Adam Nash on building Daffy, the membership-based platform for charitable giving

Americans give nearly half a trillion dollars to charity each year—over 2% of GDP. Yet despite this massive scale, charitable giving remains stuck in the past, dominated by donor-advised funds marketed exclusively to the wealthy and clunky processes that make generosity harder than it should be.

Today I’m joined by Adam Nash, co-founder and CEO of Daffy, a modern platform that’s democratizing charitable giving through technology. Adam brings decades of experience building consumer fintech products as the former CEO of Wealthfront and in leadership roles at LinkedIn, Dropbox, and eBay. During the pandemic, he recognized that while fintech had revolutionized how we save and invest, charitable giving had been largely untouched by innovation.

We’ll explore why Adam is passionate about tackling charitable giving, how Daffy’s membership-based model differs from traditional approaches, and why he believes donor-advised funds will soon be as common as 401ks. Adam will share insights on tax-advantaged giving as more people hold appreciated assets like stock and crypto, how Daffy is incorporating AI, and why they’ve opened their APIs to partners like Betterment and Robinhood.

Watch the episode

LIsten to the episode

Subscribe: Apple Podcasts I SoundCloud I Spotify

Read the transcript (for TS Pro subscribers)

From Wealthfront to charitable giving entrepreneur

Adam Nash: Well, it’s funny—gardening I’ve been doing for a very long time. That’s kind of a personal hobby and passion. But most of my career has actually been following this edge of technology and design. I’ve always been somewhat of a technology optimist, believing as computers and networks get more and more powerful, we can do more with them to help people.

I almost feel beholden for people who are passionate about the area to invest their time to think of new products and services and things that we can do better now that everything has gotten faster and cheaper. That applies in financial services too. Wealthfront, by itself, was very much—I was a customer there before I ever joined the company, because I was really excited about this idea that maybe we’ve gotten to the point now where people will actually trust computers to help them with their money.

It was an area I was always passionate about, and this idea of getting millions of people sophisticated financial advice that wouldn’t have been able to afford it or even been a valuable customer before, just was something that was very exciting to me. In some ways, my current work at Daffy is very similar, which is looking at financial services or products that are important to people and yet somehow have been withheld or unavailable to most of the people involved, and then trying to use technology to bridge that gap.

What is Daffy and the donor advised fund?

Adam Nash: The donor-advised fund is one of these great financial products that has been around for decades, and yet most people like you and me haven’t heard of it. I hadn’t heard of it, I think until LinkedIn went public back in the day and a lot of sophisticated advisors and accountants were around giving advice to early employees and executives.

It turns out that most people give to charity. Most households give, and more importantly, they give to organizations consistently—whether it’s a religious institution, maybe it’s your school, your kids’ school, a cause. Giving is one of those things that’s very personal and personally important to a lot of people and families. We teach our children to give, and yet I really became fascinated with this idea of thinking of it also as a financial goal.

I teach a class at Stanford on personal finance for engineers, and we talk a lot about behavioral finance and the emotions around money. And yet, most people, even though they give on paper consistently, there’s no line item in their budget for it. They don’t have an account set up for it. I started really thinking about, like, wow, this thing is so important. We teach our children to give. My kids went to a school where every Friday, they brought in spare change to put in the little box to give to a local charity every quarter. I said, “Well, why isn’t there a product for this?”

We’ve done so much with fintech in the last 10 to 15 years to help people save better, spend better, invest better. I’d worked with Wealthfront, I’d worked with Acorns, so many companies, and I thought, wow, we could do something different here.

The donor-advised fund really is this amazing product for this because it’s been around for decades. When you have the urge to put money aside, you’re inspired to put money aside for charity, you can, you get the tax deduction, the money’s invested tax-free. And then any time you want to give to a charity, it could be as simple as a few taps on your phone. I just got very excited about bringing all that technology and capability to an area that is just so important to so many millions of people.

Advantages of fund based giving

Adam Nash: There’s a few advantages to having a fund, but actually, it’s not that different than other parts of our life. Why is it useful to have a separate account to save money for retirement or for buying a house or for your kid’s college fund? It turns out that by putting money aside for a goal, one, it makes it easier to kind of keep that money separate and available, so that when you do want to give you have it—the whole separate envelope theory.

And also, let’s be realistic, there’s a long-term trend where for most of us, our incomes are no longer consistent year to year. We have good years and not so good years. And so having a separate account makes it much easier to put money aside when financially it’s good for you—in those years where you have a little bit extra and by the way, taxes are a little bit higher—and then in the years that are not so good, you still have money to give to the organizations and causes.

The biggest problem with just giving when you’re asked transactionally, as most people run into, is that in those not so good years, it’s harder to give, and that makes people feel bad. Most charities need consistent support. They don’t just need money this year when they ask. They actually are looking for people who will support them year after year, because they have budgets and operations. All these things make a donor-advised fund not only better for the individual putting money aside, but also for the charities that they support.

