FinTech for Charity: Closing the Trillion Dollar Generosity Gap


Alright, I know you guys thought this was gonna be all about John and nonprofits and Daffy, but really we're gonna hash through the last episode of the book of Boba Fett.

No, I'm just kidding. I think it's too early for spoilers, right? Too soon. Yep.

Too soon. All right. Well, I don't think I gave anything away. There is actually a season finale. Anyway, yeah, I think, John, maybe the best thing to start with, I think, is with some of your experience. I mean, I'm not sure everyone on the call knows that that John's actually on the board of Daffy, the nonprofit who runs the Daffy Charitable Fund. But Daffy isn't the first nonprofit that John's had experience with since earlier in his career, he was actually CEO of Mozilla, has been involved with a number of other organizations. I don't know if you want to talk a bit about that. Yeah, real quickly, my background is technical and product, but I've been obsessed with nonprofits and how you can use nonprofits and mission-oriented organizations to change the way we behave and the way our world is. And Mozilla was one of those, I ran for a little while, nonprofits made me Firefox.

You know, more recently, involved with Code for America, nonprofit work on working on getting the social safety building, rebuilding modern social safety net for Americans. And in addition to that, a company called Voting Works, which is a nonprofit on voting machines. So, you know, it seems obvious now in 2022, we started worrying about building machine security and credibility a couple years ago, or 2018, 2017, and started working on that. But yeah, Daffy is the new one. So, you know, I got, I guess, sort of helping you out, getting involved maybe a year ago, and I'm just couldn't be more excited to be on the board. You know, I've been involved.

I have my own DAF, and my wife and I have been giving a lot of, giving money over time through a DAF called Schwab Charitable. And, you know, every time you go into Schwab Charitable, it feels like you're entering the 80s or the 90s web. And so it was just, I'm really excited about the ideas at Daffy to make it easier to give.

Yeah, it's actually, it's funny because I think Schwab is actually further ahead than most on the technology front. But, like you said, the products and services feel very backwards. But I love that you've had a donor advice fund before. And I feel really lucky to have you involved with Daffy, mainly because you have such broad experience about how nonprofits and for profit companies can work together to make it easier for you to give.

Yeah, I mean, it's a great way to work together to affect change and impact. But you've also been testing the product, I think, since the early days, since before we launched. Any insights on it? Or, you know, in terms of what it meant to have like a mobile app or how it affected your giving? Yeah, I mean, the way that, so it's me and my wife, my wife does, Kathy, you know, well, obviously, she is really active on this stuff. And, you know, with the surprising thing about Daffy is it just makes it so just a lot easier. So with Schwab, really, you have to go on, it's really not a great mobile site. And so, you know, we, the way Daffs work, you know, we took, we've been lucky with, you know, Airbnb and some other things that have gone Coinbase and others have gone public over the past few years.

And so you take some stock and you stick it in the Daff, and then you have this pot of money, basically, that you can recommend donations for. And so, you know, we did that with Schwab. But every time you say, oh, we should give money to this, or we should donate to this, then you kind of got to go and log into the website. And it's a very cumbersome process. And so as a result, like means you want to give like, fewer, fewer contributions and larger amounts and like kind of bunch, batch it all like that.

And with Daffy, so, you know, second on my phone, second on Kathy's phone, and suddenly, we're like, oh, yeah, we should give $100 to this or $50 to this. And you just like tap, tap, tap on the web and on the on the mobile app. It's just, it's amazing how much that reduction in friction makes it easy to just give on the spur of the moment on something that makes sense to us right then, you don't have to, you know, remember it till you get back to your desk and stuff. And so for us, it's increased our giving.

I think it's meant that we've, you know, you know, we think right away, it's like, oh, we should just give some money, you know, boom, boom, boom, and it's done. And so that's been a really cool thing. Just friction reduction almost always like is a is a bigger innovation, you think it is, and it certainly is here.

Yeah, I mean, that that use case, you know, that story, I heard a number of times when we were trying to figure out what, what the product was that would become Daffy, you know, this idea that actually having allocated money for giving by itself, unlock some friction, but it, you have to carry it all the way through and make it just as easy as possible to give when the moment happens, right? So if you're at the, if you're at a school function, if you talking to a friend, whatever the moment is where you're inspired to give, it just felt crazy. To me that that wasn't broadly available in the App Store, right? It's not, you know, 2012. It's 2022. But was really excited to get an app like this out there.

