Artificially Intelligent with Sam Maule and Maia Bittner

Revolutionizing Philanthropy: Salomon Serfati on Donor Advised Funds and Innovative Giving Strategies

• Sam Maule, Maia Bittner, Rachel Morrissey

Share episode

Send us a text

Discover how Donor Advised Funds (DAFs) can revolutionize your approach to philanthropy with Salomon Serfati, CEO and co-founder of Chariot.  Saul joins us to shed light on how DAFs offer significant tax benefits and the flexibility to time your contributions for maximum impact. Through a touching personal anecdote, Saul reveals how he and his fiancée used a DAF to help fund weddings for those in need, illuminating the communal and heartfelt potential of these funds.

We also explore the innovative possibilities of DAFs in making charitable giving more strategic and aligned with personal values. Learn about DAF pay, an exciting solution that simplifies the donation process directly from nonprofit websites, making philanthropy more accessible than ever. Whether you're new to the concept or a seasoned donor, this episode promises valuable insights into how DAFs can help democratize strategic philanthropy and make your charitable efforts more impactful.

Hosts: Sam Maule & Maia Bittner


Sam Maule:

Hey everybody, welcome to another episode of Artificially Intelligent Podcast. This is brought to you by our friends at Money 2020. I'm Sam Maule, one of your hosts, and what do we call ourselves? Maia? Perpetual interns.

Maia Bittner:

Oh yeah, the interns here to constantly keep learning. We are eager, we are with coffee and ready to learn something new.

Sam Maule:

Always with coffee, always with coffee, I agree. So my little life update on my end I now have. Every single child has graduated from something. My son has now graduated from high school. My daughter has graduated from college. I'm done, thank you.

Maia Bittner:

Just one more kid to get through college. You've been listening to a lot of inspiring graduation speeches.

Sam Maule:

I have slept through several inspiring graduation speeches, so I'm good to go. How's life on your end?

Maia Bittner:

You're breaking my heart. I just spoke at a graduation. I saw that, so I assume everyone was on the edge of their seats, paying lots of attention to all of the wisdom that I have to impart to these new college graduates.

Sam Maule:

I believe yours was at your alma mater.

Maia Bittner:

Yes, it was Franklin W Olin College of Engineering. Full circle there. Well, speaking of charities like and non-profits, and things that you donate to um sam, we've got here today Salo S surfati, who is the CEO and founder of chariot .

Sam Maule:

Welcome to the podcast thanks for having me very excited and this is and, Maia, this is like a perfect opportunity for you and I, because, sol, I'm going to be honest, I don't know anything about donor advised funds nothing, zero, zilch. And this is what Maia and I this is the reason we put the podcast together was I don't want to call them edge cases, but this is a chance, for I've been in the industry 30 years now in banking and fintech. I love that. I keep learning new stuff. Maia, I've never heard of a DAF. Do they call them DAFs? Sal?

Salomon Serfati:

Yeah, DAFs is the people who have them. Call them DAFs Exactly.

Sam Maule:

I love that. See, there you go, Mai maya, another one.

Maia Bittner:

There's actually a fun startup called DAFI.

Sam Maule:

Seriously Well, but that isn't yours right, Sal.

Salomon Serfati:

No, and DAFI actually stands for Donor Advised Fund For you.

Maia Bittner:

Oh, I didn't know it had a whole acronym, so let's start there. Can you give us the high level overview of what is a DAF? Why do people have them? What use are they?

Salomon Serfati:

Yeah, so a DAF or donor advised fund is. You can think of it as a separate account you have specifically for charity. So there's a lot of reasons why people would open them up. But in its most simplest form, it's a savings account you have with any major banking provider where you keep your charity dollars there. Why do people open them? So there's a lot of reasons.

Maia Bittner:

Why do I want a separate? Open them. So there's a lot of reasons. That's insane. So why? Why do I want a separate account for charity?

Salomon Serfati:

There's a lot of reasons. One of them, and it's the most obvious one, is the tax benefits. So you actually get a tax receipt or a tax deduction when you deposit money into this account. Got it?

Maia Bittner:

Does that make it easier to time when I want my tax deduction for donating to charity?

