Ep. 94: Donor Advised Funds: What they are and why you need to know about them with Mitch Stein
EPISODE 94
Donor Advised Funds: What they are and why you need to know about them with Mitch Stein
About the Episode:
Donor Advised Funds… maybe this topic you haven’t heard of, or maybe it’s something that exudes a bit of an eye roll. Mitch Stein, Head of Strategy at Chariot, is joining me today on the podcast to flip what you think you know about Donor Advised Funds (DAFs) upside down. He says, “... being more engaged with DAF fundraising is critical. If you're not presenting this to your donors you’re 100% missing out.” If you’re a listener of the show, I know you’d never want to leave money on the table knowingly, and this conversation will help you avoid that. Mitch is breaking down exactly what Donor Advised Funds are, how they can alleviate friction in fundraising, and some exciting innovations that are coming down the pike with fundraising technology. This episode is really exciting, and I hope that when you listen you’ll feel yourself open up to new revenues of donating.
Topics:
A full break down of donor advised funds (DAF) and why they are important for nonprofit fundraising
Why DAFs are not only for wealthy people and how you can make them work for you no matter your income level
How a DAF alleviates some of the decision-making and guesswork that comes with philanthropy
The way that DAFs reduce the friction of giving to allow for more streamlined donations
The differences in the donor profiles between credit card donors and DAF donors
How you’re leaving hundreds, if not thousands of dollars on the table if you’re not engaged with DAF fundraising
Exciting innovations and shifts that Mitch is forecasting in the donorship sector
What Mitch would say to those who are averse to intertwining different tech tools in their fundraising
The reminder that you shouldn’t try to be for everybody
Think you’ve reached out to “everyone” in your network? Out of ideas to get noticed and get funded? Generate leads for your nonprofit or social impact business: https://www.splendidcourses.com/prospect
Christina’s Favorite Takeaways:
“When you're putting your money in advance aside, you’ve taken out any question about it and it’s automatic. So the more common use case of DAF today from people is a charitable wallet.”
“Your charitable money is not only in a DAF, but it's growing. That's fun. I really think that speaks to somebody who is excited about truly making a change in the world… it’s a really fun way for people to think about charitable giving that we haven't before.” – Christina
“For a really large organization, being more engaged with DAF fundraising is critical, like drop everything because if you're not presenting this to donors, you are 100% missing out.” – Mitch
“It's our job as the nonprofit to say, you can do this with that if you have this. We're going to make it seamless. We're going to make it easy.” – Christina
“There are 60 million people with 401Ks, and there's 3 million people with donor advised funds. I don't see any reason why those numbers couldn't be pretty close together.” – Mitch
“There's so many problems that I think can prevent people from really embracing who they are, and understanding that you need to lead with that because it is how you deeply connect with the right people – by showing up as who you are and being vulnerable.” – Mitch
About Mitch:
Mitch Stein is the Head of Strategy for Chariot - a charitable payments company that gets nonprofits more from Donor Advised Funds. He previously founded a nonprofit marketplace and community called Pond after leaving his role as a VP on Goldman Sachs' Technology Investment Banking team. He's a long-time board member at The LGBT Center of NYC and active alum of the Startup Leadership Program NYC.
Connect with Mitch:
Episode Resources:
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Christina Edwards 00:15
Welcome to the podcast, Mitch Stein. I'm like, we're in the greenroom already talking about this. So I had to hit record. So we could go ahead and dig, dig in to donor advised funds. First things first, tell us about you and your work at chariot. Thank
Mitch Stein 00:34
you. Thanks for having me, Christina. Hi, everybody. My name is Mitch Stein. I'm the head of strategy here at chariot. I have been working in around the nonprofit technology and innovation space for the past four years. I previously founded another startup called pond, which was a marketplace connecting nonprofits with all different kinds of vendors, from software to services, consultants, training, etc. And before that, I was an investment banker and a former life but had a growing passion for fundraising and doing my own, and a big, large scale fundraisers in my free time and wanted to make that my full time job. So that's why I'm here today.
Christina Edwards 01:17
Amazing. I think we definitely have to set the stage and set the foundation because many of my listeners, we've thrown around read about donor advised funds. I've actually heard some people are like, yeah, not for me, I hear a lot of what is that? So I think we have to first like define it, what is it and then we're really going to get who it's for why we're going to hear a lot more conversations about donor advised funds if you're not already. So like give us like the lay of the land.