Yeah, but yeah, so that's, that's not that's not that's on the demand side. I think it just on the supply side, just getting capital in was also been, you know, pretty eye opening, you know, being able to, you know, shoot a few Bitcoin or whatever, not a few Bitcoin, partial Bitcoin over just by, you know, just on my phone. It's kind of shockingly simple. And you know, it hits way faster than, you know, traditional and banking CH and that kind of stuff. So it just felt like it was a really cool thing.

And it just feels better and more connected to the causes, you know? Yeah, well, I mean, that's, you're right. I mean, obviously, we put out the post a couple days ago, talking about the generosity gap. But this was the part that was exciting to me about this problem space was when you thought about reinventing the donor advice fund, you know, what would really unlock more giving.

And there's so many great organizations focused on helping people find better causes and nonprofits to give to, but very few focus on actually unlocking more capital, unlocking more money to give. And so we were on the price to find out how big that was.

Yeah, I mean, I think everybody, I mean, I think, I think probably it's like you're deploying some psychological commitment mechanisms. So, you know, I think that one, the DAF is a very specific kind of tax, tax policy. But one of the things it does is you kind of commit to giving a certain amount of money away.

And what's because we, so we put this pool of money in, and then you start to you draw down. And it's funny, because like, because we're drawing down, it's like, oh, yeah, we've already got this pot of money, we're already decided to donate it. Yeah, click, click, tap, tap, and it becomes more like, you know, more like, you know, akin to like the act of like calling an Uber or something, it's that simple.

And but because we're already pre committed to giving money, it's, you know, it's already in the system, it's already in our brains, it's already committed. And I think that that's one of the psychological mechanisms that, that I'm happy to take advantage of myself, you know, pre committed to giving.

Yeah, that was the big surprise for me. I mean, when I, similar to you, when I opened my first donor advice fund, like a lot of folks in Silicon Valley, it was tied to being at a company that finally went public. And, you know, with some of the advice we got from accounts, I wrote about this on my personal account.

I wrote about this on my personal blog, not from the Daffy official case. It was actually a surprise to me how much that changed things. It was the first time I ever was asked the question, well, how much do you want to give per year? I mean, it sounds like such a simple question, but I went a good chunk of my career without ever actually asking myself for a specific number and I found that, ironically, setting up the donor advice fund, I had to come up with that number, but I found that number for very meaningful, like I felt like if I wasn't giving to that pace, I felt like I was somehow underperforming, like I wanted to hit that number. And I did check my, I mean, John, I'm sorry, for everyone listening, John and I, while being very different in a number of ways have some similar quirks. And one of them is that we're probably the last two users of Quicken out there, I'm not sure how many are left. But I was actually looking at my records, and it's very clear that once I had a given goal, I just gave more, I was just more consistent about it.

Yeah, I think so too. And it's how we teach our kids, right? So, you know, my son has a, we have a Greenlight account, he's a teenager, and you know, it's like 50% to spend 30% to save 20% to give. And so, you know, we do it with our kids. And like, so you kind of want to do that with yourself with your own bank accounts. But and so that's the other piece of programming mechanism that I like in Daffy, which is like, you know, commit X dollars from every paycheck or X dollars every two weeks. And so then, if you're, you know, you just set it and forget it, and then you build up this sort of, you know, this giving capacity, and then you start to say, Oh, well, let me make sure I give in the same sort of, you know, procedural way that I've been contributing. And I think I think it's going to be both like better for the causes. And I think it'll be more in line with what how people conceptually want to use their, their salary and their income.

Yeah, I mean, I agree. I mean, it's very interesting. When we talk to nonprofits, there is this commonality, they like regular committed membership, right? They prefer being able to count on people. And it also, you know, we know from behavioral finance, you know, that people, if left to their own devices, doing things transactionally just leads them to not happen when people get busy or distracted. So automating really helps things. I think that's one of the I think that's at the core of the DAFI product idea is that, you know, can we can we take all the things that we learned in the last 20 years about how to help people save? Certainly, we spent a lot of effort on helping people spend, why not put some of those same innovations to work helping people give. But it's nice to hear that your personal experience kind of echoed that.

