Donors increasingly use third parties to donate to nonprofits. Third parties can include:
Charitable giving vehicles such as donor-advised funds (DAFs) and family foundations
United Way
Employer matching programs
To track indirect donations in Bloomerang CRM, you add a donation to the organization that sent you the payment. You then soft credit the donor.
When you track indirect donations, you can:
Thank donors for their generosity and reassure them you received their indirect donation.
Show donors the full breadth of their support by including indirect donations (soft credits) in year-end giving statements.
Understand how indirect donations affect revenue and donor engagement
This article explains how to track donations made through donor-advised funds and family foundations. To track United Way donations, read Track Indirect Donations Made Through United Way. To track donations made through employer matching programs, read Track Matching Gifts.
Note: For legal guidance related to donor-advised funds and pledges, consult the company that manages the donor-advised fund, and IRS guidelines.
What are Donor-Advised Funds and Family Foundations?
Donor-Advised Fund
A donor-advised fund (DAF) is managed by a sponsoring organization such as Fidelity, Schwab, Vanguard, Daffy, community foundations, or others. Donor-advised funds are popular with donors at all levels of giving.
Donors make a monetary donation to a donor-advised fund. Donors are eligible for a tax deduction immediately after contributing to the donor-advised fund, even if the fund hasn’t sent payment to a non-profit organization yet. The donor-advised fund later sends a payment to your organization.
Some donor-advised funds allow donors to invest their donations and increase them tax-free until the donor is ready to give. This option can make donor-advised funds an appealing giving vehicle for donors with limited giving capacity.
Foundation
A foundation is a philanthropic organization set up and funded by individuals, families, and corporations. Donors make a monetary donation to the foundation, and the foundation later sends a payment to your organization.
Track Indirect Donations
When your organization receives payment for an indirect donation, track it in Bloomerang CRM.
If you use Journey Automation to automate donation acknowledgements, keep in mind that soft credits on one-time donations can qualify constituents to enter donation automations.
To track indirect donations:
Create a constituent account for the donor-advised fund or foundation. This type of account is also known as a pass-through account. For example, create a constituent account named Fidelity Charitable DAF or Wayne Family Foundation.
Tip: If an entity manages multiple donor-advised funds, you can create an organization-type constituent for the entire entity or multiple organization-type constituents for each donor-advised fund.Enter the donation on that account.
On that donation, in the Soft Credits section, click the + sign.
Tip: You can set up a relationship between a DAF and a DAF donor in Bloomerang CRM. This way, any donations added to the DAF account will automatically give soft credit to the DAF donor.Search for and select the original donor. This is the individual constituent who gave the money through the donor-advised fund or foundation.
Tip: Apply the soft credit for this donation to only one household member. To avoid double counting or undercounting in household analytics, do not apply the soft credit to multiple household members or divide the soft credit between household members.Click Save.
If the individual constituent has an active pledge, you can edit the soft credit to apply it to the pledge. For instructions, read Add and Edit Soft Credits. For legal guidance related to donor-advised funds and pledges, consult the company that manages the donor-advised fund, and IRS guidelines.
Acknowledge Indirect Donations
You can send an acknowledgment email or letter to thank a donor for an indirect donation. When you create the email or letter, select Acknowledgement as the purpose.
Make sure the acknowledgment email or letter doesn’t include tax receipt information. Donors get a tax receipt for their donation from the donor-advised fund or foundation.
Tip: It’s typically not necessary to send an acknowledgment email or letter to the donor-advised fund or foundation unless the fund or foundation requested one.
Indirect Donations (Soft Credits) in Giving Statements
You can email or download year-end giving statements for constituents, which show constituents all of their support for your organization.
Soft credits appear in the Indirect Donations section of year-end giving statements. For example, if you add a donation to the Fidelity Charitable DAF and include a soft credit for Avery Smith (the original donor), that soft credit appears in the Indirect Donations section on Avery’s year-end giving statement. The Indirect Donations section reminds donors of their support but doesn’t function as a tax receipt. Read more about this.
Create DAF Relationships
Creating relationships between DAFs and their donors can help you track how your donors are giving. For example, you can filter constituent reports by DAF relationships.
You can also set up a relationship so that donations entered for the DAF automatically add a soft credit for the original donor.
To create a relationship between a DAF and a DAF donor:
Follow instructions for adding a relationship.
For the DAF, select the Donor-Advised Fund relationship.
For the original donor, select the Donor-Advised Fund Contributor relationship.
(Optional) If the DAF is the giving vehicle for only one donor, we suggest you select Automatically apply Soft Credits for this relationship. With the checkbox selected, future donations added on the DAF constituent's record will automatically soft credit the donor.
(Optional) To add more details about this relationship, enter a Note.
Click Save.
Note: If you have gift defaults enabled and select the auto-soft credit checkbox, the default values will not appear in new donations you add for the DAF constituent.
View DAF Relationships
You can view the relationships between DAFs and their contributors in the following places:
The Relationships tab in either of the constituent’s accounts.
The header of a donor’s account. The header shows if a donor contributes to one or multiple DAFs.
Related
Ask an Expert: How Do I Credit and Recognize DAF Gifts? in the Bloomerang blog
Ask an Expert: How To Enter And Credit Donor-Advised Fund Gifts in the Bloomerang blog