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Donor-Advised Funds: Best Practices for donor entry

Jane Van Ingen

Hello.

When we receive contributions from donor-advised funds, we have typically listed the DAF as the donor and soft-credited the individual. This is problematic for a number of reasons, but I've been doing it this way because I'm under the impression that it's best practice. But now that so many people are using DAFs like a personal donation, perhaps it's not.

I would appreciate hearing from others how they manage these donations.

Thanks,

Jane

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Comments

Joe Moretti

@Jane Van Ingen We do the same here because accounting wants the name on the check as the hard credit. We do code all records that are Donor Advised Funds in attributes, so as to not pull these for mailing lists, but instead pull the soft credit of the gifts.

Carrie Aranda

@Jane Van Ingen - With the increase in the number of donors who began using Donor Advised Funds to make a gift, we made the switch to hard crediting the donor and soft crediting the name on the check. The main reason we did this was to make it easier for our fundraisers, especially our major gift officers, to track donations and relationships. Yes, accounting would prefer that we hard credit the name on the check, the reality that we embraced is that RE is first and foremost a a fundraising database. With the soft credit going to the name on check, it is easy to cross reference with accounting.

We are starting to see something similar with corporate giving. Many of the large corporations are transitioning their grant/giving process to platforms like Benevity and so the money comes through Benevity instead of directly from the company. We treat these grants/gifts similar to the Donor Advised Fund gifts and hard credit the corporation and soft credit Benevity. It has made reporting and keeping track of gifts much easier.

Dariel Dixon

@Jane Van Ingen This is such a hot button topic. Personally, I prefer hard-crediting the DAF and soft crediting the advisor. Others may disagree, and depending on your reporting structure your decision may vary. I prefer it because I can see the gifts that were personally given to the organization, and the gifts that were influenced by that individual separately and collectively without any issue.

I think it's worth pointing out the difference in language here. There is only one donor here which is the foundation or organization that the Fund is established with. The advisor can direct the funds to other NPOs, but it's technically no longer their money. They gave it to the fund and received a tax deduction for it.

RE does a good job of displaying the difference between hard and soft credits, and both are displayed on records by default.

Regarding matching gifts and corporate giving, I think it's a different set of circumstances if your organization uses the matching gift functionality in RE. RE was not designed to handle the new ways of corporate giving and matching programs. Still, for consistency sakes, I think it makes sense to hard credit the donor, and perhaps apply the donation to the matching gift pledge. It's a lot of steps, but I think it's most accurate for reporting and appropriate.

I know I stand on the hard credit the DAF side, but honestly I think that consistency is the biggest key here. Just make a decision that works best for your organization and stand by it. No way will be perfect, so you'll want to try to go with a method that reduces the workload.

Terri Nackid

@Jane Van Ingen At a previous position, I switched to hard crediting donor, soft crediting DAF, and I used a gift attribute called “Name on Check” - in the description field I entered the DAF name. Worked great and Finance was fine with this since the DAF/check name was still attached to the gift record.

Jane Van Ingen

@Terri Nackid Thanks for your feedback! I like the gift attribute idea.

Jane

Jane Van Ingen

@Dariel Dixon Thanks for your feedback! I agree about consistency.

Jane

Jane Van Ingen

@Carrie Aranda Thanks for your feedback!

Jane

Jane Van Ingen

@Joe Moretti Thanks for the feedback!

Jane

Sherry Aldrich

@Jane Van Ingen We hard credit whoever's name is on the check. Soft credit the constituent. We created a new payment subtype on the gift called 3rd Party.

Jane Van Ingen

@Sherry Aldrich Thanks for the feedback.

Tami Messenger

@Jane Van Ingen
I was reviewing your DAF Best Practice comment and have a a follow-up question for you.

We process DAFs the same as your organization, hard credit organization that gave and soft credit the individual donor (if we can). However, how do you handle the constituency piece? These are truly individual gifts. I need to see the money show up in individual giving (for budgeting purposes) but not sure how to handle if applying to corporate record. If I were to run a constituency report based off entry mention above, the donation would show in the corporate budgeted line. Any insight you can give would be most helpful. Thanks

Jane Van Ingen

@Tami Messenger Go into Query>Tools>Query Options>Gift Processing>Recipients>Full amount to all.

That's how I managed to export data for my acknowledgment letters and acknowledge Joe Schmoe, not his donor advised fund at Fidelity.

Good luck, and feel free to email me directly next week if you still need help.

Jane

Kerry Kelleher

@Terri Nackid
I have a follow up question on this - if you hard coded the Donor for the gift then how did you exclude the records when you went to process your tax letters? Thanks for the insight. We are trying to figure out the best way to do this moving forward.

JoAnn Strommen

@Kerry Kelleher We use a specific letter type for gifts from charitable orgs/DAFs. It

acknowledges their gift,
does not include a statement about deductibility,
does have statement that we understand they have already received receipt for their gift.

Bernard Nemis

@Tami Messenger
This is the issue I am having right now. I don't necessarily need to report on the Individual's name (Soft Credited), but I need to be able to pull his/her constituency code (ie. report on total giving of a particular constituency). If the gift is Hard Credited to the Organization, the Gift Constituency Code will pull that Organization's primary code (ie. DAF) and not the Soft Credited individual's primary code (ie. Current Parent). There's always a work around to this especially when you're working through the Database View. But the problem is, what if we want to show the total giving of a particular constituency code in NXT's DASHBOARD? I created an attribute to manually enter the Soft Credited individual's primary code in the gift to make it easier to report via Database/Excel. But unfortunately, Attributes (or Custom Fields) are not available as Insights.

So my question are (disclaimer: we are still contemplating of getting Insight Designer)…
1. Does anyone have a work around to this (DASHBOARD is the end goal)?
2. Can we create an Insight (through Insight Designer) of the created gift attribute so it can be accessible to the DASHBOARD?
3. If only Gift Code (from Database View > GiftsTab > Misc. Tab) was available in NXT (could we use this to create an Insight)?

Alex Wong

@Bernard Nemis
Since you created a new topic for this post of yours, I'm going to bring others who may have looked at your post and having same question to your new topic and its replies.

https://community.blackbaud.com/forums/viewtopic/143/69628

Bernard Nemis

@Alex Wong
Thanks, Alex!

Rose Dixon

@Jane Van Ingen We hard credit the individual donor, add a gift attribute called “DAF Source” and enter the DAF source there, and we have letters for DAF that say the donation was via a donor advised fund, and we remove the tax wording.

Rose Dixon

@Kerry Kelleher We have 40 letter templates, and we choose a letter code of either General DAF, Leadership DAF, Event DAF, Holiday match DAF.