Best Practices - Donor Advised Fund; Hard Credit or Soft Credit

Sheila Wortham

How does your organization credit Donor Advised Funds?  Currently I credit gifts made through a donor advised fund as counted as coming from an organization not an individual. Donors who made the original gift to the fund (and that person's spouse or partner if applicable) should receive soft credit for the amount the fund contributed to our organization.    A few of the staff members disagree with my process.  They believe the individual(s) should be hard credited and the donor advised fund should be soft credit.  Please share how your organization handle credits to donor advised funds and gifts coming from United Way's.

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Marla Strickland

Sheila Wortham:

How does your organization credit Donor Advised Funds?  Currently I credit gifts made through a donor advised fund as counted as coming from an organization not an individual. Donors who made the original gift to the fund (and that person's spouse or partner if applicable) should receive soft credit for the amount the fund contributed to our organization.    A few of the staff members disagree with my process.  They believe the individual(s) should be hard credited and the donor advised fund should be soft credit.  Please share how your organization handle credits to donor advised funds and gifts coming from United Way's.

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Hard credit to the Donor Advised Fund (or foundation or United Way, etc.) as they are the ones legally making the gift.

Soft credit to the individual who directed those funds.

I don't know why you'd do it any other way, to be honest.

Nina Williams

Sheila Wortham:

How does your organization credit Donor Advised Funds?  Currently I credit gifts made through a donor advised fund as counted as coming from an organization not an individual. Donors who made the original gift to the fund (and that person's spouse or partner if applicable) should receive soft credit for the amount the fund contributed to our organization.    A few of the staff members disagree with my process.  They believe the individual(s) should be hard credited and the donor advised fund should be soft credit.  Please share how your organization handle credits to donor advised funds and gifts coming from United Way's.

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 We hard credit the DAF or whom ever cut the check.  We have some umbrella foundations here in Cleveland, that handle many DAFs.  If they cut the check, we hard credit the Foundation, with a notation of which DAF the money was drawn from.  We also then SC the individual. 

 

United Way is different.  When people give to UW they can designate where their $$$ go.  UW is the tax recipient of the gift.  They issue the tax statement.  However, UW pulls out fees etc.  So you never really get the amount donated.  My last job was a UW agency  and we would enter the gifts as type "Other" sub-type United Way Designation and send a special letter with no tax information included.   We would not pull them in reports as donations/income.  Only the total amount on the UW record would get credited to the campaign.  This would allow us to not duplicate the gifts in reports, but we would know the extent of interest/support from the donor.  As the actual gift is from UW they (UW) got all the actual credit for the funds.

JoAnn Strommen

Sheila Wortham:

How does your organization credit Donor Advised Funds?  Currently I credit gifts made through a donor advised fund as counted as coming from an organization not an individual. Donors who made the original gift to the fund (and that person's spouse or partner if applicable) should receive soft credit for the amount the fund contributed to our organization.    A few of the staff members disagree with my process.  They believe the individual(s) should be hard credited and the donor advised fund should be soft credit.  Please share how your organization handle credits to donor advised funds and gifts coming from United Way's.

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Ditto what Marla posted: HC the DAF, SC the individual who requested them to give you the $. 

Generally a DAF is a 501(c)3 and will issue tax receipt to the donor who gave them the funds.  While they may state in their paperwork that they don't need a receipt they are the "donor".  Most will state that they've receipted the donor and you can send them a 'thank you' or acknowledgment of the gift. 

Whether you count it when analyzing giving as a gift from org or individual would be your org procedures.  Even if we were to count it as gift from individual, it would still be HC on org record.  I do use a constituent code of DAF if I should ever have to pull it for such analysis.

Nzinga King

JoAnn Strommen:

Ditto what Marla posted: HC the DAF, SC the individual who requested them to give you the $. 

Generally a DAF is a 501(c)3 and will issue tax receipt to the donor who gave them the funds.  While they may state in their paperwork that they don't need a receipt they are the "donor".  Most will state that they've receipted the donor and you can send them a 'thank you' or acknowledgment of the gift. 

Whether you count it when analyzing giving as a gift from org or individual would be your org procedures.  Even if we were to count it as gift from individual, it would still be HC on org record.  I do use a constituent code of DAF if I should ever have to pull it for such analysis.

So if you were to breakdown the constituency annual giving for your organization...is the Donor Advised money under the Individual or a Separate entity?

Nicole S

Nzinga King:
So if you were to breakdown the constituency annual giving for your organization...is the Donor Advised money under the Individual or a Separate entity?