Mitch Stein 01:43
Totally. And we can take it piece by piece because there's a lot of things to dig into. But I also don't want people to think this is a super complex and overwhelming topic, because at the core of it, a donor advised fund is just a charitable savings account. So just like people put money aside in a 401k for retirement and get tax benefits for that, or they put money aside in an HSA, a health savings account for health care costs that with a tax benefit, you can do the same thing for your charitable giving. And it's called a donor advised fund or a def is the acronym that you'll be seeing more and more. So people can contribute cash into those accounts, they can also contribute things like stocks and bonds are even less liquid like securities and assets, real estate, even like an art collection or something. As long as it can be valued, it can be contributed into a donor advised fund account, you get that tax write off on the full amount and you contribute it upfront. And then it can be invested while it's in that account in the market in different mutual funds or whatever. And so grow with the market over time as you're granting money out of it over time. Yeah,
Christina Edwards 02:52
so it's making me think of what is the college savings account called? What is that called? I can't think of it. So we have we have those for our kids. Right? So it's like you're putting in there? Yeah, you're like your kids. Yeah. So it's you're putting money in there. And when it's time they get to use it. But while I'm putting money in there, it's growing, right? And so I think the only difference between maybe something like that, and a 401 K is like you can grant the funds at any time. You don't have to wait to do it. By the time you're a certain age or by X amount of years has passed. You could stick it in there. And then could you get the funds
Mitch Stein 03:27
tomorrow? Yeah, tomorrow. And I think another big difference from a 401k is from Horan K, you can take money out of that early and pay a penalty for a DAF. It's once the money is in there, it can only leave the account to be granted to a nonprofit organization. So I think that's a really important thing that people miss is like, all this money goes into daps instead of nonprofits. It's not quite right just because and we get into the that complaints and issues around them. But just to be crystal clear that the only use case of that funds to leave an account is to be donated charity, it's the only thing you can do with it. There
Christina Edwards 04:05
we go. You can't just stick it in there and be like, You know what, I want to go on a trip next month. Let me pull that back out. Correct. Got it. Okay. All right. Big question. Is this only for wealthy people? Is this just for rich people to that their financial advisor saying, hey, you know, you need to do this.
Mitch Stein 04:21
Yep. I think if we would have been having this conversation 15 years ago, the answer probably would have been like, yeah, for the most part, people are opting to set up a DAF as like a simplified Foundation. And that's how I think people thought about it for a long time. And that still happens and it still isn't a growing trend that people are opting to use a DAF instead of a private foundation, because all of the administrative operational stuff is managed by the Deaf sponsors that can be a Fidelity or Vanguard if it's with a financial institution. That can be your local community foundation, or a religious affiliated foundation like National Christian foundation or or are Jewish criminal funds. But when you have your own private foundation that you're making grants out of, you have to have a board, you have to have board meetings, you have to do your filings, you have to all this stuff, you do none of that for a DAF. It's all managed by the staff and you just get to make the grant requests.
Christina Edwards 05:15
And the benefit to investing, let's just use some real numbers today. So if you want to stick to $10,000, and adath, the benefit to doing that is because it's going to grow, right versus let me just give an organization $5,000 This year, $5,000, next year, is that I see my money, grow very interest compound, etc. That's one primary benefit, would you say?
