 Welcome back to the nonprofit show. I like to say back, because I'm assuming you've been here before, but if you've not, any of this is your first entry, welcome. We are so glad you're here. I'm also thrilled to have with us today, Mitch Stein, Head of Strategy at Chariot, and we're gonna learn more about Mitch and more about Chariot. But Mitch has brought a conversation to us. It is Engaging DAFs, which is donor-advised funds in your fundraising. And can we really make this work? Like what are the strategies to this? What are the best practices? What do we need to be focusing on? So before we dive in, we want to remind all of our viewers and listeners around the globe who we are. So Julia Patrick is here, of course. She wouldn't miss a day. CEO of the American Nonprofit Academy. And I'm Jarrett Ransom, nonprofit nerd and CEO of the Raven Group. Together, we are so honored to have the ongoing support, investment buy-in from these rockstar partners. Shout out of gratitude to our besties over at Bloomerang American Nonprofit Academy, nonprofit thought leader, staffing boutique, your part-time controller, 180 management group, fundraising academy at National University, JMT consulting, nonprofit nerd, and nonprofit tech talk. They have helped us to produce a plethora of episodes. And Mitch has joined us before. I forget which year that was. But you can find all of our previous episodes by downloading the app, scanning that QR code, streaming broadcast and podcast platforms. So Mitch, as I mentioned, you've been on with us before. I'm thrilled to have you back with us to talk to us today about your new position, your new role head of strategy at Chariot. So first of all, welcome back. And secondly, yeah, give us all the goods, right? Who are you? What do you do? And what is Chariot? Yeah, of course, it's amazing to be back. It was a few years ago at the time we were talking about nonprofit technology more broadly and was working on a different startup at the time called Pond. But I'm really excited. I've been working with Chariot for over a year but joined full-time about three months ago. And they are creating fundraising solutions for nonprofits to get more money from donor-advised funds. That's what we're gonna talk about today, but this is the fastest growing segment of philanthropy and generating a lot of headaches and time wasted for nonprofit fundraisers. So we're gonna get into all of it. Yeah, and the last time we nerded out over DAFs was with Muhi Kwaja and he serves with the American Muslim Community Foundation, Mitch. And so it's very specific to a community of DAF holders. So I'm really interested to learn more about Chariot. There's so much in this conversation, but the impact of DAFs donor-advised funds because it's acronym soup in our world. What is the impact of this giving community on our, again, acronym, NPO, Nonprofit Organization Sector? Yeah, I mean, I think it's just important to be familiar with the scale and pace of change around donor-advised funds. So there's currently $230 billion that is sitting in over 1,100 different donor-advised funds around the country. Hold up, say that number again, hold up. Say those numbers again. $230 billion with a B, a capital B, $230 billion that has to go to charity. It's already gotten a tax write-off associated with those funds. As a reminder, DAFs are a charitable savings account. It's similar to a 401k or an HSA, but it's specifically for charitable giving. When you contribute cash or assets into that account, you get your tax write-off up front and then you can distribute those funds over time. So just to give you a sense for how the scale of this market. In 2022, where we have the latest figures for, there was over $80 billion contributed into donor-advised funds. There was over $50 billion granted out of donor-advised funds. And the total that remained at the end of the year was $230 billion, huge. And I think it's also important to acknowledge where that's come from. Those numbers have been growing over 20% per year on average for the past five years. So like those aren't numbers we're used to in the nonprofit space. Those are enormous. And so when you say impact on the nonprofit sector, I mean, this is where philanthropy is moving to, that more and more of these dollars are gonna be sitting in and coming from donor-advised funds and it's time for nonprofits to be ready for that. Mitch, I have to ask, are daffs for the elite of the elite, like is this like a certain threshold of affluent individuals or is this really where we're moving for that mid-level general donor? Yeah, two things. I think there's two important trends to acknowledge that the expansion of the daff market, there's over 3 million people using them today. So obviously 3 million is a lot. That's not just the wealthiest of the wealthy. There's reasons why it's become more popular kind of on both ends of the market. At your ultra high net worth end of the market, it's a really, really simple alternative to setting up your own private foundation. You don't have to manage any of the overhead. You don't have to do filings, board meetings, like any of it. You just set up your account and make grants. On the other end of the market, it's something that is a really useful way to organize your philanthropy. I have a daff, certainly not up there on the other end, but I have a donor advice fund. I contribute to putting $100 in it every month out of my paycheck and my employer matches it every