DAF Universe Spawning FinTech Startups

What is 2.9% of $250 billion? The pro forma dream of the DAF-adjacent industry

Over the last 10 years, the eye-popping 450% growth of donor-advised account assets has drawn close attention from every corner of the nonprofit and philanthropic sectors.

This interest group now includes a booming list of intermediaries, wealth advisors, fundraising platforms and ambitious DAF sponsoring entities locating themselves somewhere between the DAF donation and the account’s eventual charitable destination.  As you will see below, each firm is aiming for a slice of the action, such as DAFpay’s 2.9%, though obviously none of these are the intended beneficiaries of charitable dollars.

Among nonprofit fundraisers, the unapproachability and opacity of the $250 billion held in DAF accounts is well known. That inaccessibility is motivating a fertile market of frustrated (and sometimes desperate) development directors to forgo a portion of contributed funds to receive DAF funds – which they believe their organization otherwise could not access. Even highly visible, respected charities are convinced that these channels will somehow increase their competitiveness, attracting an impressive list of sign-ups.

A sampling of the flourishing DAF adjacent space:

•       DAFpay, created in 2023 by Give Chariot www.givechariot.com/, is a payments company dedicated to connecting DAF contributions to eligible nonprofits for a 2.9% fee.  DAFpay promotes its role as unlocking “more DAF gifts with better information for nonprofits.” Chariot’s DAF payment option spotlights customers such as the American Cancer Society, Memorial Sloan Kettering Cancer Center, and the Michael J. Fox Foundation.  In August, New York-based Chariot raised $11 million for expansion from American consumer-only venture capital firm Maveron, with participation from Spark Capital, SV Angel, and Y Combinator.
•       The DAF Gold List launched in 2024 as a ranking of the 20 most prominent U.S. donor-advised funds based on the https://donoradvisedfunds.com/our-services/ proprietary DAFScore algorithm, which “analyzes many of the more than 1,000 active DAF sponsors across a dozen or so metrics including initial contribution requirements, customer service, ease of use and restrictions, issues that the platform says are important to donors.”  The Gold List’s sponsor, DonorAdvisedFunds.com, was founded by its CEO, Brad Saft, who brings experience as a Principal at Centre Partners, a private equity firm in New York, and works in Morgan Stanley’s Higher Education Group.
•       Daffy Charitable Fund — www.daffy.org, a Silicon Valley DAF sponsoring organization started in 2021, “with a combination of technology and community, {to] help people be more generous” by facilitating recurring donations and investment options to create DAF accounts.  Directly competing with Fidelity, Schwab and Vanguard, by 2022 year-end Daffy reported 2,128 DAF accounts with $20 million.  Daffy’s website features a “small but mighty” team of 20 in matching t-shirts, yet somehow reports no employees on its IRS form 990.  Top Silicon Valley Investors include Ribbit Capital, XYZ Venture Capital, Coinbase Ventures, and CLEO Capital.
•     On the training side, the first DAF Professional Certificate Program is launching in April 2025, a 1 ½ day program created by the American College of Financial Services, for $1200-$1500.  Its first in-person session will be held in Dallas, covering four principal themes: DAF Sector Fundamentals, Maximizing Opportunities to Give, Maximizing Opportunities for Impact, and Navigating Change. .https://www.theamericancollege.edu/learn/certificate-programs/daf,
•       DAFDay.com launched in 2024 as a “giving day” (along the lines of Giving Tuesday) to maximize the use of DAFs on October 10th.  DAFday was promoted through social media with 19 fundraising platforms and 1200 nonprofits signed on (including Doctors without Borders, Planned Parenthood, ACLU, The Public Theater, and Central Park Conservancy).  DAFday was promoted as “a collaborative group of leading nonprofits, fundraising platforms, and DAF providers coming together to activate their collective audience of millions of donors for a single day of unprecedented generosity.”
  DAFday organizers held a Manhattan celebration on October 10, though contribution results are yet to be posted.

There are more DAF-inspired businesses where these came from. Each enterprise sees a long-term growth potential for DAF funds and the people who seek them. Clearly these businesses don’t anticipate an active spend-down of the funds held in DAFs. Taking a page from the commercial DAF sponsors like Fidelity and Schwab, new DAF sponsor DAFFY and fundraising platforms like Network for Good are structured with for-profit arms, relying on venture capital as an essential element of their growth and ownership strategy.

But is there any reason charitable organizations should expect to pay 2.9% to receive a $10,000 payment from a willing donor’s DAF account? This isn’t a small-change credit card transaction, with broad exposure, costs, and risks that justify at least some of the merchant fees. Instead, this haircut takes advantage of nonprofits’ culture of resource dependency, deciding that the cost is worth it because “that’s money we wouldn’t have gotten otherwise.”

The next step is to institutionalize this phenomenon by forming coordinating bodies to combine efforts for public and government relations. DAFday fulfills this function for its founder DAFpay and allies, while the Giving Platform Collaborative www.givingplatformcollaborative.org brings together another set of 19 intermediaries and infrastructure organizations (Meta, Candid, Gates Foundation, PayPal, Giving Tuesday, Salesforce, etc.). The Giving Platform Collaborative pays particular attention to legislation requiring additional reporting by fundraising platforms, especially California Assembly Bill 488.

What does this mean? New enterprises can generate profit from fees on the movement (or stasis) of funds between donors and nonprofits, and have the numbers to wow investors. One way to see this displacement is as part of the commercialization of the philanthropic sector – in which finance and investment firms stake a claim in the growth of this part of philanthropy with their superior capital and leadership. (Fidelity Investments Charitable Gift Fund is, after all, the largest charity in the United States.)

Each of these Fintech launches is delivered with gushing prose about democratizing Philanthropy, reducing processing fees (though I don’t see that documented), and using AI and smartphone apps to increase access to middle-income individuals and next-generation donors. Nothing much about increasing access to information or decision-makers for community organizations seeking funds. Now that would be a great product – an app that tells you which DAF accounts belong to whom, and what their purpose and granting history has been.

The American public has plenty of reasons to want someone to make certain that these tax-exempt funds are put to good use. This new set of intermediaries-of-intermediaries will require a close watch (state attorneys general and Congress, please note) to avoid wasteful fees and unproductive charitable repositories, and instead prioritize the timely and effective uses of these $250 billion held in public trust.

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More about uses and costs charged to DAF funds to come. The Philanthropy Project is committed to following the money, making the case that, as much as possible, charitable funds should be used to benefit the public.