We count it as individual money.

Daphne Kearson

Sheila Wortham:

How does your organization credit Donor Advised Funds?  Currently I credit gifts made through a donor advised fund as counted as coming from an organization not an individual. Donors who made the original gift to the fund (and that person's spouse or partner if applicable) should receive soft credit for the amount the fund contributed to our organization.    A few of the staff members disagree with my process.  They believe the individual(s) should be hard credited and the donor advised fund should be soft credit.  Please share how your organization handle credits to donor advised funds and gifts coming from United Way's.

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It's probably best if you ask yourself this question:  Who's money is it?

With Donor Advised Funds, the money belongs to the Donor, who is advising the comopany how and who to distribute it to.

Therefore, the Donor Advised Fund gifts should credit the Individual in RE and soft credit the Company (that the check is written against), they are simply doing as the Donor has advised them.

Hope this is helpful, as my organization has been doing it this way for many, many years.

Melissa Graves 3

Daphne Kearson:

It's probably best if you ask yourself this question:  Who's money is it?

With Donor Advised Funds, the money belongs to the Donor, who is advising the comopany how and who to distribute it to.

Therefore, the Donor Advised Fund gifts should credit the Individual in RE and soft credit the Company (that the check is written against), they are simply doing as the Donor has advised them.

Hope this is helpful, as my organization has been doing it this way for many, many years.

I am sorry but that is wrong. When a donor creates a donor advised fund they are giving up their money and donating it to the organization holding the DAF and getting a tax deduction for it immediately. When they later give it to a charity - it is the sponsoring organization that is the legal donor of that gift. You may not credit the individual, receipt the individual or give the individual benefits as a result of any DAF gift.

Melissa Graves 3

Melissa Graves:
I am sorry but that is wrong. When a donor creates a donor advised fund they are giving up their money and donating it to the organization holding the DAF and getting a tax deduction for it immediately. When they later give it to a charity - it is the sponsoring organization that is the legal donor of that gift. You may not credit the individual, receipt the individual or give the individual benefits as a result of any DAF gift.

To add to that. The only thing the donor retains is the right to "advise" the board of the sponsoring organization on where to give the money. But technically the board can reject that advise. It is THEIR money.

Kathleen McGuinness

Melissa Graves:
I am sorry but that is wrong. When a donor creates a donor advised fund they are giving up their money and donating it to the organization holding the DAF and getting a tax deduction for it immediately. When they later give it to a charity - it is the sponsoring organization that is the legal donor of that gift. You may not credit the individual, receipt the individual or give the individual benefits as a result of any DAF gift.

 Hi Melissa,

 It's okay to soft credit the individual though, right?

Melissa Graves 3

Kathleen McGuinness:

 Hi Melissa,

 It's okay to soft credit the individual though, right?

Absolutely - so long as you do not send a receipt or give them benefits.

Michael Sherman

Melissa Graves:
Absolutely - so long as you do not send a receipt or give them benefits.

I agree with Melissa.  If it helps, this is the first part of the acknowledgement letter we send to the Donor Advisors that get the soft credit:

On behalf of Hope for Haiti's staff and volunteers and all whom we touch with our mission, thank you for your recommendation of a gift of $2,000.00 from Schwab Charitable Fund to support Hope for Haiti's programs (check #2xxxxxxreceived on 4/15/2014).  

We also state in the disclosure statement that:

NO GOODS, SERVICES, PROPERTY, OR ITEMS OF VALUE HAVE BEEN RECEIVED IN CONSIDERATION OF THIS CONTRIBUTION.  A COPY OF THE ORGANIZATION'S OFFICIAL REGISTRATION AND FINANCIAL INFORMATION MAY BE OBTAINED FROM FLORIDA DIVISION OF CONSUMER SERVICES 1-800-435-7352.  OUTSIDE FL, 1-850-488-2221.  REGISTRATION DOES NOT IMPLY ENDORSEMENT, APPROVAL OR RECOMMENDATION BY THE STATE.  CH 10097

 

JoAnn Strommen

Michael Sherman:

I agree with Melissa.  If it helps, this is the first part of the acknowledgement letter we send to the Donor Advisors that get the soft credit:

On behalf of Hope for Haiti's staff and volunteers and all whom we touch with our mission, thank you for your recommendation of a gift of $2,000.00 from Schwab Charitable Fund to support Hope for Haiti's programs (check #2xxxxxxreceived on 4/15/2014).  