Mitch Stein 05:40
Yeah, I mean, the benefits that kind of depends on who's using it. And I think that gets to your earlier question of like, is this just for rich people, or the super wealthy? Because yes, another one of those benefits for like a super wealthy person is that if you've got appreciated stock, for example, like if you've been the founder of a company, and it's grown a lot, and you iPod, and so you have all this like really valuable stock, but it's appreciated a ton. So you're you have capital gains tax that you owe on it. If you donate a portion of that into a donor advised fund, you avoid any of that capital gains you owe. And you get the full write off on that donation amount, that same tax year when you have this big sale. So it's really about like smart tax planning in those instances. So there's definitely that like financial benefit for that larger market. But I want to get to the second part of your question about like, Well, what about everyone else. So there's over 3 million people using a DAF. That's the data as of like the end of 2022. So I suspect it's even larger today. And so that tells you that it's not just like the ultra, ultra wealthy, but there's also a lot of people that are using this just for like accountable and proactive philanthropy. And what I mean by that is like, I, for example, am not a billionaire. And I get to use a DAF, because it's an employee benefit at my company. So I automatically donate $100 a month into my death, and my employer matches that $100 a month. So I'm automatically I've separated the psychology of giving, right? Because there's always two decisions being made. Whenever you make a gift. Whenever you're solicited, you're making two decisions at the same time, even if you're not totally conscious of it, you're deciding how much money can I park with? What's my budget? Then do I want it to go to this organization? And do I want to allocate it to them? When you're putting your money in advance aside and adapt, you're deciding, I want to give $1,200, minimum to charity this year, so I'm gonna do $100 a month, and I've taken out any question about it, it's automatic, and not waiting to be asked, I'm automatically doing it. And then whenever I'm ready to give or I had to get asked by a friend or I'm going to a charity event like I am tomorrow, I'm like, I can make twice as big of a gift. And I sort of have this pool of funds to do that from right. And so I think that's like the more common use case today from people is like a charitable wallet. It's like, this is just what I do all my getting out of and it holds me accountable. Okay,
Christina Edwards 08:17
yes. And we're gonna go back to like the 401k example, the college savings, whatever the heck is called example, which is, I've decided ahead of time, this is how much we're investing per month for this. And it does, it's sort of it takes the guesswork out of what I want to invest towards these goals versus having to think about it every time. So I love that analogy is like, it's like, okay, what do I zooming out? What are my goals? Like, what are my charitable goals? What do I want it? And instead of just doing it like one piece at a time, I'm doing it this way? The other thing you brought up that it was like, Oh, I think maybe because I'm in Atlanta, there's so many startups and boy are stock options. Very, very, very common. And to my to answer my own question of like, yeah, there are a lot of people who are in a situation you just said, or they would have a ton of capital gains taxes, just to, to, to, you know, have to deal with who are not wealthy yet. And what a great way to like check two boxes off of just like being able to give so I'm seeing it more as like a forward thinking smart way of like, like you said, like a charitable wallet. And I wrote down before we started in all caps, friction, because friction is one of the words that my audience knows we talk about friction, a lot of like, can I donate from my couch? Do I have to get up? Do I have to do anything? Because if I have to go find my credit card, if I have to go find my password, you've lost me. And if you've lost me you've lost people are 20 years younger than me for sure. And I think what chariot does really well is it answers the friction problem. So I want to talk about friction and then we're going to move into some of the common challenges and common like maybe myths about deaths. Yeah,
Mitch Stein 10:00
and I think even before we get to friction, I'll just bring up like, yeah, the biggest issue with daps that people complain about, I would say is the fact that there's $230 billion sitting in donor advised funds, these 3 million people's accounts, that is kind of sitting on the sidelines waiting to go to charity. That's and that's what people get frustrated by. And so I think there's multiple answers. It's, it's a huge problem, right? Like, we have so many urgent crises that need to be dealt with yesterday, that need more funding, especially in an environment where donor participation has been declining overall for decades. So like, we need this money in in the market right now helping organizations. There's a lot of things that have been proposed on the regulatory side, because there's also no required payout for death. So unlike foundations who have that 5% per year payout, daps technically don't have a time limit. In practice, the payout ratio of like how much of the total assets each year are given out, has been over 20% For since they started tracking it, like almost 20 years ago. Okay, but, but that varies a ton between different types of daps or different accounts. So one of the questions to ask is like, Okay, well, why is this happening from a user experience perspective? That's right, which is what you're bringing up are in friction. So like, how hard is it for me to use my DAF. And that's the core reason that Terry started and, and for context, chariot, helps nonprofits get more from donor advised funds. By enabling easy three, click DAF giving right on your website, in your donation forms wherever donors want to get. And where that stemmed from, was, it's actually a very cool story about our founders that they made a commitment to give 10% of their income to charity. So they were in that camp of like, I want to turn ability helped me Give me a tool to manage that. So they set up special savings accounts with debit cards, called my 10%. And it was like kind of a thing that project they're doing on the side with some friends. And someone that they reached with this project was like, you know, you're kind of setting up a death, but without the tax benefits. So they were like, oh, cool, like, let's all open Daffy accounts. So they opened DAP accounts. And then the next time they wanted to use it, their friend was like, Hey, I'm running this 5k, can you donate? And they're like, Oh, no way. I can't, I can't use it. On your campaign page, I have to go log into my account, look up the organization try to track down who the actual fundraiser is. And there's like, 25 extra steps and all these redirects. And so they were like, Oh, this is why people aren't using staff accounts as much right? Is they're not usable. And that's the friction point. Yeah,
