Soft Credits and Creating New Constituent Records (Family Foundations, Trusts, LLC)

Katie Nelson

Hi! I'm seeing a lot of threads about this topic, but not exactly what I am looking for--so here goes!

We have lots of individuals with personal checks that are “So-and-So Family Foundation,” “Mr. and Mrs.' Trust,” or “Smith LLC”--etc. These checks often have the same address as their individual record.

I'm wondering if new constituent records need to be created for these folks with the recognition and soft credits to the individuals or if the gifts are fine to be booked on the individual records.

We book DAFs on the DAF records, so I'm wondering if this is a similar situation or if the gifts can remain on the individual records.

Please help! Thanks!

Chris Nungesser

Hi @Katie Nelson,

That's a great question. So I think you could probably get to a good place a few different ways. There are a few things I try to keep in mind. Here are the main three: 1. the source of the funds, 2. donor recognition (like in the annual report), and 3. reports that I may need to pull for my finance team (or, more specifically, for our financial auditors and what appears on our 990).

My team enters gifts as you described in your DAF process. The gift will go on the Foundation's record. Or if it's a donor-advised fund with a community foundation, it goes on the foundation's record. And then we do give Recognition Credit (as appropriate) to the individual constituent(s) that directed the gift. And we will remove Recognition Credit from the donor-advised fund (so Revenue lives on the DAF record, but the DAF does not have Recognition Credit).

I'll also share that I don't just use the Soft Credit label. I have seven different types of Recognition Credit that we use to track different types of giving. I'm happy to talk with you about the different types the credit denotes or what it triggers if we use one versus another. Here are the main considerations:

• Public credit - Should this person's name appear in the donor roll in our annual report? We have specific credit types for this.
• Giving Societies - Should the Recognition Credit count toward this donor's annual giving, which would qualify them for our Giving Societies? (And then, within this group, there are Recognition Credit types if they should get public credit and one type if they should not get public credit).
• Those are the main considerations. We have three super-specific types:
  • Matched gift - say if a company matches a donor's gift, we'll give them Matching credit on that matched gift.
  • We have “Influenced By” credit. We don't use this one much. But say there's an instance where someone helped direct a gift toward my organization, but, for various reasons, they should not get recognized publically for this gift and it should not count toward giving society benefits, then we use this credit type. The reason is that it helps my gift officers like being able to the gift on their contact's record. (For example, a close contact that works for a company. They are able to persuade or direct that company to give to my organization. That's not their money. It doesn't count toward their annual giving. And perhaps we are not extending giving society benefits for this gift).
  • Anonymous Credit - if the donor gives anonymously, I like to give them anonymous credit. This is just one of three ways we work to ensure that we do not publish an anonymous donor's name.

The main way these come together is with Smart Fields. I have a Smart Field that calculates a donor's annual giving. I have a separate one for Donor Rolls (which I recognize is almost the same as Annual Giving). There's a smart field that we use to track giving that counts toward Giving Society totals (which can be different from a donor's annual cash giving). These sound kind of the same, but they have different applications and the different Recognition Credit types make that possible.

Chris

Katie Nelson

Hey @Chris Nungesser,

Thanks so much. This is all super helpful. I think what I am most concerned about right now are the reports I need to pull for my finance team. Is there somewhere I can get more information about how or where gifts need to be recorded for 990s and financial audits?

Chris Nungesser

@Katie Nelson,

I don't have a guide, but what you are currently doing is in line with what our auditors are requiring. So when my auditors ask for a list of donors that gave above $5,000 last year, I am able to pull that because all the Revenue (the actual payment records) live on the donor-advised fund's record, the foundation's record, etc. So Revenue reports for that sort of reporting, but you still have the flexibility of Recognition Credit reports for other situations.

On a different topic, auditors may also ask for a list of your pledges (maybe open pledges or pledges recorded in a given timeframe). Your auditors may, in coordination with your team, want to contact these donors to verify the details of the pledge (total pledge amount, pledge balance, and any restrictions on the gift). I've found that some organizations can be a little loose when recording pledges. That they may not have secured appropriate documentation. This could become a sticking point during the audit process. So it's good to have good controls/processes in place for when you have enough to record a pledge in Altru. There are definitely guides about this online. Here are two (the second one is more user-friendly):

I would have a conversation with your development/advancement team and your finance/accounting team to see what types of reports they require. Maybe bring your auditors into the conversation, if you do a third-party audit. This way you can be sure your gift entry policies will allow you to produce all the reports your organization needs.

Chris