month. So I now have automatically set that aside. So anytime that I'm hit up for a gift, I was just at a charity event last night or a friend's running a 5K, that's my like bank that I'm distributing funds from. So it's popular for different reasons depending on the audience, but it is becoming a more mass adopted product. And I think that it could be like a 401K, like there's 60 million people in the US with a 401K. Why could they not all also have daffs? Right. I love, love, love that you put this into context of how it's working. And Jared, that was a great question because I do think that there are a lot of us that think this is just a high net worth vehicle and that it doesn't really apply but to a certain sector of our community and our economy. But let's talk a little bit more about what you're seeing as the giving patterns. I mean, following up to this conversation about just you personally, how this works. I love that you work with an organization that matches it, yay team. But talk to us about how folks are giving. Is this like the year end cruncher? Is it dribbled out throughout? Is it predetermined? What are you seeing? Yeah, so it's, there's three million people. So it's definitely not a monolith. There's a lot of different types of daff donors. I would, people generally think about them in three different categories. There's actually some researchers that have done a lot of work around daffs called them the tubs, the tanks and the towers and how they segment daff donors. So I think that the me example is usually a tub, meaning it's a plate. You fill it with money on a regular reoccurring basis and you're draining it every year. So you're just using it to manage your philanthropy in a seamless way. The tank is someone who maybe they had like a, some stocks that they owned that surged and had appreciated in value. And so they have a wealth event when they sell those shares and they're gonna set aside a certain chunk of that in their daff account and use that to grant out over the next three to, call it three to five years. So they're gonna make a really large, a larger lump sum contribution and then grant it over time. The tower is someone who's like, I could have set up a private foundation with millions of dollars, but I'm gonna have a daff to manage my philanthropy because of how it simplifies the process. So I think understanding where someone sits in that spectrum is an important indicator of how they're using the daff. But by and large, the average daff account holder has $120,000 in their daff. They are making an average gift of almost $5,000 per gift and they are making an average of 12 gifts a year. So just to put those figures in the context, the average online credit card gift is $200. So the average daff gift is 24 times bigger and the average person that's donating to charity every year is making an average of two donations. And so it's six times, they're giving six times more often. So these are just people that are, no matter where they are in that spectrum of wealth, I think it is an indicator of they are holding themselves accountable to their giving their intentional, their frequent and over 75% of daff gifts are either recurring or re-grants. So they're committed. When you think about the rates of turnover and attrition in your donor file for credit card gifts, it's usually around like 20% is how much we're retaining on average. They vary a lot depending on the platform. But if you think about that, like a daff over three quarters of them are coming back every year. You know, Mitch, I don't know where I got this message, but for me, I just assumed it was like a one and done thing. I never assumed that it could be recurring. So that's really interesting to hear that. I don't know, Jared, if that surprises you or not, but... Well, I have my hands on a lot of organizations donor bases. I'm very privileged and blessed in that way. However, I see certain daffs, right? And I will see this person has given year over year over year in that same amount. My question to you may be convoluted. So I hope I can get it out and it makes sense. How would an organization go about acquiring daff donors or do we simply acknowledge those donors currently in our network that give through a daff? Like, is there a strategy because I love your stats, Mitch? They give more, they give often, they give minimum of 5,000. Like we want more of those. How do we get them? Yeah, it's the first question that I get asked by every nonprofit. I'm not original. No, no, it's in saying it's a good question because it's one that everybody has. Sure. And I think that the important thing is to acknowledge that you already have daff donors that you probably don't know about because the reality is that most daff donors also make gifts not with their daff. Why? Because it's easier. Because if they get asked to give with their credit card or sorry, they get asked to give on a website or in response to a campaign or a friend's running a 5K, whatever, if for them to make a gift from their daff, they gotta log into their bank account, go look up the organization, try to tell them to attach it to this person's fundraiser, it's pretty convoluted and it's not something that someone has to be really engaged and it takes several minutes. And that's really where Chariot's solution came to be born is if someone could give at the moment of inspiration in the same way that they do with a credit card, could we get daffs to be even more actively