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 fundraiser who isn’t sure how to recognize donor advised fund donors.
Dear Charity Clairity,
How do I publicly recognize donors who give to us through donor advised funds? Do I list the name of the donor or the DAF directing the recommended gift? We’re having a bit of a disagreement internally, and I don’t want to get us in legal trouble.
— Feeling DAFfy
Dear Feeling DAFfy,
This is less a legal question and more a question of being donor centric.
And who is the donor?
In this case, you have two different entities jointly responsible for the gift coming your way: (1) the individual person who makes the recommendation for a gift to be distributed to your organization, and (2) the sponsoring DAF organization that accepts the recommendation.
Consider how you might best be responsive to the needs and desires of both of these ‘donors.’
Legally, at this point, the donor of record is the DAF. However, the person who contributed the money to the DAF – and who asked that this money be given to you – is the person you’re going to most want to cultivate and steward moving forward. And they’re the one you’ll want to ask again for another direct gift (or recommended distribution). Because, unlike foundations, DAFs don’t accept proposals from charities.
If you’re worried about tax issues know that, unlike foundations, individual donor advised funds (DAFs) have no tax reporting requirements when it comes to distributions they make. So it’s not a concern on that side of the equation. The individual who contributed to the DAF has already received a receipt for their gift from the DAF (and corresponding eligibility to claim a tax deduction); they don’t need anything further from you at this point. So whether you list them publicly or not is irrelevant from a legal perspective.
In fact, you must take care not to send individual donors a thank you letter indicating they’ve made a tax-deductible gift to you. They already made a tax-deductible gift to the DAF, and can’t receive two tax deductions for the same gift. So, from a donor-centered perspective, you don’t want to confuse them – or their accountants.
Let’s get back to your two ‘donors’ and consider their perspectives when it comes to public recognition. Here’s a novel approach: Why not ask them?
Here’s what I’ve found as general rules:
(1) Individual donors (unless they asked to be anonymous) usually want to be recognized wherever you recognize other similar donors. They want their peers to see they’re giving, and they’re apt to get a bit peeved if suddenly their name isn’t showing up. Or if their name is hard to find – which happens if you suddenly list the gift from Claire Axelrad (which people will search for under the “A’s”) and list it as ‘Vanguard Axelrad Donor Advised Fund’ (which people will find alphabetized under the “Vs.”)
(2) Donor advised fund sponsors sometimes want to be recognized publicly, though more often they don’t care. This is where talking with the sponsor can be enormously helpful. Plus it has the benefit of building a relationship with the sponsor – always a positive thing! Remember, sponsors are people too. They have the power not only to approve donor recommendations but also to suggest donor beneficiaries. It only helps you to have the sponsoring entity think highly of you. Plus, if you ever receive an anonymous DAF gift from this sponsor you can now easily call them up (since you’ve built a relationship) and ask them if they can reveal the donor’s name so you can thank them. If they can’t do this, you can ask them to forward a thank you (which you supply to the sponsor) to the donor.
Bottom line: Spread your gratitude and recognition around! I want to take a moment to offer some advice on how to facilitate these listings, as well as subsequent stewardship, cultivation and solicitation.
- Enter the gift into your donor database as what is known as a third party gift: the ‘donor’ of record is someone else. In this case, it is the sponsoring DAF.
- Soft credit the gift to the individual donor. Your fundraising software should easily enable this; talk to the support team if you need assistance.
- Whenever you pull reports for mailings or recognition lists be sure to include soft credits so you can list these individual donors, alphabetically, by their own names. Otherwise, you may end up treating current donors (often major ones!) as lapsed.
- Consider grouping all gifts from a single sponsoring entity as one additional donor recognition listing (e.g., list Fidelity Charitable Fund or Jewish Community Endowment Fund rather than listing multiple DAFs from these sponsors). Run a report cumulating all recommended gifts from these sponsors so you know what gift level to list them under. Remember to share your annual report or other publications (including digital) where you list your donors with these sponsors. They are people – and as receptive to cultivation and flattery as anyone else.
Now your DAF donors – all of them – will feel properly cared for. There’s nothing ‘daffy’ about that!
— Charity Clairity
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 “Feeling DAFfy” did, if you prefer to be anonymous.