Hard credit vs. soft credit - Donor Advised Fund Checks

Bethany Davis 3

Hello all! I'm curious the best way to record donations when batching if the check comes from a Foundation (i.e. National Christian Foundation of Nashville) or similar. The donation was made possible by “FUND X” recommended by “Donor X” on the check. It says we don't give tax receipt to donor, only acknowledgement of the gift. Is best practice to record that donation ON the donor-advised fund record (National Christian Foundation) OR on the “donor x” record?

Thank you, in advance!

Bethany

Joe Moretti 3

@Bethany Davis This will depend on your organization on how that is handled with input from accounting/Finance. With these Donor Advised Funds, many accounting departments what the Donor Advisor Fund to have the hard credit since that is where the check came from and the donor gets soft credited. But again that is up to your organization, but whatever you choose keep it consistent.

Austen Brown

@Bethany Davis - I agree, the answer this question depends on your organization - specifically how you run existing reporting and exports; any change you make to the current process should be made for the entire system to create consistency.

While I am partial to the method Joe's described where the DAF gift is HC recorded on a DAF record, I have worked in databases where it is the opposite - DAF gift is HC recorded on the individual's record. When doing the latter, additional tracking on the gift record is necessary - receipt amount entered as $0.00 and recording where the gift originated in a gift subtype or custom field/attribute. Both of these will be utilized when running acknowledgement letters/receipts and potentially reporting as well.

Bethany Davis 3

@Austen Brown Thank you so much for this - super helpful. I may message you / email you separately for additional questions, if you don't mind!

JoAnn Strommen

@Bethany Davis As Joe and Austen said it depends on the org. I also have been at org that have done it both ways (ironically CFO was also at same orgs with me). Currently, we HC individual and note org sending the check in the reference field. We do not have org records that receive any credit. It's what I inherited here and it seems to work. Those gifts are included in LTG totals and how they want donors credited/acknowledged for giving levels.

Key as stated: be consistent.

There are also many posts on this topic if you search the forums you will get more insights on why and how it's done by others.

Austen Brown

@Bethany Davis - Feel free to send me a direct message through Community. I'm happy to help!

Katie Werly

@Bethany Davis - At our organization (University Foundation), we create a record for, and hard credit, the “’Fund X’ of the National Christian Foundation of Nashville,” and set up the ‘Donor X’ to receive auto-soft credit anytime we receive a gift from that DAF. We do not send a tax receipt, but a gift attribute is added to the gift record which is used to pull an acknowledgment to send to ‘Donor X’ thanking them for their gift through their DAF. It works for us, but curious to see what anyone here thinks of that method. ?

Bethany Davis 3

@JoAnn Strommen Great, thank you for your input too. Consistency is key, yes - we have not had that in our system so I'm trying to decide what makes the most sense. The tricky part is that with tax statements at the end of the year, tax credit went to the donors we gave the HC to - but then I had to individually go through those and delete since some were just “noted” in the gift reference section like you mentioned.

Becky Griswold 2

@Katie Werly
This is what we do as well and it works well for us.

Bethany Davis 3

@Katie Werly @Becky Griswold - So if you do it this way, that makes sense.. but what do you do if you receive multiple checks from that DAF “National Christian Foundation of Nashville” but for different donors? Because if you automatically set up Donor X to receive the soft-credit, you may end up soft crediting the wrong donor - if that makes sense. So like from “NCF donor-advised fund” we receive $100 from Joe, $500 from Mike and $1,000 from Susan each month. So would you set up (3) different RE records like “NCF-Joe” “NCF-Mike” etc. and then set each of those up to automatically SC the correct donor?

Katie Werly

@Bethany Davis

Hi Bethany! Yep, I would set up 3 separate records! The actual ‘NCF of Nashville’ would not have an RE record, (because they are ‘just’ the foundation that holds the 3 DAF’s), only the individual 3 DAFs held by them giving us a gift would get a record in RE. Each separate donor (Joe, Mike and Susan) would be attached to their individual named DAFs in our system, so no cross-crediting could occur. In my experience, the Community Foundations that hold these DAFs have always supplied us with the names of the DAFs, so it’s made it easy to create their records in our system. For example for Joe, I’m usually supplied with an actual DAF name like: “The Joe & Betty Smith Family Fund,” so in RE that record would be the “Joe & Betty Smith Family Fund, of the NCF of Nashville” and Joe Smith would be attached for auto-soft-crediting. I mark the gift to “Do Not Receipt,” and use a gift attribute of “DAF” to pull a thank you letter to Joe & Betty. When we do tax statements in January, it won’t get pulled into Joe & Betty's summary because Joe isn’t hard credited. Hope this helps!

Becky Griswold 2

@Bethany Davis We set up an Org (DAF) record for each fund which is commonly only connected to one household. So a community foundation could have multiple “subsidiary” DAF records linked. We soft-credit both the household record and the community foundation disbursing the gift on behalf of the DAF.

Bethany Davis 3

@Katie Werly This is BEYOND helpful - THANK YOU so much for the information! Can you message me your email please?

Sheila Wortham

@Bethany Davis Currently, we HC the person and SC the DAF or foundation. In he individual record, we create org record of the donor fund. For the sake of minimizing duplication, we additionally create an alias under the specific donor with that fund name. To help in pulling the appropriate thank letter, a letter code "DAF" is assigned. If the DAF has sent in a single check from several contributors, we will soft credit the foundation and credit the DAF appropriately.

DAF is handled differently that relies on the organization policies of your company. I like to HC individual donors since it makes retrieving lists or doing queries easier.

La Donna Borth

@Sheila Wortham