How the introduction of transformative technology revolutionizes the philanthropic community.
An antiquated model of philanthropy
With nearly two-thirds of Canadians donating in a given year, the charitable sector has grown to an estimated $169 billion. People are looking to mobilize the impact of their gifts within communities and causes that most matter to them.
However, the lack of digitization in the charitable sector results in inefficient administration of foundations, donor-advised funds, and other philanthropic offerings under a “1.0” model.
In 2019, 44% of donors did so by cash, 21% by donation box, and 20% by cheque, per CAF Canada’s 2019 Giving Report. By contrast, only a third of Canadian donors do so online.
Just as online banking has replaced the need to visit brick-and-mortar banks, online philanthropy will soon replace the need for antiquated manual administration.
Developing a robust digital infrastructure will result in a growing charitable sector, with lower fees, greater access, and maximum impact.
How 2.0 technology transforms the philanthropic landscape
Technology holds the potential to mobilize charitable capital at record rates while broadening the base of who can participate in the sector. When donors have more accessible, affordable ways to donate, they are far more likely to do so.
Donor-advised funds are growing in popularity as a method to donate, with accounts exceeding $5.7 billion in assets in 2018 and surpassing 14% in annual growth. Per Investor Economics’ estimates, the Canadian DAF market will nearly double by 2026.
Traditional donor-advised funds, the assets of which are held by a foundation or other sponsoring charitable organization, face barriers to growth including inefficient, manual administration. With subsequent high fees and minimums, there are limitations on accessibility.
New technology streamlines the DAF administration process, making it easier to manage, invest, and allocate charitable capital.
In 2020, online giving accelerated at record rates, with an 86% increase from the previous year. There is a demand for technology to become a more integral part of the giving experience, and companies like Amicus.io are paving the way to do so.
Helping firms and foundations digitize donor-advised funds
The growth of the DAF market indicates unprecedented potential for financial institutions to proactively introduce donor-advised funds to clients as a charitable offering amongst firms’ existing services.
Traditional DAF administration is an arduous manual process which results in subsequently high costs, fees, and minimums. Because of this, DAFs can be inaccessible or inconvenient for many financial institutions and donors to consider when exploring philanthropic options.
Amicus.io offers a philanthropic platform for DAF 2.0 that powers the end-to-end management of donor-advised funds.
With a DAF 2.0 approach, clients and advisors access a digital giving experience that utilizes a wealth management firm’s donor-advised fund and sponsor of choice. A DAF sponsor is simply a registered charity in good standing with the CRA–such as a national charity or community foundation–that administers donor-advised funds.
DAF 2.0 software helps donors, their financial advisors, and foundations to engage in the entire DAF process–contributing, investing, granting, and managing funds–with increased simplicity, transparency, and impact. The software integrates as an extension of the institution’s existing DAF offering or broader digital experience.
Financial institutions that already offer donor-advised funds frequently do so through a third-party sponsor. The DAF 2.0 platform provides financial institutions the opportunity to bring charitable services in-house, matching the brand and online experience that clients trust and advisors are familiar with. With elastic architecture that automates administration, the platform can handle millions of accounts, hundreds of thousands of charities and billions of transactions.
Through the platform, financial institutions can continue their existing relationship with a partner non-profit or foundation. For those that are new to DAFs or are looking for a change in sponsor, Amicus.io can connect them with our partnering sponsor, GiveClear Canada Foundation.
The platform can also be used by foundations and charitable organizations in their sponsorship of donor-advised funds.
DAF 2.0 reflects a shift in thinking about the possibilities of the DAF market. With automated processes that integrate within a firm or foundation’s existing user experience, the offering is opened to donors at scale. The introduction of more efficient and affordable administration means that more clients will be inclined to donate, keeping charitable assets within the walls of the financial institution.
When will your firm launch a new generation of digital philanthropic services?