[ASK AN EXPERT] How To Enter And Credit Donor Advised Fund Gifts In Your Database

Full Platform Overview Chat With Us
Full Platform Overview Chat With Us
Our Ask An Expert series features real questions answered by Claire Axelrad, J.D., CFRE, our very own Fundraising Coach, also known as Charity Clairity. Today’s question comes from a nonprofit employee who wants advice on how to credit and acknowledge donor advised fund gifts in their donor database:
Dear Charity Clairity,
I’m unsure how to enter donor advised fund gifts in our database so they’re credited and acknowledged appropriately. And do I thank the donor or the administrator? My boss says we only thank the administrator, because the donor has already been thanked for their gift and received a tax deduction. Is this right?
— Confused
Dear Confused,
No, this is not right. Because the donor has not been thanked by YOU. And you never, ever want to pass up an opportunity to show your gratitude! Plus, the donor wants to know you received the gift, and will put it to work as they intended. This is what establishes trust, which is the foundation of any sustainable relationship.
So, let’s track what you should do from the moment you receive a recommended distribution from a donor advised fund (DAF).
While the individual donor made the recommendation to send this donation to you, the final decision about whether to approve donor recommendations is made by the DAF holder. They have control in that there’s no legal requirement the DAF holder follow a donor’s recommendations; in practice, they almost always do so.
This way you’re able to track and steward supporters who, though they did not make a gift directly (donor advised fund gifts are sometimes called “third party gifts”), did have considerable influence over the decision. As with all individual donors, you want to engage with them repeatedly throughout the year to build a relationship that will inspire their loyalty.
CAVEAT:
Make sure when you generate reports you include soft credits so you don’t inadvertently omit individual donors from recognition lists, cultivation mailings, and future appeals.
Just because the check came from their DAF, and not from the donor directly, is no reason for you to ignore the fact that saying thank you is just about the most important thing you can ever do! After all, it’s the individual donor who directed the gift your way. They will consider this to be a gift from them, not a bank account. Your thank you lets the donor know they’re making the impact they intended to make.
CAVEATS:
Remember, the folks running these funds are people too. If you build a positive relationship with them, they just may recommend you to other donors looking to enact the values your organization enacts.
CAVEAT:
Do not ask the DAF sponsor to let you know this gift fulfills the donor’s pledge. IRS regulations prohibit a donor from fulfilling or reducing the balance of a ‘pledge’ (which is legally enforceable) with a payment from a DAF. This is because, technically, once the donor has made the gift and received the full benefit of the tax deduction, the donor no longer has ownership or control over the money. The IRS has eased up on this somewhat when you’re talking to your individual donor (I still wouldn’t recommend telling donors the gift fulfills a pledge; you might be okay if you reference their ‘intent to give’), but DAF sponsors are still not allowed to put this in writing.
Hopefully this demystifies recording and acknowledging donor advised fund gifts so you can move forward to build strong, lasting relationships with these generous philanthropists!
— Charity Clairity
What has been your experience with acknowledging donor advised fund gifts? We’d love to hear from you.
Have a question for our Fundraising Coach?
Please submit your question here. Remember, there are no stupid questions! If you need an answer, it’s likely someone else does too. So help your colleagues by asking away. Please use a pseudonym, like “Confused” did, if you prefer to be anonymous.
Comments
Kristen Hay
Alyssa