Daffy’s disruptive business model

Adam Nash: It’s actually one of the most disruptive things about Daffy. This will sound pretty simple for folks who follow technology, but it’s kind of radical in the space. It turns out, most donor-advised funds out there, the big guys, they borrowed their business model from the traditional investment management industry. So they charge a percentage of assets. Even Vanguard, who I love—I love this firm, love their products—even Vanguard charges 0.6% for accounts up to $500,000. What that basically means is that they’re chasing assets. The truth is, they make more money off a million-dollar account than they do off a $100,000 account or a $10,000 account.

One of the things we wanted to do is better align the donor-advised fund with those millions of people out there who give consistently. So we borrowed a business model actually from the nonprofit sector, but also from technology, which is we charge a regular membership fee. We’re free under $100, but most of our members pay about $3 a month. We have family plans at $5 a month. And then at the high end, if you want features like a custom portfolio or large contributions of stock, crypto, etc., we charge $20 a month. It’s really quite simple and transparent.

The exciting thing for me, of course, is that it better aligns us with giving and our mission to help people be more generous more often. If you have $100,000 account at one of the big guys and you give away $10,000 to a charity, their revenue just dropped 10%. Whereas for us as a membership platform, we just want people to consistently put money aside for charity and give as long as possible, years and decades, which is what most of us actually do.

Making giving part of personal finance

Adam Nash: I think the most important thing that Daffy does, from a personal finance standpoint, is it makes it transparent what you’re giving, what you have given. It’s a better system. You can see what you’ve given in the past. You can schedule and make recurring donations to the people you want to give to. You can also make recurring contributions so that it’s actually part of your budget. You’re putting money aside.

Who knew? But some of that old-fashioned advice about just putting money aside for those less fortunate than yourself, consistently, on a regular basis, also turns out to be good financial advice. So if you, no matter how much you give, whether it’s a few hundred dollars, a few thousand dollars or more, Daffy lets you set up a giving goal. It’s actually a little bit like Apple Health—you set up a goal, we let you track it through the year.

Let’s face it, if trading apps can give you confetti for placing a trade, we can give you cheers for actually putting money aside for charity. And we do. So we encourage people to set a goal for their giving, put aside money for those less fortunate than themselves, for organizations they care about, and then that money is invested tax-free, which hopefully means that you have even more money to give when you’re inspired to give.

Family collaboration and multi generational giving

Adam Nash: The way that our fund—this goes back to kind of my technology background—from our perspective, giving isn’t just something we do alone. It’s actually a social thing that we do. We know the people who support the organizations that we care about, and it’s also within families, something that parents and families do together and care about teaching.

Yes, there are organizers for the fund. They’re the ones who control, in the end, where the money goes and how money goes in. But you can add family members who get alerts when you make a donation, or who can make recommendations themselves about what to give to. I’ve had my own children actually make recommendations about organizations to support that they’re passionate about, and it’s wonderful as a parent to get that alert so that you can have that conversation.

Frankly, it beats some of the alerts I’m used to getting about video games and Amazon purchases and that sort of thing—the challenges of being a modern parent. But the truth is, the family plan is very broad. We see siblings using it together. We see grandparents using it. Multi-generational giving has become a really big topic in the industry. It’s just surprising that none of the donor-advised funds support it.

We launched this a few years ago. We’re a new platform. It seems so obvious to us, but it’s actually turned out to be one of our most popular and differentiating features—the ability to flexibly add up to 24 people onto a fund giving together.

Why donor advised funds lacked innovation

Adam Nash: I think there’s a couple things going on there. First and foremost, back in business school, I was a student of Clay Christensen—Innovator’s Dilemma—so that really influenced me. I think the traditional institutions set up a business model that really made the donor-advised fund for them more of an attached product for their wealthier customers and their financial advisors on the platform. They didn’t really try to convince anyone to use it, but they wanted to check the box that if an advisor wanted to use a donor-advised fund, they could use that one.

I don’t know that those institutions really spent a lot of time on the features, because the economics—their best customers weren’t asking for that investment. So I think you can get trapped by your business model in some ways.

But the other thing that’s going on is some of the trends weren’t as present. A lot of these big institutions launched their donor-advised funds in the 80s and 90s. The truth is, the recent trends—more and more people are having volatile income, more and more people are getting paid with things like stock, crypto has been very big for us as well—I think you’re seeing more and more people who are starting to explore on their own the tax advantages, financial advantages of having something like a donor-advised fund.

But I think that’s a relatively recent phenomenon in the last 10 to 15 years, and I think the growth of fintech has really accelerated that. You have a lot more people engaging with these type of financial services, with financial advisors, etc., and they’re learning that, hey, there’s a better way.

I can’t tell you how many people will tell me that their eyes kind of open like, “Wait, you’re telling me, instead of giving cash, writing that check to my church or my synagogue every year, that I could be donating stock and never paying the capital gains tax?” Their eyes kind of open. Donor-advised funds have literally been around for decades, and yet most people still haven’t heard about the product.

I do think there’s a little bit of timing in it, and I do think there’s a change in the audience. I think we’re seeing a lot of people who are hitting those years where they’re thinking about giving—they’re having families, they are getting a little bit older, more success in their careers, and this idea of putting money aside for charity is just a very old-fashioned idea.

