Soft vs. hard credit for gifts received through fundraising vendor

Amanda Downes

One of our athletic programs went through an outside vendor for a fundraising campaign and after receiving a final list of donors and a lump sum check from the company for all online gifts received, we now we are trying to record and acknowledge these. I am new in my role of Advancement Services so am still trying to navigate all the ins and outs of gifting regulations, policy, etc. There are several issues we are trying to sort out:

1. Are we able to hard credit the donors since their gift for our program went through this company even though we did not process the payments? It does not seem right to hard credit the company since they are only the "collector" of the funds. Complicating matters, the company deducted their fees from the final payment sent to us so for example, one donor made a $5K gift but the business check was for roughly $4,800. We have no other supporting documentation of the online gifts except a spreadsheet with donors' name, gift amt. etc.

2. If we have to do soft crediting rather than hard crediting, what is the best way to go about recording this in RE and producing the letters? 

 Any feedback or assistance is greatly appreciated!

 Thanks,

Amanda Downes

Director of Advancement Services

Wesley College

Melissa Graves 2

Amanda Downes:

One of our athletic programs went through an outside vendor for a fundraising campaign and after receiving a final list of donors and a lump sum check from the company for all online gifts received, we now we are trying to record and acknowledge these. I am new in my role of Advancement Services so am still trying to navigate all the ins and outs of gifting regulations, policy, etc. There are several issues we are trying to sort out:

1. Are we able to hard credit the donors since their gift for our program went through this company even though we did not process the payments? It does not seem right to hard credit the company since they are only the "collector" of the funds. Complicating matters, the company deducted their fees from the final payment sent to us so for example, one donor made a $5K gift but the business check was for roughly $4,800. We have no other supporting documentation of the online gifts except a spreadsheet with donors' name, gift amt. etc.

2. If we have to do soft crediting rather than hard crediting, what is the best way to go about recording this in RE and producing the letters? 

 Any feedback or assistance is greatly appreciated!

 Thanks,

Amanda Downes

Director of Advancement Services

Wesley College

For IRS purposes - the answer to this question varies if the company was a non-profit 501 c3 or if it was a for-profit entity. Which was it?

Amanda Downes

Melissa Graves:
For IRS purposes - the answer to this question varies if the company was a non-profit 501 c3 or if it was a for-profit entity. Which was it?

 They are a for-profit entity.

 

Amanda Downes

Melissa Graves 2

Amanda Downes:

 They are a for-profit entity.

 

Amanda Downes

Then the company is acting on your behalf so you treat the gifts as if they came directly to you. Hard credits to each individual donor for the full amount they paid. Any fees or costs your finance office needs to book separately as "bank fees" or the like - same as if you ran the credit cards yourself from your own merchant account.

Did the vendor you contracted not agree to send acknowledgement letters for you? some do and some do not - if they did, you would not send another. If they did not - then these people should get full regular acknowledgements as if you got and processed the gifts yourselves.

If it had been a 501 c 3 charity, such as United Way, NetworkForGood, Global Giving, etc., then the donors made their gifts to that charity who would issue the receipts to the donors - then the check the 501 c 3 sends to you is a gift from the charity and you hard credit them. The individuals can get soft credits if your soft credit policy allows (which most would) but NO receipts since the charity already issued one. You can send them some letter of thanks but it needs to not in any way resemble your tax receipt and preferably mention that the gift was through XYZ charity.

Amanda Downes

Melissa Graves:

Then the company is acting on your behalf so you treat the gifts as if they came directly to you. Hard credits to each individual donor for the full amount they paid. Any fees or costs your finance office needs to book separately as "bank fees" or the like - same as if you ran the credit cards yourself from your own merchant account.

Did the vendor you contracted not agree to send acknowledgement letters for you? some do and some do not - if they did, you would not send another. If they did not - then these people should get full regular acknowledgements as if you got and processed the gifts yourselves.

If it had been a 501 c 3 charity, such as United Way, NetworkForGood, Global Giving, etc., then the donors made their gifts to that charity who would issue the receipts to the donors - then the check the 501 c 3 sends to you is a gift from the charity and you hard credit them. The individuals can get soft credits if your soft credit policy allows (which most would) but NO receipts since the charity already issued one. You can send them some letter of thanks but it needs to not in any way resemble your tax receipt and preferably mention that the gift was through XYZ charity.

Makes sense. This is very helpful. I do not believe the vendor sent acknowledgment other than maybe an email confirmation. I am getting this info second-hand so trying to find out as many details as I can. Since the vendor is not a 501 c 3 I figured they could not send acknowledgments/tax receipts anyway, or even if they did send something we would still need to send a letter anyway so that the donor has something official from us as the non-profit for tax records. Is that not the case if they are acting on our behalf?

 

Thanks, Melissa!

Melissa Graves 2

Amanda Downes:

Makes sense. This is very helpful. I do not believe the vendor sent acknowledgment other than maybe an email confirmation. I am getting this info second-hand so trying to find out as many details as I can. Since the vendor is not a 501 c 3 I figured they could not send acknowledgments/tax receipts anyway, or even if they did send something we would still need to send a letter anyway so that the donor has something official from us as the non-profit for tax records. Is that not the case if they are acting on our behalf?

 

Thanks, Melissa!

Even if not a 501 c 3 they can - but on your behalf. They would be sending it for you as part of the contract - but it would be your acknowledgement. An email qualifies as an acknowledgement so if they are sending emails you may want to look at the text of the email to know if it fulfills IRS requirements.

Amanda Downes

Melissa Graves:
Even if not a 501 c 3 they can - but on your behalf. They would be sending it for you as part of the contract - but it would be your acknowledgement. An email qualifies as an acknowledgement so if they are sending emails you may want to look at the text of the email to know if it fulfills IRS requirements.

 Thanks so much - I appreciate the input!