Salomon Serfati:

Precisely so you can deposit however much money you want up front. You get that tax receipt and over your lifetime you can decide where you want to donate those dollars. Where the tax advantages become very great is when you have capital gains anything with capital gains, unrealized capital gains. So let's say you have, like Apple stock that appreciated a lot. You can actually transfer your Apple stock. You get a tax receipt for the full value of that stock and then you can decide where to donate all those dollars. So you never have to pay capital gains on the stock because it sits in a DAF and anything in a DAF has to go to charity.

Sam Maule:

Did I look this up right, so I want to make sure I got this right. You and your fiance set a DAF up for a community fund so it could be dedicated to financing weddings for those who can't afford them. Is that right? Is this the same?

Salomon Serfati:

song. It's the same. That was like we opened up a DAF for a specific event or a specific cause. You're also able to do that, um, so a lot of people can donate into a fund. Everyone gets a tax receipt for donating into the fund and then you can decide like as a manager of the fund, you can decide what charities to donate that money to. So it's almost like follow crypto, right right, it's like a DAO in a way. Right yeah, which is very cool. But you can have a personal DAF that only you deposit money into and you decide where to go. You can have a family DAF that's a very popular structure, whereas a family, you can say everyone deposits some money into this account and as a family, we decide where we want these dollars to go, to which philanthropic causes, and it really brings the family together.

Sam Maule:

All right, I want you to be honest. Was this your idea, or your fiance's, to set up the community? It was both.

Salomon Serfati:

I said we should do it. She pushed it forward and it was really beautiful, right? Because we got to enjoy a nice like a really nice wedding. We were very happy and when you know that around the world people can't afford one, and if we can give some of that happiness that we felt at our wedding to other people to experience as well, we wanted to push that forward.

Sam Maule:

No, I absolutely love it because I was at Google for a while. So there's always this thing about eat your own dog food Right it's. You have these great ideas. You actually use them.

Salomon Serfati:

And the fact that you did that around such an important life event. I absolutely love that. Yeah, I actually started using donor advised funds way earlier in my life. So I have, I have a principle where I donate 10% of my income to charity and I've been doing that since like middle school. So when people would give me birthday gifts, I would say, okay, what's 10% of the birthday gift and I would make sure I would give it to charity and I would keep track of that on like excel spreadsheets and like that's how I would keep track of it throughout my life. But when I got my first full-time job at BlackRock I was a back-end engineer it became like too messy to keep track of it all in an Excel spreadsheet. So we realized that's when I started learning about donor advised funds and I'm like, wow, they're literally a separate account. You can have that. You can automatically deposit 10% of your income to that account and you know that by law you have to donate those dollars to charity. So it's as if you've almost already given them. And that's when I started to use them and some of like my friends that, and that's how we eventually started Chariot, our company, and I want to like emphasize on.

Salomon Serfati:

That's like another reason why a lot of people have donor device funds. It's not just for the tax properties. A lot of them have them. A lot of people have them as just a separate account, like organizationally, because they know they have some principle or they have some motivating factor that they know that they want to donate to charity. So separating that out and holding yourself to that goal is another big motivator for people to have these accounts. And the stats show it. Because 50% of deposits into DAFs are by cash, which is like not the efficient way if you want it to be tax efficient. But the fact that 50% of deposits are by cash is because not everyone who uses these are using these accounts for tax reasons.

Sam Maule:

I 100% get this, and I don't know if I ever told you this, and so I'm interested in what motivated you to do that when you were young. But I grew up with a mother who had multiple sclerosis, so it was absolutely handicapped. You know, I was 10 years old and my life turned upside down, so I have been donating to the multiple sclerosis society for my entire life. Just a given. I don't even think about it. It's just something you do, so I'm just assuming you have incredible parents who taught you those values and got you interested in doing that. But now I wish I'd known about DAFs much earlier, because this is something that I personally do.

Salomon Serfati:

Yeah, I would say it came from parents school, like a sort of like a moral obligation. I would say that I always questioned why people spend a lot of money on very expensive things that they can get for cheaper, instead of helping other people out. And I always realized that that's a hypocritical thought because, like I used to like going to basketball games, for example, but I could watch it on TV and the difference of the money spent I could have donated it. So I found that the most efficient model is actually a percentage of your income and fulfilling some moral responsibility to give back, because we're all born with, like you know, like a lottery ticket to some respect, right. Because we're all born with, like you know, like a lottery ticket to some respect, right. And because that percentage of income, if you can strive to make more money like a capitalistic structure and you're just going to be giving more as a result, so you're taking more but also giving more. So percentage always worked well in my mind.