We also state in the disclosure statement that:

NO GOODS, SERVICES, PROPERTY, OR ITEMS OF VALUE HAVE BEEN RECEIVED IN CONSIDERATION OF THIS CONTRIBUTION.  A COPY OF THE ORGANIZATION'S OFFICIAL REGISTRATION AND FINANCIAL INFORMATION MAY BE OBTAINED FROM FLORIDA DIVISION OF CONSUMER SERVICES 1-800-435-7352.  OUTSIDE FL, 1-850-488-2221.  REGISTRATION DOES NOT IMPLY ENDORSEMENT, APPROVAL OR RECOMMENDATION BY THE STATE.  CH 10097

 

Also in agreement. 

We do a thank you letter the soft-credited party.  However ours looks less like a receipt than Michael's as we do not put a disclosure statement or any dollar amount, check #, gift date in the letter.  We do include name of DAF.

Melissa Graves 3

JoAnn Strommen:

Also in agreement. 

We do a thank you letter the soft-credited party.  However ours looks less like a receipt than Michael's as we do not put a disclosure statement or any dollar amount, check #, gift date in the letter.  We do include name of DAF.

I agree with Joann - I would not put anything on a soft credit letter that makes it in any way resemble a receipt. I never include any disclosure statement.

Laura Reader

Sheila Wortham:

How does your organization credit Donor Advised Funds?  Currently I credit gifts made through a donor advised fund as counted as coming from an organization not an individual. Donors who made the original gift to the fund (and that person's spouse or partner if applicable) should receive soft credit for the amount the fund contributed to our organization.    A few of the staff members disagree with my process.  They believe the individual(s) should be hard credited and the donor advised fund should be soft credit.  Please share how your organization handle credits to donor advised funds and gifts coming from United Way's.

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We hard credit whoever initiated the gift. So if a donor gives through a DAF we hard credit the donor. This is not a tax database--I want to know next year who to contact to ensure we give the gift again. This is in line with Bill Connors recommendations here, slide 26: http://www.billconnors.com/media/Bill Connors - How Would You Enter THIS Gift - bbcon 2013 - post-conf.pdf

Peter McKay 2

Laura Reader:
We hard credit whoever initiated the gift. So if a donor gives through a DAF we hard credit the donor. This is not a tax database--I want to know next year who to contact to ensure we give the gift again. This is in line with Bill Connors recommendations here, slide 26: http://www.billconnors.com/media/Bill Connors - How Would You Enter THIS Gift - bbcon 2013 - post-conf.pdf

What about when a donor advised fund is not explicit in their letter about who should get the tax receipt? Also, sometimes I'm confused about whether an organization is a DAF or a Family Foundation.

JoAnn Strommen

Peter McKay:
What about when a donor advised fund is not explicit in their letter about who should get the tax receipt? Also, sometimes I'm confused about whether an organization is a DAF or a Family Foundation.

When I receive a gift from a foundation that I'm not sure about I've contacted the Org.  Asked if they were a DAF/501(c)(3)/if they receipted the individual who gave $ to them.  I don't remember running into any DAF where we were to receipt; I believe they all had that responsibility. 

To see if it's a family foundation you may have to research online or contact them also.  It can get confusing. [:)] 

Melissa Graves 3

Peter McKay:
What about when a donor advised fund is not explicit in their letter about who should get the tax receipt? Also, sometimes I'm confused about whether an organization is a DAF or a Family Foundation.

Always contact the check sender to ask.

Wayne Pozzar

Melissa Graves:
Always contact the check sender to ask.

Just to throw my hat in the ring here. We HC the DAF and SC the individual and the "Fund Management Group" (i.e. Fidelity). That way we link the gift to everyone involved. Technically since Fidelity gave us the check they are the "donor" and they have given on behalf of the DAF on the recommendation of the individual. When it comes to receipts/acks we set up the DAF to have the acknowledgement contact be whoever should receive a thank you from us. We include some gift data like amount and date and we say something like "Thank you for the gift of $500 from XYZ Donor Advised Fund". We do NOT put in tax language at the end of the letter because, as mentioned, the donor already got that from the Fund Management Group when they gave their money. By soft crediting and using contacts we are able to keep track of who advises the DAF and who to send the acknowledgement to. Sometimes they are not the same person so it's important to track it multiple places.

Ashley Holm

Laura Reader:

Sheila Wortham:

How does your organization credit Donor Advised Funds?  Currently I credit gifts made through a donor advised fund as counted as coming from an organization not an individual. Donors who made the original gift to the fund (and that person's spouse or partner if applicable) should receive soft credit for the amount the fund contributed to our organization.    A few of the staff members disagree with my process.  They believe the individual(s) should be hard credited and the donor advised fund should be soft credit.  Please share how your organization handle credits to donor advised funds and gifts coming from United Way's.