Christina Edwards 12:56
that's the we've lost, we've lost Christina, she can't make this from the couch, I can no longer support your 5k. And that's the big disconnect. Because it is maddening that that much money is sitting right here. We don't even need to fundraise for it. It's here. And how do we get it there to the people? So I think that that's the first friction point. And one of the pieces that we talked about previously was like my theory of does the does the donor, I guess, yeah. Does the donor and the person with the DAF think that once they put it in the death, they're done of like, is there because they got the tax benefit that year? So if I put money in a DAF yesterday, that's going on my my tax. Next, you know, for the year and do I think is there a certain portion? And it's like, did it and I sort of forgot, right? And there's a passiveness and almost like you would invest in a Roth or you would in a 401 K like, Oh, I did it? And how do we if that's, if that is so how do we like turn that around? How do we Yeah,
Mitch Stein 13:57
yeah, it's a really smart observation because, again, from a product perspective, so looking at it from the what is the experience user experience in the product look like? The lock the most people have their DAF accounts where they have their brokerage and savings accounts Fidelity, Schwab and Vanguard, the product experience is the exact same. So it's set up to you know, what your savings account from a user experience perspective is set up for you to see it increasing, it's set
Christina Edwards 14:27
up for set it and forget it as somebody with a Vanguard account, that's what it's for.
Mitch Stein 14:32
Yeah, so that when you're sending the donor into their DAF account, to do all to make their gifts and stuff, it's like you're sending them through a user flow that's designed for them to want to see that account increase instead of decrease. So yes, I think like that, that contributes to it. And the lack of usability I also think causes this and the lack of like familiarity and awareness on the nonprofit side because They're not bringing up DAFs in conversation and putting it on their websites and like really reminding people that it is really easy to kind of forget, set it and forget it that you have it all there. I remember
Christina Edwards 15:10
there was a fundraising tool, and I'm not sure which one or maybe a year or two ago, there was like, we now it's up donor advised funds. And I was like, Cool. And I remember many people were like, okay, like, no one knew really what that meant. And so just and that's part of why I think we really need to have this conversation. Because when there is I'm looking at your website $230 billion sitting here, that's a conversation worth having. I think the next layer is who what organizations on sighs on on, like, what type of organization should say, let me prioritize making sure that we are making this as frictionless as possible, but also that we're just talking about donor advised funds and accepting that like, what kind of organization should prioritize that now?
Mitch Stein 15:56
It's a great question. I mean, DAF can donate to any 501 C three organization. So it's not like there's a restriction anyone can benefit from this. I think it just goes along the lines of like how far along you are in your individual donor, base building, because you probably have daft donors already. And they're probably just giving with a credit card, because it's easier. And that's a psychology to your point about like our people just setting it there and forgetting it. I'm sure I'm sure that happens. I've had conversations people who are like sold a business a few years ago. And I think the exact quote was like, oh, yeah, I put some money in a DAF. I should check that like, they hadn't looked at it. And you're like, but by and large, like, I'll get back to the point raised earlier, you can only use this money to donate to charity. So yes, up component of setting it up was probably optimizing a tax burden. But you are also a philanthropist like you, you also like you want to give you want to be engaged in your philanthropy.
Christina Edwards 16:58
But you made that choice. And now you did it. So like, let's use it. Yeah,
Mitch Stein 17:02
totally. And the overall numbers certainly support that as well, like the fidelity the largest staff in the country discloses really great data. And their average gift size from their DAF account holders is almost $5,000. And the average account holder is making 12 gifts per year. So you compare those numbers to the average iron credit card donor is making two gifts per year, and they're worth about $200. So these are like significantly more engaged, and larger donors more generous and just more engaged their philanthropy. But the caveat to that is in the all the donor interviews we've done in developing the product, we always ask, do you make gifts with your credit card still? And every 100% of them say yes. So we have this image in our mind, like daft donors are just these like super wealthy people that are like calling their financial advisor, they don't interact digitally, they're not on our website. It's just not true. And the reason is, like too many people have this mindset that they're like their death is for like their big five or six figure gifts that they're going to make near the end of the year, to their four or five, like chosen primary organizations, and they use their credit card to donate when they get hit up for a bike ride, or, you know, a local campaign or whatever. And people will say it's just because it's easier, but that individual is behaving with that like charitable wallet mindset. And the more that you're putting that in front of them, you can discover who amongst your donors has a DAF by giving them that easy option.
