In the past, donor-advised funds were largely only available to the wealthy. But Daffy has flipped the script, democratizing tax-efficient giving for the masses. I’ve been using Daffy for a while now to maximize my charity impact, so thought it would be good to write a full Daffy review in case others are interested!
Daffy’s is a not-for-profit community with the goal to “help people be more generous, more often.” That’s a goal I can get behind.
I believe that giving more money away is a great ambition. It helps to create a healthy detachment from our money and helps us support incredible work that’s happening in our communities and around the world. Daffy can help you give more efficiently and effectively. Plus, you can get $25 in free money for your favorite charity by signing up.
Check out this Daffy review to find out the myriad ways opening a donor-advised fund (or DAF for short) can help you and your giving goals significantly.
What is a Donor Advised Fund?
Donor-advised funds are a tool that can make your charitable giving more effective and efficient.
In essence, DAFs give you the ability to create your own non-profit foundation. But here’s the interesting part, you act as both the donor AND the executive who decides where the funds are donated. You receive an income tax deduction immediately when you contribute to a DAF, even if you don’t funnel that money directly toward a charitable cause.
Why Use a DAF?
There are a few specific reasons to use a donor-advised fund instead of just giving directly to your favorite charity.
Tax benefits: Contributions to a DAF are tax-deductible, just like donations made directly to a charity. You also don’t pay tax on the growth of your investments inside of a DAF. You can also contribute stock shares and cryptocurrency that have gone up in value and avoid the taxes you’d otherwise owe on those unrealized capital gains. Plus you can “batch” your giving to maximize tax efficiency by allocating more of your money towards charitable causes in your DAF in a given year.
Flexibility: You can contribute to your DAF at any time. You can also opt to give out of your DAF at any point you’d like as well. On top of that, you can schedule your giving in advance, whether that’s a one-time donation or a recurring one.
Convenience: DAFs make it easier to keep track of all your giving in one place. If you like to see all of your giving in one dashboard, DAFs help make that a reality. No more scouring your inbox come tax time next year.
Optimization: DAF’s are particularly excellent for folks who want to grow their giving dollars. It’s great to make a $100 donation straight to your favorite charity. But it’s so much cooler to be able to invest money for future giving, allowing you to grow your giving nest egg in a meaningful way.
Enhanced Privacy: One other perk is that you can make donations anonymously if you’d like. Most givers choose to make that info available to the charity of their choice, but giving via your DAF makes it possible to give with complete anonymity, allowing you to avoid ending up on dozens of mailing lists.
Daffy Features and Benefits:
There are lots of places that you could choose to open a donor advised fund. But here’s a laundry list of reasons why we think Daffy is the superior choice.
Daffy makes charity easy
Daffy has only been around for a couple of years. But they’ve been growing quickly. That’s largely because of how easy they make it to open an account and manage your funds.
If you prefer software that feels intuitive (and who doesn’t), then you’ll be thrilled with the multitude of ways Daffy has elevated the giving experience. They allow folks to give more, and be frustrated less by the entire process.
Here’s a glance at the account dashboard within a Daffy account:
I mentioned convenience as a perk of DAFs earlier, but Daffy takes that convenience factor to the next level with its intuitive design and user-friendly experience.
Daffy has the lowest DAF fee structure
This is one of the other ways Daffy stands out from the crowd. Kind of like the woman in the red dress in The Matrix, Daffy’s value proposition is impossible to ignore. The miniscule flat fee that they charge has changed the entire ballgame in the DAF space. They didn’t just beat their competitors, they blew them out of the water.
Even some of the best companies in the low-cost investing space can’t keep up with Daffy’s incredibly efficient fee structure. Daffy only charges its users $3 a month. And sure that might sound cheap, but you may wonder how much that will actually save you vs their closest competitors.
A LOT. Going with Daffy over their closest low-cost competitors could put thousands of dollars a year back in your pocket. Seriously.
How much you’ll save depends on how much money you’ve contributed to your DAF. Vanguard Charitable, for instance, charges 13x more in fees than Daffy! That means that someone with a healthy DAF balance of $500k would pay roughly $236 in fees with a Daffy account. Fidelity customers would pay just shy of $6,000 and Schwab customers would be out more than $7,000! So yes, the savings can be significant.
Those extra fees, of course, will eat into your returns, meaning you’ll have less money to give away over the years. Daffy’s commitment to low fees is top notch, and it’s the #1 reason I send my philanthropic friends in that direction.
It’s not just the incredibly low $3 monthly fee that stands out. Daffy has also minimized fees on the ETFs they offer. The average expense ratio for the standard ETF portfolios are rock-bottom, just 0.05%. Again, that means that more of your money is working for you so you can maximize your giving ability over time.