used and more of this money to be flowing out from daffs more seamlessly? And so when you deploy Chariot has a payment option called daff pay that can go right on your website or donation form like Apple Pay or PayPal and it lets anyone of your donors that has a daff donate in three clicks in about 15 seconds. So you're doing a couple of things to answer your question about finding daff donors. You're making it easier for them to reveal themselves to you by taking that easier option where they've already set money aside and guess what, they're gonna give more money because it's like sitting there on a gift card, the psychology is all in your favor. We also in that form actually remind them of their balance. So it's like, hey, you've got $100,000 in your account, you were thinking about $100 gift, why don't you boost it? And we actually render those suggested boost amounts based on their account balance. So we see that 30% of the donors that are using daff pay are increasing their gift from their originally intended amount. And we've actually seen several instances where people increase it to the full balance in their daff. They're like, I'll go ahead and max out $9,873 was a gift I saw the other day where someone had maxed out their daff for that one gift. I love how easy convenience this has been made because I have to own up, right? Like someone's running a race, they asked me to donate. I went to make a nominal donation and I had to get my credit card. Are you kidding me? I stopped, right? Because that was just one level of inconvenience. And so anytime we can click a button that says, yes, use Apple Pay, use whatever is already in the system, yes, pull it from my daff and to have these systemized strategic journey, two thumbs up. I love it. If I was Siskel and Ebert, right? Like we're set. I love it. You know, this is amazing. Now, one of the things is where we started today's episode of the nonprofit show. We talked about how it's somewhat mysterious on the side of the nonprofits. And unfortunately, we are not as adept as we should be about even understanding how this works, let alone understanding the impacts of the metrics that you gave us. So how do we as a sector get comfortable with this process and educate ourselves and start talking about it? Yep, it's a great question. And I think there's really simple steps that anyone in a nonprofit can take to get started and start making change. Number one, if you're listening to this, you've already taken a step. You're getting more informed. You're learning about the sector. That's really what it takes. Like it's really about that education, awareness, comfort and then making sure that people around you also have that same level of awareness. The leadership at your organization, your board, like anyone who's a big advocate and especially if they're more likely to engage with major donors or wealthier donors, they need to be up to speed on these vehicles because if they're able to talk about it in a conversation with a donor, that donor's gonna be more comfortable talking about, oh, yeah, I was thinking about starting a DAF. What have you heard about it or what's people experience been? You wanna be someone they can rely on for information in that context. So it's all about education as a starting point. This is a great session. I share a ton of resources on LinkedIn on a daily basis. So we can connect there. And the blog, Chariots blog has a ton of really helpful materials for people. Both like really beginner one-on-one, like what is a DAF? All the way to like more nuanced ethical considerations and compliance policies and anything that you need. So that's number one. I would say number two is really making sure that you prioritize communicating DAFs with donors. So simple things like you make an appeal, say like click here to donate, provide another link that says, and click here to use your donor advice fund, like remind people that they have it. It might sound wild, but people forget about it. It's like forgetting a gift card in your sock drawer. Like it truly happens. So like remind people that they can use it and not to just instinctively give another way. And then make the process super easy. So on your website, you can have a section under ways to give or ways to support that explains, yes, you can support the DAF. Here's our EIN, because when they go in, if they do go to their portal and they're not clicking through DAF pay and that easy process, they're gonna have to look you up. And if there's another organization that has a similar name, or maybe your legal name is different from your website, like all these issues, the EIN is the way to go for looking that up. So make that process super, super seamless. Yeah. You know, Mitch, I'm so interested in all of this conversation. And this might be a little bit of a curve ball, but are you seeing this ecosystem changing or, and the reason why I asked this question is that as we are trying to educate ourselves, get everybody talking about this, do you see things changing? I mean, other than just more people using it, do you think that this is gonna be something that we have to really monitor because compliance is gonna be changing in the process? Yeah. I mean, it's really important as this grows as a fundraising channel. I mean, it's already almost 20% of philanthropy is coming from DAFs. And if we stay on our same growth rate, there'll be a trillion dollars in DAFs in five years. Like this could really be