Maia Bittner:

I love that. Yeah, I have a DAF. It is with another startup called CharityVest, and one of the things that I also like about. Well, I think most DAFs infrastructure the most. Most companies support this.

Maia Bittner:

I can invest the money in my DAF and so it actually has the potential to grow. So I put in money or I donate stock or whatever has the potential to grow in size, and then I can choose to donate it to charity whenever I like. I also just heard about this really interesting concept, which is people who are supporting using your DAF to invest in venture capital and then hopefully making big returns, and then, of course, all of the money that you make on of those investments gets donated to charity. And I think there's a lot of people who are sort of more comfortable with that as their first entry into private investing, but I thought that was a really, really interesting idea is using this money that you've set aside for charity, placing risky bets and then, hopefully, it you know 10xs or 100xs and you have a lot more money to donate charity at the end.

Salomon Serfati:

Yeah, it's an incredible tool in the sense that the money you put in is not going to lose its value to inflation. As you take time to figure out where you want to donate those dollars, you can be very flexible as to how that money grows. The important piece is that the money is not technically yours it's owned by a non-profit. That's how you get the tax receipt up front. So whatever money that money makes must go to charity, and you can never take it back um, so that's an important thing. And if charity is defined as a 501c3 um organization by the irs, so it's a public charity and then is a daf itself a charity.

Maia Bittner:

I think I was looking at setting up a nimcrut, which is a charitable remainder trust um, with a beneficiary being my daf um, so that then I could send the charities that exactly it goes over. So is that is it? Is it considered a charity?

Salomon Serfati:

functionally, a daf is a charity. Um, what you're doing when you deposit money into a daf?

Maia Bittner:

you're giving your money to a charity and then it is a charity and your account it looks like it's a charity that picks exactly, exactly.

Salomon Serfati:

You're putting your money into a charity, um, and then you're just telling the charity where you want that charity to send the money to, to another charity, um yeah, so that's why you get the tax write-off right away is because you effectively have donated it to charity right at that time. Exactly, exactly. Those dollars aren't technically owned by you anymore. They're owned by the charity and you're just giving. The charity is just giving you that's why it's called a donor advised fund advisory privileges of where you want to donate those dollars.

Sam Maule:

So when did you found Chariot Kind of walk us back through that story of actually setting the company up and the inspiration for that?

Salomon Serfati:

I always love that yeah, so I was, um, I was at blackrock and a lot of my friends were like bane, like I had graduated from upenn two years prior, uh, studying computer science. And I had a lot of friends who also thought very critically about philanthropy and also donated some percentage of their income to charity and we were trying to get our friends to use separate accounts for their philanthropic giving. We knew, we knew that once you separate, we had the hypothesis that if you set up a separate account and deposit money into that separate account and give from that separate account, a lot of positive things would come out of that. Right, for example, we did that with like a group of 30 friends. We encouraged all of them to set up a separate account, deposit some money into it and give it from there and we noticed three main things happened right.

Salomon Serfati:

First, when you have a separate account for charity, you stop seeing philanthropy as an expense but rather as an investment. If I ask the average American, can you donate to American Cancer Society? They're like, okay, like I can either go to dinner tonight and spend $50 or I can donate $50. They see it as an expense and it's always reactionary. You have to ask someone to give and then they give. When you set aside a portion of your income to charity, now someone asks you, can you give to American Cancer Society? They're like, oh, I have $1,000 set aside, sure, I'll give $50. It doesn't hurt anymore to give.

Salomon Serfati:

That was step one. Step two was, since people now had a pool of capital that they knew had to go to charity, they started to ask this very critical question, which is like where should I give? Before that question never came up. It was always reactionary. Someone asked you to give and you gave, and that's how you decided where you were going to give. Now that you have a pool of capital set aside, it's like you ask this critical question of where, which brings to.

Salomon Serfati:

The third point is that people become more intentional about their giving. They actually care who is being most effective? Which nonprofit aligns with my mission, with my values? You started getting into like the rabbit-hole. Effective altruism, value-based giving and all those things are things that humans, like most people, don't think about.