Yeah, yeah, the only the feature request, you know, is like, right now, my wife would have to share the same account. I need I need an account with her email on it so she can log in separate from mine. But other than that, we're pretty happy.

Yeah, we're on that. It's it's on our shortlist. We've had you know, the the two, the two features we're working on right now that we're really excited about, of course, is support for households, making sure that you know, you know, both members of a household, you know, both members of a household can have separate charities and causes they support, but still operate off one fund. So we're excited about that's something we're going to hopefully roll out in a few weeks.

Yeah, that's good. Until you get that I can't guarantee next year's Christmas card.

Thanks. We'll try to get it sooner rather than later.

But yeah, I think, you know, and I think, I mean, I think in general, it's been very excited about how people are reacting to this, you know, donor advised funds are kind of a exotic product in a way, I think that most people haven't heard of them. And in some ways, I don't know if that's even important that people know that term.

Although I guess we live in a world now where everyone knows what a 401k is, even though that's a, you know, line in the tax code. But I really like the idea, though, of setting up a platform where people actually proactively put money aside. It's like you said, it's very old fashioned.

It's what we, it's what we teach our kids. It's just surprising that more people don't do it as adults. It actually feels good to know that you're putting money aside.

Well, so how are you thinking? So the dafts have been fairly vilified in the press as a mechanism. And that's not what we're talking about here. But, you know, as a way for sort of really wealthy people to set aside money and get tax benefits and never have to give away the daft.

You know, it's been written about by even guys who are in the room like Teddy here. But the, so what's your, what's your sense of how that's going to evolve? Is it going to evolve? Is it going to change? And how will that change giving, do you think? Well, I mean, at the high end, I think that the donor advised fund, it's a great product and idea, but it's been overly tailored to the very, very wealthy. Yeah. And, you know, obviously, we've seen liquidity events at the very high end go from millions to tens of millions to now.

I feel like we read about a multi billion dollar event every week. And so I think that unfortunately, donor advised funds have kind of operated in a separate world from foundations. And so there's some, I think there's some rightful push to say, like, why would we treat these things differently? Why would we rationalize these things? But I think there's also a fundamental problem in the business model of the industry. You know, most donor advised funds are partnered with an investment manager. And so they kind of ended up borrowing the investment manager's business model, which is to charge on a percentage of assets.

And in a funny way, I think there's really good people at all the traditional firms, I don't think they're doing this on purpose, but incentives do matter. And it turns out that when you make a gift out of an existing donor advised fund, the provider makes less revenue.

I mean, Teddy and I were talking about this a couple days ago. And so that's another thing that we're, you know, hopefully we can be a change agent for the industry is to kind of move away from models that have incentives for people not to actually give money to operating charities.

I mean, that's, that's the whole premise here is you're putting money aside, but having money compound only is as valuable as it getting to actual organizations that are going to have impact on a cause or community. Yeah, yeah.

Yeah. Yeah, I mean, I think a lot of things are going to change. I think just like everything else is getting pushed down to everything's becoming retail as opposed to institutional. I think that as retail investors get more power as retail, retail sort of causes get more power, I will start to see retail philanthropists, basically, I think that's a huge, a huge positive.

Yeah, well, I like I like the, I like this idea. And I mean, as promised, you know, for this, for this chat, I want to open this up to questions sooner rather than later. I did promise in the lead in to talk a little bit about the generosity gap. And I don't have to repeat all the data from the post, I'm certainly happy to have folks read it.

But really, I was surprised at how compelling this this data is. I was lucky enough. Shlomo Bernazzi, who is the famous behavioral economist from UCLA, who wrote one of the seminal papers on how pre commitment can help people save for retirement was followed by some research that suggested it might even apply more to giving.

But we were surprised by not the data supported the idea that it might increase people's giving by almost a third, right 32% just by doing the simple step of having a goal and committing to it. And it turns out the US is a really big market in the US alone individuals give over 300 billion a year.

