Adam Nash is the CEO and co-founder of Daffy, a new fintech platform focused on charitable giving. Nash has been influential in fintech most notably as a serial angel investor, advisor, and board member in over 100 companies such as Acorns, Gusto, Figma, and Opendoor.
Episode Highlights Here:
Adam
So if you bought apple stock at 10, and now it’s at 160. So it’s up $150 a share. When you donate that Apple stock, you not only get the charitable deduction for the $160, it’s worth today, not what you paid for it years ago, but also you’ll never have to pay those capital gains tax.
Brett
Adam, what is the number one secret to using a donor advised fund to your tax advantage?
Adam
Believe it or not, the number one secret is just to know that there is such a thing as a donor advised fund. donor advised funds have been around for decades, and yet most people have never heard of them. If you don’t have a professional financial advisor or high end accountant. Most likely, you’ve never heard of this type of account. But it’s not that complicated. You know, we were used to having individual retirement accounts and 401, K’s for, you know, for retirement savings, or 529. For college savings, there’s different accounts for everything. And the donor advised fund is just a great tax advantaged account for money and assets that you’re putting aside for charity.
Brett
Excellent. So it sounds like the number one secret is to actually be aware that it actually exists. So what’s the number two secret to using a donor advised fund to your tax advantage?
Adam
Well, yeah, it’s probably worth going into a little bit of what the donor advised fund is. So the idea behind the donor advised fund is they can only be offered by nonprofits themselves, right? Daffy is a 501 C three, registered not for profit organization. And by putting assets and money aside in this account, you get this immediate tax advantage. Because by putting money in the account, that counts as the charitable donation, right, so if you have a good if you’re like, a lot of us, you have some good years, some not so good years. Of course, in our tax system, those good years are very, very expensive. Those are usually the years that you want to put money aside for charity. But you don’t necessarily want to give it away all at once. And you don’t necessarily know who you’re going to give that money to. Unfortunately, our tax system is very strict, right? It’s from January 1 to December 31. And so if you have big gains in a year, trying to rush and figure out where to get your money is a real problem. So the great thing about a donor advised fund is it just separates those two problems, the problem of how much do you want to put aside for charity, versus who you’re going to give that money to. And so donors advised funds that you put money aside now, get the tax benefit now, and then you can spend time figuring out which organizations and causes are the best recipients of your money.
Brett
You can learn more about Adam nationally by going to daffy.org. And it’s daffy.org. So it sounds like the number two speaker there is just the flexibility with timing, not only timing for the amount that you want to put in per year, but also the timing for for who it’s actually going to go towards. Because you might be an entrepreneur, real estate investor, someone who’s building massive wealth and a tech industry cryptocurrency, whatever. And you’re like I want to give. I’m so focused on this. I don’t know who it’s going to be. I have 365 days to do it this year, I can open up a donor advised fund, but I don’t have to decide who it’s going to go to. I just know I’m going to be giving it to charity. Is that a fair summary so far?
Adam
Yeah, that’s right. So number one, you want to know what a donor advised fund is, and open one and the second one is, in any good year where you’re going to face significant gains? Those are the years you want to be funding your donor advised fund.
Brett
Excellent. So what would you say the next secret is or the thing that’s most commonly overlooked when it comes to the donor advised fund and using it to your tax advantage? Well,
Adam
This is the big one. So number three is, whenever possible, you should be donating money with assets and not with cash. Right appreciated assets as you know, the charitable donation by itself is one of the most generous deductions in the entire tax code. But you get a double benefit when you donate assets, because you win two ways. One is of course, you get the full charitable deduction for the amount the market value of what you donate. So if you bought apple stock at 10, and now it is 160. So it’s up $150 a share. When you donate that Apple stock, you not only get the charitable deduction for the $160, it’s worth today, not what you paid for it years ago. But also you’ll never have to pay those capital gains taxes. It’s one of the few cases where it’s a real win for you in terms of your taxes. But also it’s a huge win for charitable organizations. Because of course, when they received that $160 They don’t have to pay taxes on it either. So it’s a wonderful way to get money and capital to the causes and organizations that you support the most. Absolutely
Brett
love. So make sure I caught that. So let’s say you had $16 million of Apple stock that you’ve accumulated over the years through either purchasing it yourself or just as an employee of Apple stock. We recorded that. And let’s say that basis happened to be about a million, you know, but now it’s appreciated. Let’s say 16 million, right? So you have A $50 million gain, what you’re saying is, hey, you have a chance to just, you can just donate all of those assets to a donor advised fund, and it’s gonna get a full basis meaning you’ve eliminated that capital gains tax right because it’s now full bases with with the donor. And then number two, I surely caught that net pay capital gains tax but didn’t get it so the other part was I missed the second part. The
Adam
Another part is, when you contribute that stock, you get the charitable deduction, off your taxes and remember, the charitable deduction on your taxes does not come off capital gains, it comes off your income. And actually, it’s a very generous deduction up to 30% of your adjusted gross income in any year can be deducted when you donate stock or crypto anything with appreciation over one year long term capital gains. And so that’s the double win is you get the charitable deduction off your income taxes in the year you make the contribution and you never have to pay the capital gains taxes on those assets.
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About Adam Nash
Adam Nash is a proven advocate for development of products that go beyond utility to delight customers. At Dropbox, he led the teams responsible for growth, product strategy, product management & product analytics for a platform with over 600 million registered users with responsibility for all of Dropbox self-service revenue (~90% of all company revenue in 2019).
Before Dropbox, Adam served as the President & CEO of Wealthfront, where for four years he championed the creation of a new category of automated investment services. While Adam was at Wealthfront, the company grew its client base by over 60x, and grew assets under management 45x from less than $100m to over $4 billion. During his tenure, Wealthfront delivered industry-leading innovations including Direct Indexing, the Single-Stock Diversification Service, and the first automated 529 College Savings Plan.
Prior to joining Wealthfront, Adam was Vice President of Product Management at LinkedIn. Adam led LinkedIn’s Platform & Mobile products, including the launch of LinkedIn’s open developer platform and their highly successful native applications and mobile web experiences. Adam was the founder and architect of LinkedIn Hackdays, a seminal program for driving the innovation culture at the company. He also was responsible for leading LinkedIn’s search & cloud efforts, as well as forming and leading their user experience & design team.
Prior to joining LinkedIn, Adam held a number of leadership roles at eBay, including Director of eBay Express, an innovative new site focused on new, fixed-price products. Previously, Adam also held strategic and technical roles at Atlas Venture, Preview Systems and Apple.
Adam holds an MBA from Harvard Business School as well as BS and MS degrees in Computer Science with a focus on Human Computer Interaction from Stanford University.
Adam was born and raised in Silicon Valley where he lives with his wife, four children and a golden retriever.
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