Salomon Serfati:

But once you have a separate account for charity, you do start to think about it. So I was at BlackRock and we were sort of experimenting with that and getting our friends to adopt these types of accounts and we realized that if you had a donor advised fund, it was very disconnected from the online ecosystem. So you go to any non-profit's website. When we started the company, you can very easily donate with credit card or PayPal to a friend's marathon a campaign, but you couldn't donate with a donor advised fund. It was disconnected from like online giving, and so we we asked ourselves what would it take to create a payment option that called DAF pay that allows you to donate via your donor advised fund directly from a nonprofit's website. And that's how I like the idea for Cherry began and that's when we got started.

Sam Maule:

Yeah, my day job. I work for a payments company, so moving money.

Sam Maule:

And so I honed right in on the DAF pay side on your website. So I love the idea of that dashboard too that you have, so you can see the balance and easy boost options. In that you talked about the difference between using daft pay and without it, because it looks like without it it's more of a. I'm using my credit cards with that pay, as you can actually pay in the moment of inspiration is what you call it which I really like. So all of that done through the app, right?

Salomon Serfati:

exactly, exactly, and you can think of it as a payment option. You go to your friend's campaign If your friend's trying to raise $10,000, let's say on GoFundMe and now you can actually donate via your donor advice fund and the thermometer goes up. All that nice stuff happens and you can give finally, via inspiration from your DAF. You don't have to go through all the hoops and steps to actually submit that donation from your portal.

Maia Bittner:

Well, yeah, I was going to say the way that I donate from my DAF today is I log in to where my DAF is. I search for the charity that I want to donate to. I find it in all of the options and things that have similar names and then I say how much I want. I just click it. I don't actually know what happens next. It says, like great, we've sent them $100. My suspicion is that it is cutting and mailing these charities a check, but I'm not actually sure. The mechanics of money movement. That happens on the other side. Salo, do you have any color around how that happens today?

Salomon Serfati:

Yeah, so there's two things for any payment, right. There's the initiation of the payment and the settlement, right. So two things. Once you went to that charity best portal and you click donate, imagine you wanted to donate to your friend's campaign on GoFundMe and you want the goal to go up, there's no way that's going to be connected with the initiation of payment on GoFundMe. That's why you need DAF pay on the GoFundMe side and then you get thanked by the nonprofit. They can build a relationship with you. All that happens on the initiation side. On the settlement side, which is how the money actually moves, every DAF is a little different. A lot of DAFs are cutting checks. They're sending a check to the non-profit you selected based off, uh, the mailing address they get from the irs. Um, yeah, exactly so that's how a lot, of, a lot of daft providers send payments today because I mean there's a lot of money moved from through dafts today, right, well, they actually have this on the website $230 billion sitting in DAFs.

Sam Maule:

And I feel like a moron because, again, unlike Maia, I really hadn't paid attention to this $230 billion. So yeah, Maia, I think there's a little bit of money that's moving around here.

Salomon Serfati:

Yeah, and donor advised funds before they were used. I think a common misconception is that donor advised funds are only used by ultra high net worth individuals. That was probably true, like 10 years ago, where people would open up a donor advised fund maybe instead of a foundation. Now all the major providers have lowered their minimums to zero dollars, so anyone can open up a donor advice fund, and amazing tech players like charity vest and daffy have come to the market that allow you to open up a daff, just like a acorns account, for example. Um, so it's very, very easy. It's becoming more accessible, which is now why, like, anyone can open them up, and it's not just high net worth individuals who are using these accounts.

Sam Maule:

You've also opened up integration, if I'm looking at this right no-transcript.

Salomon Serfati:

Exactly so, like, for example, I gave the example of GoFundMe we launched with them, like last month. Now any GoFundMe page that's raising money for a nonprofit, you'll see DAF pay there and so where we work with fundraising platforms so that very quickly we got distribution to the nonprofits payment pages missing saw.

Sam Maule:

Yeah, well, one thing that I really like I see this is a coming soon. You have the daf academy for people like me, which didn't pay attention. If I've seen this right, you get an eight-part curriculum that's coming up, because it does sound like there's a gap in educating folks on actually what this is and how they can be used.

Salomon Serfati:

That really smart move yeah, we're trying to educate people on two sides.

Salomon Serfati:

So we like to say that anytime you go to donate in the future, you're now going to see a new payment option called DAFE, and if you don't have a donor advised fund, you may click that and want to learn more.