Design and user experience: abstracting the financial complexity

Adam Nash: That’s the great thing about standing on the shoulders of giants. We’ve had 10 or 15 years of novel, new fintech products. When I was on the board of Acorns for six years, watching how they’ve made it so easy to start with something as simple as saving your spare change and turning that into a healthier financial life for you and your family. Watching Wealthfront take sophisticated strategies like tax-loss harvesting and direct indexing and bond ladders, and make it so easy that you can just send some money in, and they do it for you.

So we do the same thing with giving. We make it incredibly easy to get started. In fact, we were, I think, the first fully functional donor-advised fund in the App Store when we launched. If you go to the App Store, you can download this app, link your bank account, and start moving money over. And then, for a lot of people, they give a few taps on their phone and they realize, “Wow, it really is that simple.”

And then we try to help them understand more things about how they can be even more generous—the benefits of donating stock or even crypto, the advantages of investing that money tax-free, so that you have even more money to give. We treat it—we actually learn a little bit from gaming of all these techniques that are used online to get people to engage more and watch more and click more. We use those same techniques, but instead, we use them to encourage people to be more generous, to put a little bit more money aside, to be a little bit more free giving that money to institutions and organizations that need it.

We try to take the journey step by step. But the truth is, in the US today, we’ve been marketing as a society tax-advantaged accounts for the last 50 years. Most people know what a 401k or an IRA is. Some people know what a 529 plan is for college. And so it turns out that letting people know, “Oh, there’s basically a 401k for charity or an IRA for charity” hasn’t turned out to be a lot of education.

Charity facing features and campaigns

Adam Nash: There’s a couple of things we do. Every charity—Daffy supports every legal charity in the US. In fact, some of the value that we add for our members is that we pull in lots of information from both public and private sources about as much as we can about the different charities, so you can make informed decisions about your giving. And of course, charities reach out to us to update that information and make it better.

We have a new feature that we launched in the last couple of years called campaigns, which has been very popular. As you may know, for a lot of nonprofits, when they want to raise money, they’ll find one of their big donors who’s already supporting the platform and then say, “Hey, instead of you giving us money, how about you match dollar for dollar the other donations that come in?” And we said, “Wait, why not build that into a donor-advised fund?”

Campaigns have been on the internet for decades. Why not make it so that any donor, instead of giving, can actually match dollar for dollar other people? So we actually launched that feature. We’ve actually had a lot of nonprofits reach out to us about how they can use campaigns to help meet their goals. If you have a school that’s raising money for a new sports program or a computer lab, the idea of saying, “Oh, we can just have them use Daffy really for free to do a matching campaign” is very empowering.

Key performance indicators and growth metrics

Adam Nash: The nice thing about a membership-based platform is that the metrics are actually pretty clear. In some ways, we probably look a lot like a SaaS company in technology. We look at acquisition, we look at our membership, we look at churn. One of the signs that we were really onto something in the early days was some of those metrics were kind of off the charts great.

It turns out, when people put money aside for charity, they do it for a long time. In fintech, we all know that retirement accounts churn less than taxable accounts in terms of people opening them, closing them, funding them, etc. But I’m really happy to say that when we see people put money aside for charity, they stick with it. It seems to be something that really feels good and that people want to do more of—the more they do.

Not only do we see people stick with their accounts, but the most exciting thing from a mission standpoint is that as fast as our growth has been, the growth in the money that people put aside for charity is even faster. We put out our numbers for 2024—we grew our membership more than 100% year over year, but the actual assets on the platform grew at more than 200% year over year. And of course, the most exciting thing from our mission is that donations, actually money going out to charities, grew more than 300% year over year.

We really think we’ve built a product that not only lets people do the smart thing financially for their giving, but also actually does help people be more generous.

Incorporating generative AI

Adam Nash: We actually launched a whole suite of features just a few months ago, but we’ve actually been investing in it for a couple years. We see that as part of our role in the sector—to be the tech forward, thinking about what can technology do to help people give more and be more generous. So we’re actually using generative AI across the board.

One of our first features was very simple, just giving people good thank you notes when they give—that pat on the back, that personalized attention that’s personalized to the institution they gave to and themselves. But we have a new feature called Quick Donate. So on the app now you can literally just tell it “give $1,000 every year to my children’s school,” and it understands enough of your history to know that if you’ve given to that school before, it kind of automatically does it. It makes it—we think it makes it as easy for the average person to get the same level of service that billionaires get when they have a whole philanthropy team, and they just tell them what to do, and then they go off and do it.

We’ve also seen phenomenal benefits on the back end. It turns out that a lot of these donor-advised funds and incumbents, they actually hire a lot of people for processing to do nothing but donation operations—to process checks and research what charities and get new information. And generative AI has made it so much easier for us to pull in that information, keep it up to date and make sure that when people make a donation on our platform, that we can get it out to the charity as fast as possible. It’s really been phenomenal on the back office as well.