Episode 96: The Future of Event Check-In: Apps, App Clips, and Arrival Innovation

Jeff: Welcome back to Elevate Your Event. We talk about all the various ways you can make your next fundraising event or campaign better than the last one. So we've got a repeat special guest because he's so amazing and so popular, and because he works for such an amazing company. We've brought Mitch back from Chariot to chat about donor-advised funds. I think this is still a mystery for a lot of our listeners.

Mitch: Yeah, well, I'd like to think in the past year everyone has figured it all out. I don't think we're quite there yet, to say the least.

Jeff: We just did an integration with Chariot into the Handbid platform, so I got to know the process very well. Probably one of the most over-engineered and robust integrations that we've done. We were really happy to get it over the line. Rock solid. And I was so excited to tell all of my major clients, and even the customers of ours who I sit on the board of, that hey, we have DAF Pay. It was a huge upgrade for us, too, and some of the organizations I'm involved with.

Jeff: It was so funny because I sat on the board of the Fellowship of Christian Athletes here in Denver, and I had mentioned to them before -- hey, we just implemented DAF Pay. I don't think they fully heard what I said. So this guy gets up one day at one of our board meetings and he's like, well, I wanted to pay with my donor-advised fund. So he had to go into some tool inside of his donor-advised fund and find FCA. He searches for FCA and finds like 6,000 entries. He's trying to figure out which one it is, calling FCA corporate, making sure he's sending money to the right place. And he was so proud of himself because he had generated this PDF with arrows and highlights -- three or four pages long -- and he's like, this is how you donate to FCA. I kind of raised my hand. I'm like, so, or you could just go to the FCA campaign page on Handbid and click DAF Pay.

Mitch: DAF pay shouldn't be that hard.

Jeff: It shouldn't be. So, Mitch, can you give a little DAF 101 to our listeners? What is a donor-advised fund?

Mitch: Of course. It's not boring, and I always love chatting about it. I think it sounds more intimidating and complicated than it is. It's especially helpful to think about it like a 401(k) or an HSA. A DAF is a tax-advantaged account for charitable giving. Similar to how a 401(k) is a tax-advantaged account for retirement or an HSA is a tax-advantaged account for healthcare costs. In those examples, you're putting money into a specific fund. It can be invested and it has restricted use -- retirement or healthcare costs. In the DAF example, you're putting assets or cash into an account. You get your tax write-off immediately for that contribution -- that's the tax advantage piece. Those assets are invested in the account. They grow tax-free. And then you make grants out of that fund over time, but it can only be used for making donations to eligible nonprofits.

Jeff: So I can't walk into Crate and Barrel and make a donation for a new sofa? It's going to a registered 501(c)(3) charity or something equivalent, right? What we learned through our process is there's only certain things you can actually pay for with a DAF.

Mitch: That's the really important thing, especially in the context of events. Because you got that tax write-off when the money went into the DAF, there are more restrictions on how the funds get used even when it is paid to a nonprofit. You can't use it to purchase things. The overarching rule is that you can't get any personal benefit from a DAF donation. So you can't use it to buy a table at an event, pay for an auction item, or pay for tickets. It is straight donations. But you can absolutely use it at the event when you do your paddle raise, your pledge call. You should absolutely be encouraging people to use their DAF.

Mitch: I think that's the biggest mismatch -- people either equate "event" with "can't use my DAF," which is not the case. It's just certain things. Or they're thinking they have to go through that multi-page process. So they just make a credit card gift instead. But the opportunity you're missing as a fundraiser is they would donate something like 10 times as much if they can use those tax-advantaged DAF dollars they've already set aside.

Jeff: Is 10 times a real number? Like, is there a statistic?

Mitch: It depends on the organization, but there have been several partners of ours -- March of Dimes, Susan G. Komen -- that have gone through the gifts they got through DAF Pay when a donor used their DAF for the first time, compared to when they previously gave with a credit card. For March of Dimes, the average was 8x. For Komen, the average was 10x. It'll vary by organization, but directionally it's a large increase. Think about it -- you can think about a DAF like a gift card for giving that you've given yourself. It's restricted use, but it's set aside and it's not coming out of your other budget. When I go into a store and I have a gift card, I'm basically trying to spend the whole thing. Whereas if I was just using my credit card, I'd just buy the one thing I wanted.