Salomon Serfati:

So we have a section in our payment flow that allows you to put in your email and then, once you put it in, we ask you to select another payment method because we don't want you to forget to donate. So we ask you to donate via credit card etc. And then we email you additional information about what donor advised funds are and why you should open one up, and by doing so, we're educating the donor on what these accounts are, so more people open them. At the same time, we have to educate nonprofits about what these accounts are, because a lot of times, some nonprofits are not familiar with these types of accounts, even though they now represent 17 percent of philanthropy and growing. They're the fastest growing vehicle in philanthropy. So that academy you were mentioning is a series that we're putting together for nonprofits for to make sure that they know why they should do everything they need to do to make sure that donor advised fund donors can easily give to those organizations.

Maia Bittner:

Okay, I always got to ask. And then, how does Chariot make money?

Salomon Serfati:

So we charge a processing fee, just like credit cards. We charge around 2.9%. If nonprofits prefer to lower that processing fee, they can pay an annual plan for us. So we give nonprofits those flexibilities. Sometimes nonprofits say I only wanna pay as I go. If I get a donation I'll pay, I'm happy. And sometimes nonprofits say I'd rather not worry about a processing fee and here's like an yearly fee. So we offer that flexibility to nonprofits depending on their preference. That's cool. We have amazing case studies on our website showing that just by adding DAF pay when a nonprofit adds DAF pay to their website, for example, pan-mass Challenge saw a 60% increase in DAF gifts, which is very meaningful for them, and I think 50% of all of total giving was driven by. Of the increase in their giving this year, 50% of that was driven because of DAPA. So just incredible results that nonprofits can do just by adding a payment option. It's pretty simple and that's where we're trying to drive to increase the pie.

Maia Bittner:

Yeah, I know that, like fundraising with these just so you're saying the campaigns and the thermometer gauges and all those different types of gamification tools has really exploded online, but the DAFs have kind of been left out. Since historically you had to originate your payment within the DAFs portal, it was kind of orphaned from all of the tracking and all the campaigns and all the specific mechanics that nonprofits use to solicit funds, and funds for specific causes and tied to different people.

Salomon Serfati:

Exactly. Our world is becoming increasingly digital. That's not an unknown fact. We have TikTok, we have Facebook, we have everything, basically, and in a digital world, you have to be able to participate in that, like your charitable wallet has to be able to participate in that. You can't be expected to leave a Facebook fundraiser go to your portal, donate and then it never be reflected on Facebook, which is inherently a social network. Right, it needs to be connected.

Sam Maule:

I absolutely love the concept of this. Again, it's one of those things, right, we talk about those. I hate calling them edge cases, but those use cases that just make sense when you see how this is put together. So, Sal, thank you for that. Where's the best place for folks listening to this podcast to learn more about Chariot, and especially if they want to engage with you?

Salomon Serfati:

Yeah, if you want to learn more, you can always visit our website. We have two Chariot givechariotcom and then daftpaycom. You can also always email us at contactgivechariotcom. If you are an excellent engineer operations person, if you're looking to join our team we're hiring pretty aggressively now, so you can email either of those emails or submit a contact form on our website and we'll be sure to look out for it. But, yeah, if you want to join a fast growing team that really cares about the work we do and is very intentional about how we can craft a world that's more philanthropic for the better, charity is a great place to work All right.

Sam Maule:

Well, and for those of you that want to ask Maia questions about what she's doing with her DAF, Maia, best place for listeners to reach out to you.

Maia Bittner:

Always Twitter. Feel free to DM me. I'm at Maia B. Would love to chat about your favorite charities to donate to.

Sam Maule:

And I've yet to figure out how you got so much time to post on Twitter with those two little kids. I spent the weekend with three grandkids and I don't think I picked up my iPhone once, other than to grab it from my two-year-old's hands as he was screaming and running out the door. So congratulations, you're very good at Twitter, Maia.

Salomon Serfati:

Well, a lot of people would congratulate you, Sam. I think a lot of people are addicted to their phones nowadays, so not picking it up.

Maia Bittner:

I'm addicted. That's the harder part. Yeah, totally.

Sam Maule:

I was trying to catch up on the Premier League scores as my grandson ran out the door with my iPhone, so it was a great moment. So I've pulled the hip muscle everybody. I feel great. I'm limping and you can't see it. If you want to reach out to me, if you have ideas for additional shows Twitter actually not a bad place Sam Wall at Twitter. Everybody, we appreciate you going out and giving us a review, telling your friends about the show, so we can grow the audience and learn more about topics like DAFs, which are just fantastic. Everybody thanks for listening and we'll see you next week.