So you increase that by a third. That's that could free up another 100 billion a year for organizations and for people who really need it. And so the, the idea of the generosity gap was just to kind of really more internally for our team kind of orient on what was the big problem we were trying to solve.

And the big problem we're trying to solve is to get more money, more support to organizations that need it. And we have you know, we have this crazy idea that actually it's a better way to live that actually will make people feel better to make this commitment and feel like they're the person they want to be as generous as they want to be.

Anyway, I'm sure there's a lot of questions about this, etc. And I'm happy to answer them. And but I know having you here, john is a special treat for folks. So any questions for john or me are fair game.

Do you know how we do this, this part? Yeah, totally not. Oh, it looks like some people are tweeting in questions. So I got I got one here. Are any of the ideas being built here applicable to countries outside the US? That's a great question. Something I one of the things I liked about this product in this space, which is different than a lot of fintech is that actually this product can be fairly universal.

It's only available in the US now. But the idea of a donor advice fund is actually supported in dozens of countries. And even in countries that don't have it, there's a concept of giving money for charity that's fairly broad based. So we're hoping that I mean, it's still so early, we're, we're small team, and we just launched a few months ago, but we have aspirations to make this a global product and platform as much as possible.

Any other questions? Oh, the speaker requests. Here we go.

Oh, I see requests. Yeah. Do you see them? Don't feel free to take anyone you want. Yeah, I just had a hon. Hi, hon.

Hey, John, how you doing? Adam, I think you guys are definitely showing your age. This is more like clubhouse, you people who have a question need to like request on that little mic button icon on the bottom. And then you guys call them up and then they can ask a question and then kind of go back down to the audience.

We got it. How exactly like he's a lot younger than we are. He's only a little younger.

I'm more, I'm more Twitter age. I'm still reeling from the implication that I'm too old for. No, no, clubhouse. Clubhouse. All right. Let's bring on. So Nasra has a question. So let's just bring on Nasra here. Hi, Nasra.

Hi, Nasra. Nasra, you there? Yes. Hi. Thank you for this. This is fascinating. I have to say I'm into this topic. I just joined Giving Tuesday to help study generosity at a global level. But I think if I could just say one of the things I haven't heard in a long time and your example about children and how we encourage our children to be, you know, givers and think about children.

Is that that's almost always tied to kind of being a better citizen, being a better person. I mean, we tie as kind of personality to it and a kind of positive person. With philanthropists, though, I guess the high network wealthy people, it's either we want to tax them, make them feel guilty about what it is they need to do, their lack of responsibility.

Maybe to, you know, solve big problems. But I feel like one of the areas we could really think through is something, Adam, you hinted on, which is that psychology of actually being, you know, having a better life, being connected to your community. What does leadership look like when you are generous? Of course, I think leadership is a very important thing.

But I feel like one of the areas we could really think through is something, Adam, you hinted on, which is that psychology of actually being, you know, having a better life, being connected to your community. What does leadership look like when you are generous? Of course, I think there's a way to systematically manage some of these things around inequality.

So I'm not saying we don't go through DAFs, we don't go through taxes, but I feel like there's such a huge area about generosity behaviors that help us think through what it means to be these billionaires and trillionaires. It may humanize them in more ways than one, but I wonder who would be interested in that? What would be the psychological studies and areas we could really help link giving to one being generative actually may create more wealth, but then also helping to address mental illness and getting people to be better and be involved and be more human and not just be seen as an ATM.

So just some thoughts there, but I'm very lucky to be here and thanks for the discussion.

Oh, yeah, no. And thank you. A couple of things you just said resonate strongly. I mean, we didn't do academic quality research, right? And product is more traditional user research, customer development.

But I was really surprised personally, just talking to folks, two things you said were very clear. One was taxes were not the primary motivator for most people.

Almost everyone that we talked to had some awareness that there was a tax deduction. But the real motivation for giving for a lot of people we talked to was that they had some moral authority in their life when they were young, they would talk about it.

It was like a teacher or a priest or a family member, someone who taught them that, you know, no matter what's going on in your life, there are people who have it worse and that you should always put something aside or be doing something to help others.