Jeff: I think that's awesome. One of the things we had to make sure was well figured out on our side is when people pay their invoice inside of Handbid, we only allow them to pay with their DAF for what we call donation items in our platform. But it really facilitates the use of it at an event because I'm going to buy my ticket in advance, pay with a credit card. I'm at the event now, bidding on live auction items, bidding on silent auction items. Then I make a donation in the paddle raise. We offer them the ability on their invoice to pay for those select items -- those donation amounts -- with their DAF, and then the balance on their card for the auction items. Our goal is to use it when you can.

Mitch: And that's what you've built -- a huge service. You've taken the interpersonal resolution of that out of the equation, which is where you get into gray area, either because someone on staff doesn't know the exact rules, or maybe the donor pushes to use it for something they shouldn't. By instituting it in a flow in the product, you're actually reinforcing proper, compliant behavior for the nonprofit and the donor and reducing the chance of conflict that's difficult to navigate as the fundraiser.

Jeff: We also, because Chariot has a really cool interface -- when the DAF Pay modal pops up, they can actually modify their donation. We allow them to see their balance and think, okay, I was going to give a thousand bucks, but I've got $4,000 left in my account. Let me donate all of it. They can change it right there on the fly, and then we just update their donation. Their money's already been set aside -- it's not in their bank account. It's been allocated.

Mitch: The intent is for them to use their DAF. I think it's similar to an HSA -- you're trying to grow it, but also when you want to use it, you want to use it. I think it's really important to address the misunderstanding or criticism that when someone puts money into a DAF, they're taking it away from a nonprofit. Think about the last time you had to do anything for your personal finances -- open a bank account or change your bank account. You put it off for months. This person took all these extra steps to set up a special financial account just for giving. That's how invested they are in philanthropy. This is not someone trying to avoid giving. And the tax advantage is only an advantage if you plan on donating that money. Otherwise, the 40% write-off was still 60% cost. My dad always tells my mom whenever she says something was on sale -- he always says, well, it was still 60% on.

Jeff: Could we build with you guys a form of recurring donation where they would pay with a DAF?

Mitch: Yeah, we have that capability in DAF Pay where you can set up a monthly recurring donation. When they initiate, we're passing through the initiation request into their portal. If the DAF offers that monthly recurring option, we toggle that on so it can set up that recurring gift. The DAF handles it automatically, paying the funds out.

Jeff: So, Mitch, what's been a successful strategy or tactic you've seen nonprofits use to find or identify DAF donors, or cultivate that within their donor base?

Mitch: There are two separate pieces there. On identifying or finding DAF donors -- that's a question I get every single time I speak to any group of nonprofits. Typically they think they need to build a relationship with the DAF provider and that Fidelity is going to tell their donors to donate to them. That's not the answer. That's not how it works. It's really similar to how you engage with donors overall. It's a matter of making it really clear and easy that DAF giving is available to your organization.

Mitch: There are friction points, especially if your name is similar to other organizations or your legal name with the IRS is different from your marketing name. So clarifying those things, giving people instructions to use their DAF, or putting DAF Pay in those moments is helpful. The simplest thing is provide your EIN. Check your website -- when's the last time you tried to find your own EIN on your website? I can't tell you how many organizations make that difficult to find.

Jeff: I think there's a persistent myth that it's a private number.

Mitch: It's a very public thing. Just put it on your footer on your website and people can find it. There was some really interesting research that just came out from the DAF Research Collaborative, a group of academics that study this. They surveyed over 2,100 DAF donors and found that nearly 100% of folks using a DAF also donate outside their DAF every year, with a credit card. The top answers for when they were more likely to give directly versus using their DAF were things like a smaller donation, a crisis response gift, or being at an event -- something spontaneous. So those are the moments when someone is currently donating with a credit card but has a DAF, and you would get a larger gift if you got them to use their DAF.

Jeff: It'd be kind of cool to do this in our apps too. Right now we do it on the web. But I'm thinking in-room paddle raise -- pop up the screen, let them pick their level and say pay with DAF. Why not?

Mitch: Yeah. Because that's capturing it in the moment. It's just another payment method, another option. And this is inherently educating people too. When folks see this new option, they're curious and want to learn about DAFs. I've been to three galas in the past few months and I heard every single one -- the auctioneer for the pledge or paddle raise was like, and remember you can use your donor-advised fund. I did not hear that a year ago. This is changing. All these things are elevating DAFs so that people use them, but also people learn about them, which ultimately leads to being more engaged in giving and giving larger gifts.

Jeff: At that same board meeting, there seems to be an impression that only rich people have DAFs. Do you have any stats around that?

