Daffy.org, a contemporary platform for charitable giving, has launched its groundbreaking Personal Inventory Donation Program as a brand new solution to unlock billions for charity.
This program from Los Altos, California-based Daffy will permit staff at corporations like Figma to show their non-public inventory right into a power for good, making it simpler than ever to donate shares to charitable causes.
As non-public corporations now outnumber public ones within the U.S., the worth of personal firm inventory has soared. Over the previous 20 years, the variety of public U.S. corporations has declined by greater than 50%, whereas the variety of non-public, pre-market corporations has surged, with over 700 unicorns within the U.S. alone, valued at greater than $2.2 trillion.
Firms are staying non-public for longer—in response to a latest research, the median age for an IPO elevated by over 65% from 2000 to 2023.
With the rise of personal corporations, extra staff are receiving non-public inventory as a part of their compensation, but many discover it troublesome to satisfy their monetary obligations whereas the inventory can’t be offered.
In response, corporations are more and more conducting tender provides and secondary alternatives to assist present liquidity. The truth is, in This fall 2023 and Q1 2024, six of the highest 10 most extremely valued startups on the earth have disclosed participation in, tender choices together with ByteDance, SpaceX, OpenAI, Stripe, Databricks, and Canva.
Daffy’s Personal Inventory Donation Program provides a singular profit, permitting staff to donate their shares both ad-hoc or after these liquidity occasions, reworking non-public inventory into impactful charitable contributions and tax financial savings.
“As more private companies conduct tender offers to provide liquidity to their teams, every company should offer a private stock donation program,” stated Adam Nash, CEO of Daffy, in an announcement. “This not only improves employees’ financial outcomes, but also unlocks billions for charity—meeting the demands of today’s cause-driven workforce.”
Traditionally, donating non-public firm inventory has been restricted to a small variety of rich and related individuals–founders, board members, and enterprise capitalists–on account of excessive minimal thresholds and complicated processes. Daffy’s turn-key resolution simplifies this, making it accessible to a wider vary of staff. Many individuals donate appreciated inventory to assist fund their charitable giving and reap the tax advantages, however this chance hasn’t been broadly out there to staff of personal corporations.
“Giving Figmates more ways to support causes they care about makes an impact that extends beyond our company and community,” stated Praveer Melwani, CFO of Figma, in an announcement. “Daffy’s new private stock donation program gives Figmates a simple and high-impact way to contribute to the charities and causes that matter most to them.”
Worker advantages of personal inventory donations
With Daffy’s Personal Inventory Donation Program, staff can donate non-public inventory, permitting people to contribute the complete honest market worth of the inventory to charity. That will increase the full quantity given with out having to first convert it to money.
The workers can obtain a major tax deduction. People can qualify for an instantaneous revenue tax deduction on the present honest market worth of shares held for multiple 12 months. They usually can keep away from capital features taxes. By donating appreciated non-public inventory, people can keep away from capital features taxes on the appreciation.
They usually can entry a contemporary donor-advised fund. With a local iOS app and responsive internet expertise, Daffy makes it simple for workers to contribute extra belongings to their account, develop these funds tax-free, and provides any time they’re impressed.
The Daffy Personal Inventory Donation Program is an extension of Daffy for Work, enabling employers to offer staff with entry to a donor-advised fund (DAF), a tax-advantaged account for charitable giving. By means of Daffy for Work, corporations may match donations or gift-specific quantities instantly into worker DAFs, providing a straightforward and impactful solution to help charitable causes.
Daffy for Work was acknowledged as certainly one of Quick Firm’s 2024 World Altering Concepts and is utilized by modern corporations like Acorns, Grindr, OpenAI, Titan, and XYZ.
In February 2022, Daffy Charitable Fund raised $17.1 million in Collection A funding. The funding spherical was led by Ribbit Capital and likewise included participation from XYZ Capital, Coinbase Ventures, and greater than 50 angel traders.
Daffy Charitable Fund is acknowledged as a tax-exempt public charity as described in Sections 501(c)(3), 509(a)(1), and 170(b)(1)(A)(vi) of the Inner Income Code.
Background
Within the wake of the crash of the Web bubble of the Nineteen Nineties, the United States rolled out numerous laws and necessities to assist shield public market traders. Within the twenty years since that point, not surprisingly, the variety of public corporations has dropped greater than 50%, from simply over 8,000 in 1996 to roughly 3,700 right this moment.
Happily, the venture-backed ecosystem has not stopped constructing new corporations. However on account of the upper prices and necessities for turning into a publicly traded firm, increasingly more corporations are staying non-public longer.
Whereas this can be a phenomenal financial achievement, it additionally has some surprising and unintended penalties. A whole lot of hundreds of staff at the moment are being paid, at the very least partially, with fairness grants of personal inventory. For the overwhelming majority, this wealth is inaccessible till the corporate experiences a liquidity occasion, and as corporations keep non-public longer, these occasions have gotten fewer and farther between.
Excessive-quality corporations have responded to those modifications more and more by arranging tender provides and structured secondary gross sales to assist get their stakeholders entry to some liquidity to repay scholar loans or buy a house—however what about philanthropy? Donations of public inventory have grow to be an enormous supply of funding for the 1.7-plus million non-profits within the U.S., however what occurs when increasingly more wealth is trapped in non-public inventory? That’s what Daffy is addressing.
The way it works
Daffy’s Personal Inventory Donation Program is totally different. It leverages trendy expertise to dramatically enhance the consumer expertise and decrease prices. Extra importantly, by working instantly with corporations, it will increase the variety of contributors, enabling enormous value financial savings per donor.
Any Daffy member on the benefactor stage can donate non-public inventory, with nothing owed to Daffy upfront. Daffy expenses only one easy payment of 1.5% of the worth of the inventory when it’s lastly offered.
When you’re an worker at a personal firm planning a young provide, or in case you are all in favour of seeing this at your office, add your identify to the listing—if 20 or extra staff specific curiosity, Daffy will assist the corporate launch this system.
Daffy’s Personal Inventory Donation Program makes the method easy for corporations and staff alike. First, they set up phrases and timing with the corporate. They get hold of board approval and solicit curiosity from staff. They execute inventory transfers to Daffy, and permit staff to donate from the proceeds after inventory gross sales are accomplished.
The Daffy Personal Inventory Donation Program extends that platform to help office giving of inventory for personal corporations. Now, staff could make charitable donations of personal inventory both ad-hoc or after liquidity occasions like tender provides—making charitable giving accessible to everybody, not just some well-connected traders and executives.
Not surprisingly, the following technology of corporations are main the way in which democratizing entry to this chance for his or her staff.
The power to donate non-public inventory is a type of little secrets and techniques that has largely been handed down, by word-of-mouth, between skilled founders, traders, and board members for years. There are only a few donor-advised fund suppliers that help non-public inventory, and even fewer charities that may instantly settle for it.
Nonetheless, even for the few who study this chance, the method is complicated, costly, and infrequently gated by excessive minimums, excessive authorized prices, and excessive charges. One supplier quoted a $1 million minimal donation, and one other a minimal payment of $10,000. Most require the donor to pay $3,000 to $5,000 in authorized charges upfront. In fact, if that wasn’t sufficient, many funds cost excessive annual charges on belongings of 0.6% or extra along with these prices.
Why? For a similar causes that charges have been excessive throughout conventional donor-advised funds for many years. Their focus has been totally on serving the ultra-wealthy, with each transaction a one-off bespoke course of that may take as much as 12 weeks.