. 

We hard credit whoever initiated the gift. So if a donor gives through a DAF we hard credit the donor. This is not a tax database--I want to know next year who to contact to ensure we give the gift again. This is in line with Bill Connors recommendations here, slide 26: http://www.billconnors.com/media/Bill Connors - How Would You Enter THIS Gift - bbcon 2013 - post-conf.pdf

 

I'm really coming around Bill Connor's recommendations, myself. We just received a gift from a corporation that ran their own giving campaing and matched their employees' gifts. The check was cut by a local foundation. My head exploded from the layers of soft credits going on with this scenario and I've been working with RE for 10+ years now.

Aldera Chisholm

Ashley, I feel your pain on that one! We have a org called Benevity (Canadian Online Giving Foundation) that flows through corporate and matching gifts. So, I have Benevity giving me a cheque with gifts from three companies, and each of those companies has a list of the individual donors and their corporate matching gift! Eeek!



For some clarity, I have starting entering the Benevity gift in say three pieces, with each gift being the amount from the company (the three gifts total the Benevity total) so that I can soft credit the company, and then that companies employees without wondering which individuals belong to which company. It's not an ideal solution, but it works for us somewhat. 

Nicole S

For us, we HC the indidvudual/SC the DAF -- to us this is our "donor" and who we would solicit or reach out to.  That's not to say we would HC the individual on a business or familify foundation gift, but it simply is for DAFs.  It's not the popular opinion, but it's how I've done it at 75% of the places I've worked. I don't really care about the legal donor, and we acknowledge appropriately with no tax language and we also ack the DAF. As previously said "this is not a tax database".  And I ditto the usggestions to see Bill Connors' book.  YOu need to work it out and do what is right for your organization.



Regardless of how you do it, be consistent.

JoAnn Strommen

" I don't really care about the legal donor,... "

I'd be careful about making a statement like that even though you don't use 'tax language'.  Your legal donor is the DAF if they are a 501(c)(3).   Yes, it's tricky when looking at total giving history.  And yes, consistency is a key.

Rachel Deery

Wayne Pozzar:

Melissa Graves:

Always contact the check sender to ask.

Just to throw my hat in the ring here. We HC the DAF and SC the individual and the "Fund Management Group" (i.e. Fidelity). That way we link the gift to everyone involved. Technically since Fidelity gave us the check they are the "donor" and they have given on behalf of the DAF on the recommendation of the individual. When it comes to receipts/acks we set up the DAF to have the acknowledgement contact be whoever should receive a thank you from us. We include some gift data like amount and date and we say something like "Thank you for the gift of $500 from XYZ Donor Advised Fund". We do NOT put in tax language at the end of the letter because, as mentioned, the donor already got that from the Fund Management Group when they gave their money. By soft crediting and using contacts we are able to keep track of who advises the DAF and who to send the acknowledgement to. Sometimes they are not the same person so it's important to track it multiple places.

 

I appreciate this post because it clearly identifies that there are three potenital entries for a DAF gift: the individual or family who initially set up the fund and advises the host(bank, etc) where to give; the hosting entity, be it bank or community foundation; and the DAF itself. It seems like the gift should be entered in all three areas and linked via the relationships tab. Then, it seems like best place to hard credit is the DAF itself, which keeps it clear that the individual/family shouldn't get a tax benefit, but enables appropriate thanks to be sent since the philanthropic motive came from this particular advising family/individual, and obviously not Fidelity. So the host/Fidelity gets the SC and so does the family/individual.



My organization is just setting our policy, so I would appreciate feedback on what I've just outlined. Also, that means the DAF would be entered as an organization, just like family foundations, but shouldn't be confused with a foundation, so should have its own "DAF" constituent code. Does this make sense?

Sunshine Reinken Watson

Laura Reader:

Sheila Wortham:

How does your organization credit Donor Advised Funds?  Currently I credit gifts made through a donor advised fund as counted as coming from an organization not an individual. Donors who made the original gift to the fund (and that person's spouse or partner if applicable) should receive soft credit for the amount the fund contributed to our organization.    A few of the staff members disagree with my process.  They believe the individual(s) should be hard credited and the donor advised fund should be soft credit.  Please share how your organization handle credits to donor advised funds and gifts coming from United Way's.

. 