And then the other thing we ran into, which is what led to this idea of the generosity gap was this idea that people weren't meeting their own expectations that when you ask them how much they should give in a given year, they always had something they didn't agree on the number.

But they believe there was some amount they should be doing over a huge majority. But when you ask them how much they actually gave in a given year, they didn't match the number that they had in their own head.

And that kind of cognitive dissonance is normal with a lot of financial tasks. But I think, by the way, I would be surprised if that's purely based on income or wealth.

I think, you know, in finance, we're always surprised to find out how similarly humans behave with money, small or large amounts.

So I think it's an exciting era for research. So it's great if you're digging into this and would love to connect if there's some way we can help better understand how generosity makes people feel better in their lives.

I mean, I know it sounds old fashioned, but it's it really is this getting out of your selfish motivations and thinking about others has been repeatedly shown to lead people to be more balanced and settled.

And so there must be a connection here where we can help people live better lives, not just for others, but also for themselves and their loved ones.

Oh, it looks like there's another request in. Yeah, for sure. Adam, I'd love to connect on that one. Thank you so much.

Laurie, you have a guy. You know, I really more just wanted to just take just a moment to offer myself up as a resource.

I'm the executive director of Charity Watch. And I really appreciate the piece that you guys are tackling here with, which is actually trying to grow the total pie. Right.

We kind of function on the other end where we try to eliminate the waste by making sure that when people donate to charity, that it actually makes an impact by not being siphoned away by someone else.

These bad actors in the nonprofit sector. So we're the only charity watchdog, true charity watchdog in the country.

And so I just wanted to put myself out there and say, if people want to think of charity watch as a resource, feel free to reach out to me about this piece of it.

And I look forward to following more of your expertise on the piece that you guys specialize in.

Oh, Laurie, thank you. Appreciate that. It's, you know, there's I didn't mean to give a short trip. I think that there's an incredibly important set of problems around helping connect people to organizations that actually are having the biggest impact.

And so it's fantastic to hear about yours. And we certainly see a lot of opportunity to partner with those organizations and integrate them into the Daphne platform over time.

Yeah, great. I know. Yeah, it sounds like you guys have put a lot into this. So, you know, I do get contacted by different platforms on on a somewhat regular basis.

And I find that I tend to learn a lot during those conversations, and I also tend to teach a lot. And so, you know, again, if there's if there's at any point you'd like to reach out and just kind of do some knowledge sharing, I just wanted to offer myself up as a resource.

Fantastic. So, let's see, I think there are any other questions coming in from Twitter.

Now, OK, I want to be careful on time. I don't know, John, if if if you want to give any final thoughts or things that you're most excited about, I know you already got your feature request in, which, you know, I don't know.

That's fine. You know, you know, I just think I think I, I just think we want to get I'm excited just to do more, especially as the year moves on.

And once we get past the midterms, hopefully, and people get back into a charitable mood, I decided I'd be excited to share things out on Twitter and Facebook and social things and just hopefully get more focus on the causes of the pandemic.

And let's focus on on taxes and that kind of stuff. So I think you guys are making good progress. And so just excited to talk about a little bit.

Yeah, it's fantastic. And I will say, like, thank you to everyone who connected for this for this space. And I would ask you, actually, I'm just personally interested.

So feel free to reach out afterwards. But, you know, the same three questions that we asked everyone in that initial research more than a year ago, when we were coming up with this product, you know, that question of how much do you really think people should give to charity in a given year, like no right answer, but what's your answer? And then more importantly, do you hold yourself to that same standard? Right? Is that the same number you would give for yourself? And then of course, the third question, which might be a little harder is to actually really look at, look at your giving last year or the year before.

And did you actually meet that goal? I'm sure some of you did. And that's fantastic. But I'd love to hear the experience and ways that we can help people basically be the person they want to be. And I think that generosity is one of these age old patterns of behavior that seems to align with a better life.

So if you have your own experiences around it, or you have your own thoughts when you answer those questions, please feel free to reach out to me, either on Twitter or email is fine. It's just adamnash at

Please note that the information contained on this page is for educational purposes only and should not be considered tax advice. Any calculations are intended to be illustrative and do not reflect all of the potential complexities of individual tax returns. To assess your specific tax situation, please consult with a tax professional.

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