizations having trouble finding people.
It’s not just about donations. They have trouble finding people to volunteer. They have trouble finding people for their boards. They find trouble finding employees, throwing events, and there are tens of millions of Americans who have trouble finding those organizations…those people who are doing things that they believe in, that they want to help.
And so what I’m hoping is that as Daffy grows and as technology invests more in philanthropy, we’ll do a better job of bringing together those millions of organizations with those tens of millions of people. That feels to me like a marketplace, and as someone in my career, I had the advantage. I got to work at eBay in the early days and saw that marketplace get built up.
I got to see LinkedIn. I was the head of product there through the IPO. And now millions of companies find hundreds of millions of people on LinkedIn. Wouldn’t it be amazing if that same thing existed for philanthropy? Wouldn’t it be amazing if you could actually have this community where it was possible to discover those organizations, and those organizations had a place they could go to find people who cared?
To me, that would be the biggest way that technology could make a real transformational difference to philanthropy.
Denver: A great point. You even said about your own career, one of the keys to it was the ability to be found. You’ve got to be found. Nobody’s going to… no matter how good you are, if they can’t find you, it won’t make a difference.
For listeners who want to learn more about Daffy, sign up, maybe get their company involved, tell us about your website and what visitors will find there.
Adam: Yeah. Happy to, Denver. So it’s as simple as going to the App Store, typing in Daffy. You’ll find us there. Or you can just go to daffy.org and sign up. It’s very easy to get started.
Like I said, the most transformational moment for most people, is just picking a number, picking a goal. But we try to make it very easy to get started. And for your audience, Denver, I’m very happy to give you a link. We like to help people get started so we’re very happy to give people, once they fund their account, $25 to give to the charity of their choice, which is by itself just a good deed to do.
Denver: Yeah, yeah. Well, you do know how to remove friction, I’ll tell you that.
I want to thank you so much for being here today, Adam. It was a great conversation. I really appreciate you taking the time to be on the program.
Adam: No, and thank you for having me.
Denver Frederick, Host of The Business of Giving serves as a Trusted Advisor and Executive Coach to Nonprofit Leaders. His Book, The Business of Giving: New Best Practices for Nonprofit and Philanthropic Leaders in an Uncertain World, is available now on Amazon and Barnes & Noble.