Christina Edwards 18:41
We just really I think one of the most exciting things about this is I know you'll fill me in on this, but our sector really needs to think about Gen Z, Gen Z, millennials, and really like, how are we cultivating? How are we you know, having conversations with them. And as you're describing this process, it's making me think of anyone who has ever had Venmo and you've got money in your Venmo account, right? So I am Venmo going somebody, or this happened to me, this past weekend, I went to an estate sale, they take Venmo, I'm now going I've got my Venmo money and my my fund money in my wallet, my threshold of what I'm going to spend is totally different than if I was going to take it out of my checking account, or look and see how much cash I had aka Christina is going to spend more because I've got fun money. And it's like when you're charitable money is not only in a DAF, but it's growing. That's fun. And I really think that speaks to somebody who is excited about truly making a change and like seeing their community, the world, whatever mission they're really, really passionate about better than then it was you know, when it started and I feel like that's kind of a really fun way for people to think about charitable giving, that we really haven't before of like you're investing in this. You're told you got an HSA, you're told you need this amazing try that And then also I would bet and it sounds like you have the data now you're shared to back it up people give more people give. Yeah,
Mitch Stein 20:07
yeah, one of the coolest things we've seen so far, with a large peer to peer bike event that we're supporting, and they have DEF pay as a checkout option on their on their payment forms. And in the first three quarters of the year, they got 332 distinct donor advised fund donations, average size was $650. And the median size was $250. So to your question of like, Are these just for the ultra ultra rich? I mean, those are still nice, like, yes, you'd be getting, but it's not like this, just to me proves that when given the option, people with Daffs want to use it like that charitable wallet, still making larger gifts, but also giving your organization the best signal possible that they are a good prospect for a major principle gift donor because there's likely more where that came from. And so like, listen, for a really large organization, I would say, like being more engaged with that fundraising is critical, like drop everything. If you're not presenting this to donors, you are 100% missing out, because if you have a large donor database, there are absolutely DAP donors in there that you're under serving.
Christina Edwards 21:24
Let's define large, because I feel like that can be very subjective. What's your version?
Mitch Stein 21:30
So I guess I brought that up to say it's critical for someone that's large. But again, the secondary part of that is like, no matter where you are, it you're not losing anything to bring up donor advised funds to have something on your website about it to make it easy for people. I mean, I like to find largest, like, if you've got if you're raising like 10 plus million a year and contributions. But this is like, it's a yesterday priority, I think. But those numbers are
Christina Edwards 21:59
so hard to 6 million, or even in the millions, mid millions. That's when we see the like, if you'd like to donate, and it's like, it's like written on their website. It's like, you know, they're it's friction, friction, friction. And so I totally, totally agree. And one of the things that you said earlier that I 100% in with you and believe in is there are people right now in your donor base, that have Daffs, period, full stop and like for everyone to let that sink in. Because again, 230 billion sitting in these deaths. So for me, the marketer in me, the storyteller in me is like, Let's go tell some stories. Let's go write some emails, of, hey, you might have forgotten about your death. Totally fine. Here's what it is. Here's how you can support our organization like telling some stories about like, reminding people what it is reminding people that they have it reminding you that your organization takes them right. And so starting to bridge that gap, and also so that people when they think of you, they're like, oh, I don't have to get my credit card. I don't need to mail a check, right?
Mitch Stein 23:04
Yes, absolutely. And just some more data that we're already seeing from from some of the customers we work with, there's a very large organization, that's probably one of the has some of the largest databases of individual donors in the country. And they track that data really, really well. And so they track the who has a donor advised fund in their database, like based on who's given from it. And one of the interesting things they've looked at is who from our current death donors that we know of free gave first to us with a credit card, and it's over 60% of their current DAP donors first donated with a credit card. So to your point, it's like how can we do a better job of encouraging even a first time donor to see oh, it's easy to get with the data. I mean, that's what chariot is trying to do for folks is just make it like a part of the product expense, right? That's right. Even short of that, if you can do that, in your communications, you can do
Christina Edwards 24:04
a PS, no, just like, this is here. If you've got it, boom, you know, it's reminding me to have like, for HSAs, there was a movement. And I think we've seen I see it always at the end of the year where it's like, did you know if you still have HSA money, you can buy this, this and this. And it's like vitamin companies other outside of like, traditional medical expenses, educating the public, you can buy this with that. And it's our job as the nonprofit to say, you can do this with that if you have this. We're going to make it seamless. We're going to make it easy. We're going to make it an experience that again, you're from your couch, you're on your phone, it's very, very easy. So we've been talking a lot about what excites me about the sector really is just like we are innovating, which is the most exciting thing that I see in the nonprofit sector. When we talk about innovation. I'm like, Yes, I don't want to do it the way that We did it 20 years ago, I don't want to do it the way that we did that in some dusty book like forward thinking. So to that point, I want you to like dream a little with me. And tell me about some maybe exciting shifts you've seen in the sector or what you would like to see change in the sector sector?