Daffy makes giving feel more joyful
Giving can sometimes feel laborious. Daffy helps make it, dare I say, fun! They include elements of gamification, which just makes it easier to get excited about giving.
For example, you can earn achievement badges that just make the process of giving a little more exciting. Daffy will also give you $25 (for your favorite charity, of course) when you refer a friend. That makes it even more fun, and lucrative, to get your friends in on the action. You can even share the love and give a friend money for their favorite charity via your Daffy donor-advised fund through their Daffy Gifts feature.
And if you’re up for a challenge, you can create annual giving goals for yourself. This is probably my favorite money goal to hit, and hopefully surpass, each year.
You can also follow your friends to see what sort of charities they are giving their money too. You might find one you’ve never heard of before that you’d like to support! And you can collaborate with your friends to raise money for a cause you mutually support.
If you want to automate your giving so that you can support your favorite charity monthly or annually, that’s simple too.
Daffy offers a wide range of investment options
The main reason I’m keen on DAFs over just giving directly to your favorite charity is because they can help you grow that giving stash so you can do even more good. Why not use the same investing tactics that can help you grow wealth for yourself to enhance your generosity!?
Daffy offers ~15 premade portfolio allocation options, and the ability to create fully custom portfolios (for those who have Benefactor accounts).
The standard (agressive) fund is the one I picked because it suits my long-term giving goals best. I’m not keen on the ESG or crypto funds Daffy offers. But those are options at your disposal too.
A plethora of giving options
Chances are that you like to give to a variety of charities, not just one. You can give to your place of worship, your alma mater, and your favorite charities all in one place. Daffy makes it easy to give to almost every US non-profit (1.5 million+ and counting!)
Pros and Cons of Using Daffy
As you’ve probably gathered by this glowing Daffy review, I’m extremely impressed with Daffy and recommend them wholeheartedly. But I wanted to highlight the pros and cons of their service so you can fully understand what you’re getting into.
Pros:
Free tier: Daffy has a new free membership option for those wanting to dip their toes in the DAF waters. Balances below $100 won’t incur a monthly fee.
Low fees: As discussed above, Daffy isn’t just barely winning on the fee front, they’re crushing their competitors by slashing fees in a way that’s never been done in the history of donor-advised funds.
Wide range of investment options: As Daffy states on the website, “Daffy offers a total of 12 different portfolios across four different categories: Conservative, Standard, ESG, and Crypto.” I’m partial to the standard and/or conservative funds that largely prioritize traditional savings vehicles or investing in the stock market, but Daffy’s handful of investment portfolio choices are nice to have.
Excellent customer service: If you need help with your account, just shoot an email to support@daffy.org or start a chat on the Daffy.org homepage. Their friendly team is quick to respond!
Cons:
You can donate with a credit card, but you’ll be charged fees for doing so. This makes sense. It costs Daffy money to take donations via credit card. But it’s important to note that it’ll cost you extra if you want to donate with plastic. Donating via ACH transfer is fee-free and makes the most sense.
If you want to contribute big chunks of appreciated stock and cryptocurrency to your Daffy DAF, you’ll have to pay extra for the “Benefactor” tier which raises the monthly cost significantly to $20, or $240 annually. An interesting caveat though, even this more expensive tier is less expensive than going with one of the traditional low-cost companies like Vanguard, Fidelity, or Schwab.
Overall Review of Daffy:
The truth is, Daffy blows away the competition in the DAF space on basically every metric. Daffy spices up the act of giving money away, all while helping you do it in the most efficient manner possible. We believe that Daffy is a particularly excellent choice for everyday philanthropists who are looking for a low-cost, convenient, and flexible way to make charitable donations.
Donor-advised funds are an incredibly effective way to give away money to your favorite non-profit organizations. The tax benefits and flexibility of donor-advised funds make them the superior choice for a slew of money savvy folks.
Don’t forget that you can also snag $25 for your favorite charity when you sign up for a Daffy account. That’s a sweet deal for any budding philanthropist!
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Daffy has changed the way people give money to charity. They have made it easier for everyone, not just the wealthy, to donate money efficiently. With Daffy, you can decide where your money goes and get a tax deduction right away. You can even contribute stocks and cryptocurrency without paying taxes on the gains. Daffy makes giving fun by adding game-like elements and rewards. They also have low fees, so you can save a lot of money compared to other options. Overall, Daffy is a great choice for people who want to give back in a smart and affordable way.
Agreed! Daffy really has made donor-advised funds accessible to normal folks.
Sounds like an excellent tool Joel! I’ll check it out and use your link.
Daffy absolutely rocks. I hope you’re able to give money away like a madman, dude!
Is Daffy a particular DonorcAdvised Fund?
It’s the low-cost platform where you can easily set up your own donor advised fund. It’s truly a game changer in the space!