Mitch: That's the single biggest myth that is just not true. I had breakfast this morning with a fundraiser at a very large national nonprofit. He works in major gifts. They put DAF giving under major and planned giving regardless of the gift size. So the donor services person on his team is completely underwater because of how many $50 and $100 gifts they have to process that are excluded from their central gift processing for annual giving. This is the perfect example of that misconception and why DAFs don't just live in major gifts or planned giving. It's really just a tool that all kinds of donors are using.

Mitch: It certainly has a lot of value for wealthy people -- they can contribute appreciated assets like stock that's gone up in value, avoid capital gains tax, get the tax write-off on the full amount, and it grows tax-free. But even if you're not at that stage -- I have a DAF. I'm certainly not getting any tax deduction for it. I have a monthly contribution, and my employer automatically matches up to $200 into my DAF each month. So I've basically set my floor for annual giving at that amount. It helps me stay accountable and organize all my gifts into one place.

Mitch: We're in the second iteration of the DAF Fundraising Report, our big research project where we analyze nonprofits' historical fundraising data. One of the new things we're adding this year is the distribution of DAF gift size. The vast majority of DAF gifts are actually below a thousand dollars.

Jeff: Do you have any stats on how many different charities an individual DAF holder gives to?

Mitch: The only place I know that discloses this is Fidelity, the largest one in the country. Their average is that a DAF holder supports 12 different nonprofits. The average for the general public is two. So it's substantially larger. That goes against the myth that DAFs decrease people's giving. They give more and to more organizations because they're proactively contributing and setting up an account, which makes them think about who they want to give to. It makes them more intentional and proactive.

Jeff: Is this a U.S.-only thing? Are there international funds?

Mitch: Chariot's product, DAF Pay, only works for U.S.-based DAFs and U.S.-based charities at this point. But there are DAF-equivalent instruments in other countries -- Canada, the UK, and Australia are the more meaningful ones, but even then they're like one one-hundredth of the size of the U.S. DAF market.

Jeff: What about currencies? Are there crypto-oriented DAFs?

Mitch: You can contribute a whole host of things into a DAF account -- crypto, stock. I heard a community foundation say someone donated a cruise ship to them. One of the benefits is that DAFs are well positioned to take in and liquidate complex assets in a way that a nonprofit might not want to deal with. But the important thing for nonprofits is that the money coming out of a DAF when folks are making their grant recommendations is always cash. They aren't getting crypto, they aren't getting yen, they aren't getting cruise ships -- they're getting cash.

Jeff: What do you see as the next set of major changes in this space over the next year?

Mitch: In the next 12 months, the earliest thing on the horizon is we just announced the kickoff for DAF Day this year. We started that event last year. It takes place in early October -- this year, October 9th. It's meant to be a giving day specific to DAFs, a rallying cry for both nonprofits and DAF providers to educate folks about DAFs and encourage people to use them. In our first year, over a thousand nonprofits participated. This year, we have almost 400 registrants for the kickoff webinar in 24 hours.

Mitch: There are going to be a lot of large fundraising platforms introducing DAF Pay in the coming months. The coolest thing about what we do is that's not competitive to anyone. Every fundraising platform that adds this capability is increasing the visibility of DAF giving and getting people familiar with how easy it is. Reducing friction -- you reduce friction, people give more. We really view ourselves as doing that at the industry level for this specific vertical of giving. So there's going to be a pretty significant shift in this dynamic around DAFs.

Jeff: Count us in. We'd love to participate again in DAF Day. Impressive what you guys pulled off last year. Beneficial for the industry as a whole.

Jeff: This has been awesome. It's always good to catch up with you. You guys are an amazing partner. When we're chatting with prospects and clients and saying what's new at Handbid, we say you can now process your donations with DAF Pay and people give us double thumbs up. It used to be like, what's a DAF? But now it's like, oh, that is cool -- that's accessible to my constituents now. So, Mitch, if there's anything our listeners need to reach out to you about, what's your website?

Mitch: Our website is givechariot.com. You can reach out there with any questions. Claim your account so you get access to DAF Day things. Also check me out on LinkedIn -- I post probably more than you'd ever want to learn about DAFs, but it's good to build that familiarity and education.

Jeff: Get your charity registered with Chariot. You don't want to do that the morning of your event. It's good to get everything squared away on both ends. All right, Mitch, have an amazing late spring, early summer. We hope to see you soon at another conference. And to all of our listeners out there, until next time, happy fundraising.