Hard Credit v. Soft Credit - gifts through donor advised funds
Ashley Lomery
a donor advised fund and the check is from the DAF. Who should legally
receive the hard credit for the gift and receipt for the gift, the DAF or
the donor? If the DAF is to receive hard credit, then should the donor
receive soft credit?
Ashley Lomery
Individual Giving Manager
California College of Arts and Crafts
5212 Broadway
Oakland, CA 94618
tel 510.594.3662
fax 510.594.3762
alo...@ccac-art.edu
David Ross
>
> A donor gives a gift of $10,000 to your organzation, but gives it through
> a donor advised fund and the check is from the DAF. Who should legally
> receive the hard credit for the gift and receipt for the gift, the DAF or
> the donor? If the DAF is to receive hard credit, then should the donor
> receive soft credit?
I'm not at all familiar with the terms "hard credit" and "soft
credit".
Generally, a donor advised fund is a fund within a charity (often
a community foundation). The original donor received appropriate
tax benefits when making the donation to the fund and cannot claim
any additional tax benefits. However, since the donor advises the
charity on making grants from the fund, you definitely owe the
donor formal and informal thanks (but no receipt). The fund (or
the charity operating the fund) gets the receipt.
For information on donor advised funds at a small charity, see
Donations and Funds under Community Foundation for Oak Park at
<http://www.vcnet.com/~cffop/>, which uses the term "donor-defined
funds". For donor advised funds at a large charity, see the
California Community Foundation at <http://www.calfund.org/>.
--
David E. Ross
<http://www.vcnet.com/~rossde/>.
Concerned about someone snooping into your E-mail?
Use PGP. See my <http://www.vcnet.com/~rossde/pgp.html>
Tony Poderis
> A donor gives a gift of $10,000 to your organzation, but gives it through
> a donor advised fund and the check is from the DAF. Who should legally
> receive the hard credit for the gift and receipt for the gift, the DAF or
> the donor? If the DAF is to receive hard credit, then should the donor
> receive soft credit?
Hello Ashley --- David Ross gave the right answer to your question. The
official receipt (your “hard credit” reference) for the gift must be given
to the organization-foundation which issued the check. They are now the
stewards - keepers of those donated funds --- though the use of them is to
be advised by the donor according to terms agreed upon when the arrangement
was made.
Your question as well touched on some form of “soft credit” to be given to
the original donor, now advisor. Because such a communication has no tax
implication (since they received that benefit when they turned over the
funds), you still might want to offer your appreciation. After all, that
person’s wishes made your gift possible. As well, should there be a chance
for a renewal of the gift next year, how is such a gift is to be solicited
in the first place?
You can determine those protocols on a case-by-case basis with experience
gained with donor-advised gifts you receive for special, regular, or annual
support.
Generally, donors initiate an advised funds arrangement so they can be
relieved of the administrative duties connected with the process of
reviewing proposals, making gifts, refusing proposals, accounting for the
funds’ use and income, operating expenses, and all of the other myriad
activities now handled by the stewards of the funds.
You need to know for certain that the original donors, those who expressly
planned to distance themselves from such administrative responsibility,
would still accept solicitation, acknowledgment, and other communications
made directly to them. From my experience with many of them --- some do,
some do not.
For example, families (family foundations) preferred that we communicate to
them through the stewards of their donor-designated funds, while most, if
not all, of the “Mr. & Mrs.” donors, accepted, and mostly expected, that our
direct communications be made to them. In the latter instance, when we were
to receive a donation, we would subsequently receive a letter from the
holder of such funds stating, “Mr. & Mrs. J. Q. Smith has requested that a
contribution of $____ to made to your organization.”
But when it came to the acknowledgment of a donor-designated contribution,
we found, much more often than not, that the “official” receipt we sent to
the organization-foundation was the only acknowledgment we needed to make.
Both the advisor and the grantor were more than satisfied that we included a
request to “Please extend our sincere appreciation as well to Mr. & Mrs. J.
Q. Smith for their thoughtful generosity.” The appreciation we cited in
that way was subsequently forwarded to the original donor. There was no
need for dual gift acknowledgments.
In any event, those procedures were the rule, rather than the exception, as
desired over many years by our Cleveland (Ohio - USA) Foundation and Jewish
Community Federation program officers and by the donors whose funds they
administered.
Simply build your records case by case, as desired by the original donors of
donor-advised funds, and by the (designated) granting organization.
--
Tony Poderis
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Putnam Barber
It provokes a further question in my mind.
What sort of recognition should be given for gifts that come through a
donor-advised fund or other intermediary. Should the listing in the
program, for example, say "The P.P.Person and D.D.Donor fund at the Generous
Foundation" rather than P.P.Person and D.D.Donor? Or should Person and
Donor not be mentioned at all?
Thanks in advance for advice and comments.
Putnam Barber, President
The Evergreen State Society
PO Box 20682
Seattle, WA 98102-0682
206 329-5640 :: pba...@tess.org
Tony Poderis
> This has been an interesting discussion. It provokes a further question in
> my mind. What sort of recognition should be given for gifts that come
> through a
> donor-advised fund or other intermediary. Should the listing in the
> program, for example, say "The P.P.Person and D.D.Donor fund at the Generous
> Foundation" rather than P.P.Person and D.D.Donor? Or should Person and Donor
> not be mentioned at all?
Put, here is what we did --- by choice, initially, but later as required by
most of the organizations--foundations "advised" to give us the funds:
For example, under our giving category of $1,000 to $2,500 in our Annual
Report, if we had two such donor--advised contributions, they would be placed
under the Foundation name, which was positioned in alpha order in the
respective donation level:
The Cleveland Foundation: Donor Designated Funds
--- Cynthia Adams
--- Mr. & Mrs. John Doe
These credits were printed in this way as many times as they needed to be under
their respective giving categories in our Annual Report, and in other such
publications. The granting organization--foundation could, therefore, appear
in that way any number of times.
How is this done where you are?