Mitch Stein 25:17
Yeah, I mean, it's a big question. I mean, specifically related. So we can start with the donor advised fund topic is what we've already been chatting about. But like, I think Daffs there's 60 million people with 401 K's. And there's 3 million people with donor advised funds. I don't see any reason why those numbers couldn't be pretty close together. Like there's more than 60 million people that are donating to charity every year. And I think for all those reasons we mentioned of like they give more, they make larger gifts, they're more intentional. Like, that's, those are all good things. And I think you even opened up with a question like I've heard from some people that they're not interested from the fundraising side, the nonprofit, they're like, I don't do dabs. You don't have a choice. Like this is just That's like saying I don't take cash like it's, this is a this is how people want to get in are going to give and you just you'll get a check mailed to you. You don't have a choice about
Christina Edwards 26:15
I got an eye roll in advance of this very recently from an ED he was like, ah, Daffs. And you know, what, what is that translate that in layman's terms?
Mitch Stein 26:26
Of course, I was just at a at the AFP icon calm. Yeah, it's like the largest fundraising conference in the world. And I always before I don't just like launch into talking about chariot, I always say like, are you familiar with donor advised funds, and I almost always get a. And I'm like, I go into therapist mode. I'm like, Tell me more. Let's unpack that. Because I want to know, like, where they're starting to
Christina Edwards 26:48
do some inner child work with a deaf student? You
Mitch Stein 26:51
Yeah, what did they do to you. So it's always two things. One is the frustrated, like, the kind of macro frustration that through all this money there. There's an A, but then it's like a huge operational frustration, because they're like, whenever we get this gift, I get really, it's either it can be anonymous, like they always they'll always say it's the anonymous giving. But you need to unpack that a little bit. Because less than 4% of Deaf gifts are truly made anonymous. Like you have no idea. It just came from Fidelity and you get any other information. Most of the time you get information. It's not useful. It'll be like a peel box mailing address, and the name of the fund, which could be like the dog and pony fund, like it can be anything, or it'll be like the Smith Family Fund. And you're like, I've got 400 Smith families in my database. What do I do with that? So it's the it's the not useful information that is really frustrating to people. And I think that's what where that comes from. And what that means.
Christina Edwards 27:50
Does cherry it removed that part? Because I'm thinking of another Ed, who said to me last year, the good news is we got $75,000. The bad news is, I literally don't know from where beyond what you just said, you basically just described her entire experience.
Mitch Stein 28:06
Yeah. So yes, whenever someone is making a DAP gift through the Deaf Pay button, you're capturing their name and email right there. So you have an immediately. And the other problem is like these things are typically sent through the mail, they get lost, and a donor gets frustrated. And you don't even know that they made a gift because it's just initiated through their own portal. So when you bring that all into your own domain and your own website, you're solving a lot of those problems. And we can't guarantee that donors won't still go through their portal. But you're at least moving donors over to this easier process where you capture name, email and gift size immediately. So you can immediately thank them and we ran an experiment with the Michael J. Fox Foundation. When they implemented def pay on their ways to get page and they got in two months, they got 15 new net new DAF donors, that average gift size is about $2,000. But they also emailed them all linked up pretty shortly thereafter, like as soon as they could get to it within a few hours. And they had over 50% of those new DAF donors respond to their thank you email, which they're like, that is unheard of. Thank you email, because they were like shocked that they actually heard back, because it's also a bad experience from the donor. It's not just the nonprofit. They're also like, I'm I made the staff get this gift for my fidelity account. I never even heard from them.
