New Low-Fee DAF Allows Crypto Donations, Investments

A new donor-advised fund that accepts cash, stock and crypto assets as contributions, includes crypto as an investment option and has extremely low fees has entered a market dominated by Vanguard, Fidelity and Schwab.

Daffy Charitable, co-founded by Adam Nash, a former CEO at Wealthfront and former executive at Dropbox and LinkedIn, and Alejandro Crosa, who worked at Slack, Twitter and LinkedIn, says its mission is "to help people be more generous, more often," using its phone app to donate to more than 1.5 million charities.

"Right now, there are millions of people struggling, and so many who want to help. Just like other companies have made it easy to shop and save," Nash said in a statement. "We've built a platform from the ground up to make giving easier for everyone."

Donors — Daffy calls them "members" — can make a minimum one-time contribution of $100 or take the "Daffy pledge" and commit to donating $10 a week or $25 a month.

Fees

The DAF has two basic sets of fees: $3 per month for donations made with a linked bank account, a credit or debit card through Apple Pay and for donations of stock and crypto up to $25,000. These donors are known as "contributors."

The other set of fees is $20 per month for donors known as "benefactors," who have the ability to make unlimited stock and crypto contributions. The minimum for one-time stock contributions is $1,000 and for crypto contributions is 0.001 Bitcoin.

Donors with less than $100 in their accounts pay nothing.

Schwab Charitable and Fidelity Charitable have no minimums and charge an administrative fee of 0.60% or $100, whichever is greater, on the first $500,000 in assets. Vanguard Charitable has a $25,000 minimum and charges an administrative fee of 0.60% on the first $500,000 in assets.

Investment Options

Daffy's investment options include standard and ESG low-cost index funds from Vanguard and BlackRock which have an average cost of 0.045% as well as investments in publicly traded index funds from Bitwise Investments and in Bitcoin and Ethereum directly through the Coinbase crypto exchange.

Daffy Charitable's donors can choose from among nine different portfolios across three different categories — standard, ESG and crypto — based on their risk appetites — standard, moderate and aggressive.

DAFs are appealing to many investors because contributions are tax-deductible as soon as the donations are made, not when they are distributed to the recipients, as is the case with donations made directly to charities. DAFs also accept donations of stocks and other assets, saving donors the tax consequences of selling those assets first in order to make a subsequent cash contribution with the proceeds.