We hard credit whoever initiated the gift. So if a donor gives through a DAF we hard credit the donor. This is not a tax database--I want to know next year who to contact to ensure we give the gift again. This is in line with Bill Connors recommendations here, slide 26: http://www.billconnors.com/media/Bill Connors - How Would You Enter THIS Gift - bbcon 2013 - post-conf.pdf

 

This is how I have always done it. I soft credit the organization and record the receipt amount as zero, so the donor won't receive a tax receipt.

Jessica Taylor

This is such a great topic! Thank you all. We have been going around with this too. Currently, we hard credit the donor, and in the reference line for the letter, we say made possible by DAF through (the Foundation/Fund). We remove our tax-id info, but their member card is attached if applicable. We also add in the Salutation, under Public Regconition, the donor advised fund name. If a donation comes in anonymous, we list under the Foundation/Fund. We haven't been soft crediting the Foundation/Fund though, so that is something to think about.



Question, if you are HC the Foundation/Fund, isn't that a nightmare for reporting? Thanks for sharing!



P.S. I see someone quoted Bill Connors! He is great! He has come to help us a couple of times, as we have only been using the system since 2012 and it was a bit of a learning curve. I highly recommend him if anyone needs a consult.

Susan Connors

Speaking of Beneivty or any other Employee giving program, except United Way, we HC the donor/employee so we can create the MG pledge and pay it from the Employer's record.  No SC involved. (e.g Micorosft sends us big checks with employee giving and matches). Only Employee giving is treated this way.  And mostly because ot the matching gift problem.  All other DAF type gifts are HC to DAF, SC to donor.



Benevity is one of the most difficult and poorly organized of these companies, giving you 3 separate reports that you have to cobble together to get any clear picture of the funds' sources.  I hate that a lot of the big comapnies (Google recently moved to them, and Getty Images, too) are moving to them from the better and easy-to-use Easymatch, Cybergrants, etc.  Benevity actually offers Google employees to process the matching gifts as anonymous, making it impossible to pay the MG pledges that were booked.  I couldn't convince the Benevity admin staff that to offer anonymous Matching Gifts made no sense unless the original gift was anonymous.  They remain unmoved. Plus, they take fees, to boot.

Unknown

I just posted my question below in another thread, but it seems like this one is more relevent and more active so hopefully it's not against the rules to cross post. My question was:



For those of you taking Bill Connor's approach, that is when money comes in from a DAV, hard crediting the donor that directed the funds and noting the DAV in the Name on Check attribute, when it comes time to fill out the VSE, how do you report on money coming in from DAVs under Section 4a. Additional Details on Section 3 - Individuals -> H. Personal Giving Additional Details taking care not to double-count that money?



This is my first year administering RE and I plan to use the built-in VSE survey report, but I don't see any easy way to hard credit the donor that directed the DAF gift yet have the VSE correctly calculate Section 3, Part 1H, Number of Donors and Total Donations from DAFs. 

Jessica Taylor

Aaron,



Sorry, I am not sure what you are asking exactly. We report funds coming from individuals. I don't report on how many donor advised funds. I inherited a system eight years, but I have never been asked for this before. Sorry.

Jessica Taylor

Susan Connors:

Speaking of Beneivty or any other Employee giving program, except United Way, we HC the donor/employee so we can create the MG pledge and pay it from the Employer's record.  No SC involved. (e.g Micorosft sends us big checks with employee giving and matches). Only Employee giving is treated this way.  And mostly because ot the matching gift problem.  All other DAF type gifts are HC to DAF, SC to donor.



Benevity is one of the most difficult and poorly organized of these companies, giving you 3 separate reports that you have to cobble together to get any clear picture of the funds' sources.  I hate that a lot of the big comapnies (Google recently moved to them, and Getty Images, too) are moving to them from the better and easy-to-use Easymatch, Cybergrants, etc.  Benevity actually offers Google employees to process the matching gifts as anonymous, making it impossible to pay the MG pledges that were booked.  I couldn't convince the Benevity admin staff that to offer anonymous Matching Gifts made no sense unless the original gift was anonymous.  They remain unmoved. Plus, they take fees, to boot.

When a donro says their gift will be matched, we link that on the gift and then make a relationship between the two parties. All employer gifts are then entered and HC to the employer and the gift is applied to the pledge. THEN we link the employer gift to the individual's membership only. No soft credit needed. Agreed, Benvity and Your Cause are killing me!!

JoAnn Strommen

Jessica,



Schools/universities have required annual reports detailing gift info Aaron describes. 



Aaron, saw both posts.  I'm not one who's required to report that so will leave answering your questions to someone who is.