80% Increase in Median Donations Achieved with a Simple Nudge

Donor-advised funds allow you to deposit money or investments like stocks and take a tax deduction for the full charitable contribution for that year. But you don’t have to redistribute any money to nonprofits that year. Instead, you can let it sit, as if it were your own private foundation; ponder your goals and do some research; and then ask the fund to make donations to various nonprofits over time.

One big behavioral (and public policy) challenge with donor-advised funds is this: How can the funds — or you, yourself — deploy nudges to prompt bigger distributions of the money more quickly? That’s where the “chai” gambit at Daffy, which stands for Donor-Advised Fund for You, came in.

There are many other possibilities. If you’re trying to make a donation to your college to replace the grants you were awarded as a student, you could add your graduation year, say $19.93, to what would have otherwise been a $100 gift. Schools could prompt something like that, and so could donor-advised funds when they see people giving to a college.

If you have children, grandchildren, nieces or nephews, there’s another possibility. Daffy has a family plan that allows children to prompt their adult relatives to support a cause the children choose. Why not put the app on their iPhones or iPads so they can make suggestions and let, for example, a 12-year-old make $12 donations to 12 nonprofits each year? (Daffy doesn’t support Android devices yet.)

I wrote this column in 5783, at least on the Jewish calendar. You’re reading it in 5784, on Rosh Hashana or a few days afterward. In this new year, I resolve to add $57.84 to my contributions. Here’s hoping that you can find a figure that means something to you — and will mean even more to your favorite cause.

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