overtaking philanthropy by 2030. So yes, you're spot on because there are unique restrictions related to donor-advised funds because a donor has already gotten their tax right off when they contributed the funds to the account. It can only be used for 501C3 nonprofits and there can't be any benefit received in return. I can't get a table at the Gala. I can't use it for an auction item. You've got to be really careful. And there are instances when donors will be like, oh, come on, I'll just make this gift over here and you can just set a table aside for me. Those are, you're putting yourself in some high-risk situations that ultimately could jeopardize your 501C3 status if that comes up in an audit. So this is not something to take lightly and it's a lot of nonprofit folks, it's tempting, especially if you might be getting pressured from a donor to think like, oh, that's on them, isn't it? Like they're the ones handling the tax right off. So it's their risk. That is not true. It is 100% still the organization's risk if they knowingly comply with one of those requests, you could be putting your standing in jeopardy. Thank you for sharing that. Thank you for sharing that. That's amazing because it's not all wine and roses and I think what you said earlier is we've got to be educating ourselves on this and the wins of government and compliance, the more money involved, the more scrutiny it's gonna come under, right? So I gotta believe that reaching a trillion dollars in a short period of time is going to create some conversations. Yeah, there's new legislation that's under comment right now out of the IRS. So this could be changing in the coming weeks and months as things move forward of what exactly how these funds are managed, who can manage them and what ways. So pay attention, it's changing very fast. Yeah, this is just so fascinating to me. And again, I wanna echo what Julia said. Thank you, Mitch, because bringing in the ethics of this is very important to our sector and very important to these conversations. Talk to us more, can we get nerdier, right? Around the marketing that includes the DAF donor and I keep going back to the three T's, like how many tubs, how many tanks and how many towers and do we dare ask them that? Are you a tub, a tank or a tower? I don't think that's etiquette. I don't know, but I like it, Jared, I like it. It's so catchy. Dan Heist and Danielle Vance McMillan are the two researchers that coined those terms. I can't take credit for them, but they are very, very easy to remember and very apt. Yeah, these are really great questions. I think a donor probably wouldn't be familiar with that categorization, but the right question to ask particularly one-on-one is like, how are you managing your giving today? Do you use anything like a DAF? Do you use a foundation? What are your priorities? And just let them get talking and you'll kind of understand, so I think you might have asked earlier, is it something that's shared or individual? Actually, the average number of people using her account is 1.6, so it's quite common that someone is either sharing an account with their spouse or a full family. So yeah, these will be shared like family vehicles to manage plant trees. Again, because for a lot of people, it is a substitute for a foundation, particularly on the higher end of the market. But when it comes to marketing too and engaging with these donors, I think it's just important to spell out the words donor-advised-fund, the act you kind of laughingly, we mentioned acronym SUP here in the nonprofit world. We've actually learned that a lot of donors aren't familiar with the acronym and they might even say things like, it's my charitable account or that's my giving account or that's my, you know, it's all over the place. And so, spelling things out whenever you're referencing it is really important. We actually do that on our button. It'll say DAFPEI and then spells out donor-advised-fund to the side. So it's a really important way to make sure people understand and are familiar with it. And then yeah, I would just say to, it's important to track who you know has a donor-advised-fund in your database so that you can send specific appeals to that audience and go into more detail about donor-advised-funds but also don't shy away in a general solicitation if it's through the mail or over email or on social media to mention donor-advised-funds because if someone doesn't know what it is they're just gonna ignore that piece and it's not gonna dissuade them but if someone does it can make a really big difference. We work with the American Cancer Society and when they launched DAFPEI as a payment option they shared it on their social media, they held their whole executive team, share that out on their LinkedIn and really had a big campaign out to educate donors that was broad-based, not just specific to a certain segment of donors which is really powerful. And I would just say having, whenever you have a CTA to give you could have a specific CTA around DAF giving. It's really helps those donors reveal themselves to you. CTA is called to action so I just wanna call that out. Another acronym, we refer to it. I'm really curious, chariot specific, if our viewers and listeners say I'm drinking the Kool-Aid Mitch, I love what you're doing, I too want DAFPEI, where do we start and what is the process before we get DAFPEI on our website? Yeah, so go to our website, obviously www.givechariot.com. You can also message