Christina Edwards 29:28
Yes. And we have to like before, we're totally salty about something and completely write it off. We have to think about like, what was their experience like, right? They didn't know that it basically came to you anonymously or semi anonymously. And so yeah, what do you say to people, organizations, leadership, who are like a little tech adverse, because this is a tech tool. This is very forward thinking. This is end to end like you said, like, the goal for me is always again, I'm getting the couch analogy. Do you have like, do you have to find the logins? And so I'm having anyone who's like, oh, but then my donor has to trust this third party. What do you say, to any resistance around tech around investing in tech tools? That's another one that drives me bananas. What do you say to all that?
Mitch Stein 30:16
Yeah, so I'll split in two parts. Because I do think security is obviously like the single most important thing, you and your donor. And the way when you go through the death Pay button, you're logging in to your fidelity account with your fidelity credentials. We don't store those. We we work with some of the largest hospital systems and nonprofits in the country, we've gone through like the wringer of security review, and all these different things like we are also highly focused on that. And so it's extremely secure from a donor privacy and security perspective. And I think that there's another tool, some people might be familiar with it called plaid, which has been around for like, a decade. And that's where you, you as an individual consumer can log into other products with your bank account credentials. We're doing something very similar. And I think that daft donors took to it quickly, because they're used to doing that and other settings, they understand the process. And I also think that it being on they're seeing their DAF name and brand and they're seeing your nonprofits name and brand is giving them a lot of confidence as well. We do have some deaf donors that reach out and say like, I've never heard of this, how does this work? And they do want some extra reassurance because we're in the beginning of that adoption curve. Yeah.
Christina Edwards 31:31
I'm glad you said that. Because before plaid, okay, I don't know, there were probably some other ones. But how many times now? Have we done a handshake with plaid and we don't even remember it, for example, QuickBooks, if you use QuickBooks in your life, it's probably back in I want to say as plod or should connecting straight to something. And so if you have the belief like oh, I don't know if my donors are gonna like this, or Oh, new tech, whether it's whether it's chariot, or another just fundraising tool, which is sometimes when I'm on the receiving end of like, oh, think about how often your donors have already done this in a million different ways, setting up a Venmo account, Zell account, like all of these different back end, things that are now 10 years ago may have felt very like, ooh, should I give away my credentials. Now we're like, Here, go go forth, connect, make my life quicker, faster, easier.
Mitch Stein 32:20
Yeah. And I'll use some fidelity data again, just because they're the largest and they provide the most robust data. I think it's like 97% of their DAF gifts are made online or their donors are using their online tools. These people are online individuals, even though the age does skew older for donor advised funds than they're used to being online. And so I think that's another misunderstanding people have this visual of like, a super elderly person, like calling their financial advisor, that still might happen, especially for someone that's like a literal billionaire, like they're probably might not be doing as much. But in general, people are online. And I just wanted to answer your second part of that question, which was making making the actual investment. I think it's a little bit easier for us, because it's so clear, like, if I convert one DAF donor, it's gonna be like, 10s of 1000s of dollars in benefits. So there's like this top line, revenue, results and ROI that I think is much easier for people to point to. But behind that, I mean, the operational benefits, I argue, are even bigger than some of those top line benefits. It's typically a harder sale. So I don't even try to emphasize it as much. But just thinking about all the effort people go to to like, calling the Community Foundation, who is this donor? Can you tell me who it is, back and forth? touchpoints with a major donor to see if they submitted their gift? That's not what you want to be talking to them about like that friction, you know, back and forth? Did you submit it? Where do you submit it to use the right again? Did you give a different designation? What was the name of your fund? Like, Oh, you want it to be immediate and done, and then talk to him about your mission? And to put a price tag on?
Christina Edwards 34:03
Yeah. Oh, I love that. Is there anything about donor advised funds that we that you wanted to make sure we talked about that, that?
Mitch Stein 34:12
We haven't. I mean, I, I guess this is also to your question about like, where things are going or what the future will be. I have a personal event very passionate about changing corporate matching, because I have now had two experiences where I've been at a super big company that did hold school corporate matches, which involved me making a gift to like the local LGBT community center. And then me needing to go log into a system that looked like it was from like built on an Atari game system. And like having to have the exact legal name of the organization to find it. Going through all these extra steps, waiting weeks, then get In a cheque, trying to match it up to it, like the operational burden on both the company and the nonprofit and the donor, to me is wild. Yeah. And now being in a company where we use a DAF as an employee benefit instead of individual gift matching. I'm like, this is the future, because the user experience instead is I automatically put money into my DAF, and my company automatically matches that there's no diligence, they're not betting in religous. I don't submit anything. I just have twice as much money to give away to charity. So the charity doesn't need to connect a matching gift to me asked you to make Are you sure you don't get a corporate match for this? Can you go do this extra work? Like, it's so much better for everyone that I'm like, when will people see the light and start using Daffs? As an employee? Yeah,
Christina Edwards 35:49
yeah, I think I think it's happening. The more we talk about it, it's happening and what a great add value in the corporate world. And I'm sure that whoever's in charge of doing it, the old school way will be your biggest evangelist fan of like, Please, let's let's do it this way instead? Oh, yeah.
