[Charitable giving is driven by very personal decisions laden with powerful emotions, noble ideals and important goals. Within that context, it is amazing to see how innovation and technology have been fundamentally shifting the philanthropic landscape. Charitable giving has evolved from just writing/sending checks to being more actively engaged and taking more control by starting private foundations or establishing donor-advised funds. 

Donor-advised funds (DAFs) are now the fastest-growing philanthropic vehicle in the U.S., crossing over one million individual accounts for the first time in 2020. This is due to the flexibility, ease of use and democratized accessibility of the vehicle—from individual to family to workplace to online fundraising platforms usage. DAFs have expanded the philanthropy model by being more accessible and actively used by more donors. 

The National Philanthropic Trust’s DAF Report 2021 provides us more on the lay of the land of the DAF landscape:
• Contributions totaled $47.85 billion, an all-time high, with assets under management totaling $159.83 billion.
• Grants from DAFs to qualified charities totaled an estimated $34.67 billion, a new high-water mark.
• The average size of an individual DAF account is estimated to be $159,019.

Now innovators are forging new avenues for charitable giving by applying a forward-thinking mindset and the latest technology. Originally vehicle-driven and product-innovation-focused, innovators are shifting to process, experience and personalization. The result is the development of a digital platform that transforms the giving experience to be more flexible and agile; engaging and coordinating donors based on shared values and mission to collectively maximize impact. Technology is bringing a modern set of pipes to allow for better efficiency, usability, engagement and personalization raising the experience and engagement levels to a deeper level.

To better understand these innovation trends, we reached out to Institute member Cor Hoekstra, EVP and general manager of TIFIN Give — a next-generation, digital, charitable giving platform within the TIFIN Wealth family. They are addressing a key industry issue: while the total estimated charitable giving in the United States has soared to $471.44 billion in 2020, according to Giving USA, why then are less than 50% of High-Net-Worth donors currently utilizing a tax and process efficient vehicle. We asked questions to inquire about what innovation trends are being deployed and how they are energizing the future of DAFs and expanding philanthropy itself.]

Bill Hortz: What was your motivation in developing TIFIN Give? What challenges and opportunities are you addressing?
Cor Hoekstra:
We developed TIFIN Give to fundamentally shift the DAF experience by introducing a digital giving platform that engages the whole family and aligns donors’ investments with their values.

Like many forms of charitable giving, the traditional DAF is obsolete; it is historically costly, inefficient and labor-intensive to administer which has limited its use to HNW and UHNW donors. It simply is not reflective of the world we live in, nor the millions of people who want to make an impact on the causes that matter most to them.

We know that younger generations are increasingly committed to social change. This shift in how people manage their money in alignment with their values comes at the same time as the largest transfer of wealth in history. By bringing the entire family into the giving experience, advisors can now empower their clients to make more intentional financial decisions while also forming meaningful connections with client heirs.

Our AI-powered platform adds the next level of personalization so that each client experiences philanthropy that directly ties into their greater financial plans. We offer thematic portfolios that can algorithmically adjust DAF investments to reflect giving priorities.

Hortz: How are you further democratizing donor-advised funds?
Hoekstra:
Traditionally, DAF accounts would require over $100,000 in minimums and fees to set up. This automatically limits their use to wealthy donors who could afford the up-front charges.

Technology cuts down on the traditional costs of administration, which means that we can eliminate fees and minimums. Now any individual or family, regardless of financial means, can open a DAF through their financial advisor.

Fidelity found that while 69% of advisory firms offer philanthropic planning, only 20% actively use it. This gap marks a significant opportunity, as only a fraction of firms have adopted technology to modernize and automate philanthropic administrative processes.

TIFIN Give bridges this gap, making DAFs available at scale within financial planning, which strengthens connections between advisors and clients as they navigate holistic wealth management. 

Hortz: What design decisions did you make in building your digital charitable giving platform to be more engaging and effective for clients?
Hoekstra:
TIFIN Give is rooted in personalization. We have built a platform that serves each donor’s unique priorities and values. Intuitive AI personalizes the search and discovery process of charitable causes and organizations for clients; the more a client interacts with the platform, the smarter it becomes in its recommendations.

With both ESG investing and charitable giving on the rise, we created thematic portfolio tilts that can align investments with giving actions. This amplifies the impact of each charitable dollar, even before the first donation. Say someone donates to organizations fighting the climate crisis; their thematic portfolio may exclude oil and gas or prioritize companies with a commitment to carbon neutrality.

Unique to our platform is the ability to engage the entire family on the philanthropic journey. We have seen that younger generations are increasingly philanthropic (75% of millennials donated in 2020 amidst the pandemic) and this is expected to continue, particularly in anticipation of the largest generational transfer of wealth we have seen to date. We know that legacy planning and philanthropy is important to donors as they connect with their heirs, yet we have not seen other providers tap into this aspect of giving. With asset allocation and collective campaign functionality, the client is empowered to lead multi-generational giving.

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