me on LinkedIn or whatever, I'm always happy to chat and connect. But nonprofits work with us in two primary ways. We are integrated with dozens of fundraising platforms already. So if you work with someone like GiveButter, for example, you can actually turn on DAFPEI directly from your GiveButter account. And then that will automatically be featured on your campaign pages and giving forms to anything through GiveButter. But nonprofits also work directly with us, especially if they wanna implement chariot and DAFPEI more broadly across their website on a ways to give page as a specific call to action, the different button, et cetera. And also get added services and tools from chariot around donor advice fund fundraising. And that you can sign up for directly on our website as well. So those are the two primary ways to check and see if your existing tools have an integration and make sure you're turned on and enabled there. And if you're ready to take it up to the next level, then you can also work with us directly. I just see this as a no-brainer. Like why would we not have this, right? Right, I don't know. I think to your point, especially as we're tracking across this country, the popularity of this and the amount of wealth that we know, we talk about this all the time that we're in the middle of this amazing wealth transference in our country, this is not gonna go away. I mean, legislation might change and how it's managed and all that, definitely. I see that storm of ruin, but I think that just this vehicle in itself is going to become more and more common. And it seems to me, I mean, Jared, let me ask you this question. And because you are like I am, you get a lot of solicitations. Are you seeing anything like this? Anything that says, I haven't, I've never seen that. Or planned giving or gifts of stock or like there's so much that I think we're missing. And as I answer that, there's so much noise that already exists. And I don't, I'm not implying this is noise, Mitch, but looking at it from a perspective of like, where is the fine line of education, information and advocacy and clarity, you know? It's a fine line, I think. Yeah, I mean, I think the best thing is to have the resources available. So like particularly on your website, having a section around ways to give some information around these different options. You know, that way it's not noise, but it's available. And I think that that's really helpful because donors that are looking for it can find it. So giving them like easy pathways to find that information. And I think it's just about prioritization too. Like the DAF market is, it's not like a bespoke, you know, alternative giving method. It's like a primary giving method for a huge portion of philanthropy. So I think it's just about under, when you say like the noise and the signal from the noise, like focus on the things that really you and a lot of organizations, I mean, we hear this every day or like, well, yeah, we already get several gifts from Fidelity or Schwab, like, what does this mean? How do we get more of it? Like you're probably already seeing it. And the last thing I'd mention is that a giant growth area for donor-advised funds is around employee benefits. So more and more companies are offering donor-advised funds as an employee benefit, where they can also match contributions. Morgan Stanley just rolled this out across all of their work benefits customers. There's several other companies that do it specifically for DAFs. So it's a big trend. I love it. Well, we are so, so very grateful that you would come back on the nonprofit show, Mitch, and give us a heads up, a push, and some great data to help us really understand that this has got to show up in our strategy. Mitch Stein, Head of Strategy for Chariot, givechariot.com, go to their website. It's really well done and it's fascinating on the amount of educational knowledge, as you mentioned on the backside where the blogs are. There's a lot of information and it does take you from the range of, I don't know anything too, I know a lot. So that's, I think, a really amazing resource for everybody. We're gonna have more conversations about this. I just got to hold up the Chronicle of Philanthropy. Do you see this? Huge thing right here about this issue. I mean, yeah, it's here and we need to be knowing more about it and engaging. Everybody, again, thank you for joining us today for another episode of the nonprofit show. I'm Julia Patrick, CEO of the American Nonprofit Academy. Jared Ransom, nonprofit nerd, has joined us as well, CEO of the Raven Group. Again, amazing partners that allow us to have these conversations, they include Bloomerang, American Nonprofit Academy, nonprofit thought leader, Staffing Boutique, your part-time controller, 180 Management Group, Fundraising Academy at National University, JMT Consulting, nonprofit nerd, and nonprofit tech talk. Amazing partners that allow us to have conversations like we've had today with Mitch Stein. Mitch, I have a sinking suspicion that you are going to have changed the trajectory of a lot of nonprofits today with your knowledge and enlightenment. So thank you very much. Very kind of, I'm excited to be here and excited to connect with anyone who wants to learn more. Awesome. Hey, everybody, as we connect with our viewers and listeners of the nonprofit show, we'd like to remind everyone to stay well, so you can do well. We'll see you back here tomorrow, everyone. Thank you, folks.