Mitch Stein 36:05
I mean, we don't even I'm not we don't offer that. Like, we're just the payment facilitator. Yes. But I have had so many I'm such a like advocate for it. And I talked about it a lot on LinkedIn, I probably sent like, we use a company called Daffy that does this. But there's several there's, I think, uncommon, common good. groundswell charity vest, they all manage similar programs like this. So I'm like, if you are, if you want to recommend this to someone, I cannot say enough good things about how good it is
Christina Edwards 36:33
amazing. Oh, I love that. Well, we ask every guest on the podcast, what is one thought they like to think on purpose? So this can be a guiding thought, mantra and affirmation? Would you share yours with our audience?
Mitch Stein 36:45
Yeah, I guess I don't know that I had this these specific words before. But I think about this concept a lot. And then I was just at this conference before we had this conversation. And I don't know if folks are familiar with Mallory, Erickson, who's another we love her love her great nother podcast hosts and awesome voice in our sector. And she came up and gave me a gift, which was the nonprofit fundraisers coloring book, which was like beautifully designed pages that have little monitors on them. And I'm flipping through. And I saw one and I was like, this seems to be on a billboard. And I think about this all the time, but it just said, Don't be for everybody. And I was like, the s that I think particularly in the nonprofit sector, we're so used to being people pleasers, and like, oh, we can upset the donor or we can, you know, you're like worried about what other people think. And yeah. And it's hard not to be you're trying to live up to some expectation and your power imbalances all off. There's so many problems that I think can prevent people from really embracing who they are, and understanding that you need to lead with that. And that's how you deeply connect with the right people by showing up as who you are being vulnerable. And it's I mean, I have too many examples to count of times that I've, like, shared out a problem I'm having or a realization I had and someone reaching out to me like, this truly changed my day, my week, my life. Thank you for sharing that. Here's where like my experience has been. And I just am. Every time I do that, it's like reiterating to me like just never back away from who I am and what I care about. And anyone who has a problem with that is someone that I don't want to be engaging with anyway, and the world is too big, and there's too many amazing people out there to worry about someone that's gonna have a problem with me.
Christina Edwards 38:38
I love that. Thank you for sharing that with us. It's, it's when you water yourself down and try and be for everybody, which is which is tempting. It's tempting individually, but personally, it's tempting as an organization, because then we'll get sweep up more donors, right, you actually ended up just being kind of watered down and not really attracting your people to your point. And it takes more courage to not be for everybody. And that is where the impact is. That is where the growth is. So I love that thank you for for sharing that with us. How can everyone connect with Yeah, go ahead.
Mitch Stein 39:13
No, it's because I think there's a part two of that, because I always want to make sure I call out that. Also, some people don't necessarily always have the safety to feel like they truly can be themselves. And so I think there's definitely a lot of privilege in where you are in your career to be able to do that, you know, you know, different layers of your identity that you may feel more or less comfortable or uncomfortable with. And so I think folks who are who do have some of that privilege to show up more authentically and be themselves is to like, make that space for other people too and be like proactive about giving people permission to show up as themselves. And when you're in management positions or have an audience like you. You have to do more than just say ain't like be yourself because it's, it is definitely easier for some folks and others. So it's Be yourself and make space for others to do them.
Christina Edwards 40:08
How are you creating seats at the table for people who shouldn't be at the table and aren't yet and that's that? Yeah, that's part of our work in the sector for sure. How can people connect with you? Thank you so much for this conversation has been Yeah, of course.
Mitch Stein 40:23
I mean, you can find me on LinkedIn. I spend way too much time there, but it's my favorite. It's my like only social media and I, I really love it. But yeah, definitely, let's connect and reach out there. If you've got questions about DAX in general, or want to learn more about chariot that's definitely an easy place to find me or if you want to shoot me an email. I'm just at Mitch at give chariot.com Amazing.
Christina Edwards 40:47
Thank you so much.
Mitch Stein 40:49
Thank you