In Jane’s last blog, she told you about Donor Advised Funds (DAFs) and shared some information about community foundations. How appropriate, as today I had a “teaching moment” with a staff person who was not clear on how a DAF gift was to be treated.
So, let’s go through the logistics and the recordkeeping, and most importantly, the stewardship of a DAF gift.
I received a letter today from The Community Foundation with a check drawn on their bank account. You may have seen these: “ I am pleased to enclose a gift of $10,000,000 from the John and Mary Smith Donor Advised Fund…”
Yea for you, but now what?
When a check comes from a DAF, The Community Foundation is the donor. Yes, it is money the Smiths used to establish the DAF, but it’s not technically theirs anymore. So you post the gift to the Community Foundation in your database. Pretty easy. But what about John and Mary? Shouldn't they get some credit?
Of course they should, but since you can’t double-count the gift, you’ll want to “soft” credit the Smiths’ record in your database. All good donor databases have this feature. Both transactions are actually connected in the database – so you can see the trail of activity but they reflect as one.
I think the next step is where we all get tripped up. And that’s in stewardship and receipting.
Since the Smiths were instrumental in this gift, they need to be thanked for directing this gift to you. They get a thank you, but not a tax receipt. The Smiths already got a tax deduction when they established the DAF and The Community Foundation sent them a tax receipt that satisfies the IRS. But you still must thank the Smiths since they are your primary relationship and you want to steward them to encourage additional giving and a stronger relationship.
Do you have to send a receipt to The Community Foundation? Yes. First and foremost, you are required to properly receipt all gifts at certain levels in certain circumstances (see IRS Publication 1771).
While The Community Foundation doesn’t necessarily think they need to be thanked, they do! That stewardship might just be the catalyst the next time they have some extra money to give away and your organization comes to mind! It’s that little investment in time that pays off later in the relationship.
Sounds like a lot of work, but let’s face it: stewardship is key to donor engagement and retention. It’s not something that happens overnight and every cultivation step helps. Competition is fierce out there for donor dollars and a simple thank you is, unbelievably, something that many nonprofits overlook.
Donna Rex is President of Beaches Habitat for Humanity, Inc. She is a donor-centered fundraiser with extensive experience in strategic planning, reflective practice, facilitation, fiscal budgeting and financial management as a corporate and private banker, consultant and nonprofit executive.