Linking a gift to a donor advised fund, donor and foundation

Margot Martin · March 2018

Hey all,

We're in a bit of a data predicament. When we receive money from donor advised funds, we hard credit the amout to the Foundation that houses the fund and then make a call on whether we're soft crediting to the donor or to their fund based on the donors' preference for how they're listed in the annual report. What we end up with is a confusing system that's sort of held in our heads. Does anyone else have this problem? Do you apply multiple soft credits? Is there a magical cure that we're just not aware of?

Thanks!

Margot

Kris Countryman · March 2018

Margot Martin:

Hey all,

We're in a bit of a data predicament. When we receive money from donor advised funds, we hard credit the amout to the Foundation that houses the fund and then make a call on whether we're soft crediting to the donor or to their fund based on the donors' preference for how they're listed in the annual report. What we end up with is a confusing system that's sort of held in our heads. Does anyone else have this problem? Do you apply multiple soft credits? Is there a magical cure that we're just not aware of?

Thanks!

Margot

We enter the gift in the donor advised fund (i.e., Fidelity, Nat'l Phil Society, etc). We s/c the gift to the donor. We then enter a gift comment with the name of the fund (if noted) which we pull for annual reports. If there is no fund we use the s/c donor name for the annual report. We then manually create an acknowledgement for the donor who was s/c so they know we received their gift via the donor advised fund. I've got it on my to-do list to automate the manual acknowledgement. For reporting purposes we don't do multiple soft-credits. If a donor advised fund is from two constituents we split the amount and do two gifts, one gift s/c one constituent, the other s/c the other constituent.

Aaron Rothberg · March 2018

Lots of differing opinions on this. Below is my comment from this thread.

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I'll put my neck on the chopping block to say that with DAF gifts I break all the rules everyone else has mentioned and I'll add that Bill Connors agrees with me.

It is true that DAF funds do not belong to the donor and cannot legally pay off a pledge from a donor. If your organization's auditors audit the Raiser's Edge for tax compliance you will not be able to follow the practice I'm about the describe. Bill Connors has often said that Raiser's Edge is not accounting software, but rather fundraising software and as such our database needs to support our fund raising and stewardship efforts. At my organization if the IRS shows up to audit us, they are going to audit our Business Office books, not the Raiser's Edge database.

Given that, when we receive a check from a DAF we, unlike everyone else, hard credit the donor that directed the funds and soft credit the DAF. We also use a Gift Attribute of Name on Check so we can capture the legal entity that gave us the donation. This practice better supports stewardship in that when we produce a list of donors Fidelity is not one of them. Additionally, because the donor that directed the funds did not legally own the money we received, we mark the Gift Receipt Amount as zero dollars and we do not issue a receipt to the constituent, only an acknowledgement letter and we recognize the DAF in that acknowledgement letter. If the DAF requires a receipt we will send them one, but we don’t run into that request very often.

Quote from Bill Connors book "Fund Raiding with the Raiser's Edge: A Non-Technical Guide" pg. 27

"Many fundraising database users in the United States say, ‘The IRS requires that the name on check be entered as the hard credit constituent in our database.’ My research and experience have shown this is not the case. The IRS requires acknowledgement letters clearly indicate the name of the true donor. However, the IRS does not dictate how we set up our database and who the constituents are. Correct this belief among your data entry staff to avoid duplicates and difficulty retrieving data."

Jen Claudy · March 2018

My personal preference is to HC a record for the DAF itself and SC both the Foundation and the Individual Donor. So a gift from the Hernandez Family Fund of the Fidelity Charitable Foundation would be entered/hard-credited to an Organization Record [Hernandez Family Fund] and soft-credited to both Fidelity Charitable Foundation AND Robert Hernandez. When looking at the Fidelity record, one can see a total list of all gifts that came from funds held there. When looking at the Robert Hernandez Individual record, one can see a total picture of their giving. And if they ever move their DAF from Fidelity to Vanguard, all it takes is adding a new Relationship Record and editing the existing link to the Fidelity record.

For publishing donor lists, I like to use a Constituent Attribute on all records. All in one place with no need to combine Addressee/Salutation with Organization Name, no risk of someone changing the Organization Name or anything connected to an Addressee/Salutation Format, and has Date & Comment fields for additional information (even "see Constituent Note" for longer explanations). If you ask the donor's preference as to listing the individual names or DAF name, you can simply enter the preferred text in the Individual Record then put "REMOVE" in the DAF record so that you know to remove that line when pulling your lists.

I have also used the Attribute text in acknowledgement letters and pre-filled gift forms sent out with appeal letters. A "this is how you will be listed in our publications" piece and easy to do when the data is all in one place.

Candace Chesler · March 2018

I agree with Aaron - and Bill Connors. My job is fundraising and donor relationships. As such - I need to know how much money my donors have contributed to my organization. Gifts from Donor Advised Funds are hard credited to the donor - and then we add a Third Party attribute to the gift record which tells us if the check was from Vanguard, Fidelity - etc.

I don't have a record in RE for the Donor Advised Fund Holders - since my relationship is not with them.

Linking a gift to a donor advised fund, donor and foundation

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