A donor-advised fund (DAF) is a charitable investment account that allows individuals to contribute money, stocks, or other assets and receive an immediate tax deduction. The funds are invested for tax-free growth. The donors will make recommendations for charitable distributions to the sponsoring organization that manages the investment account.
A DAF calls disbursements "grants" because, while the donor technically doesn't directly distribute the money, they "recommend" which charities should receive the funds from their DAF account, essentially acting like a grantmaker by advising the sponsoring organization on where to direct the money; this means the funds are "granted" to the chosen charities based on the donor's recommendations.
There are a variety of ways to document a contribution from a DAF. Be sure to consult with your financial advisors and accounting team for the best way to utilize the features in DonorView to record these transactions. It is important to note that the donor only receives an acknowledgement from your organization, but it is not a tax receipt. The donor receives their tax receipt from the DAF, not your organization.
Most of the time the contribution from the DAF will include the name of the recommending donor. There should be two constituents in your database for these transactions, one for the DAF as a company profile record and at least one for the donor as an individual contact record. If there are other family members involved in the DAF, you may have multiple individuals. These records should be connected via a relationship. You can create a custom relationship type and label the DAF as the Donor Advised Fund and the donor could be an Advisor, for example. You can set up an auto-soft credit, however it will auto-soft credit in both directions. So if the donor makes a contribution outside of the DAF, the DAF would automatically receive a soft credit from the donor. This can always be updated manually to remove the soft credit.
You will want to create a Mail Merge Gift Template letter for the DAF and a separate letter for the donor. If you are planning to acknowledge the gift and mail your letter in regular mail (instead of email), you have the option of creating one letter that will include both the DAF and the donor on two pages. See option 2 below for more.
Option 1 for DAF Acknowledgement:
When the contribution is entered in DonorView, the donation is recorded under the DAF's record and a soft credit is added for the individual donor(s) if an auto-soft credit has NOT been assigned. If the relationship is set up with an auto-soft credit, you do not need to add it manually to the gift entry, it will happen automatically. You can add the name of the donor in the Memo field, which can be included in the merge fields in the acknowledgement letter sent to the DAF. You can create the acknowledgement letter using the Save & Acknowledge button at the top or bottom of the page.
To send a corresponding acknowledgement to the donor, you use the Gifts grid and apply the Soft Credits Only query to see only soft credits.
You can use the Mail Merge column and click on the envelope icon to print or email your acknowledgement letter for the donor. If you have several soft-credits to send you can also filter your list as appropriate and use the Actions > Print/Mail Merge feature.
Option 2 for DAF Acknowledgement:
When the contribution is entered in DonorView, the donation is recorded under the DAF's record and a soft credit is added for the individual donor(s) if an auto-soft credit has NOT been assigned. If the relationship is set up with an auto-soft credit, you do not need to add it manually to the gift entry, it will happen automatically. If you plan to send your acknowledgement letter via mail (not email) you can create a single acknowledgement letter with the first page addressing the DAFs contribution and the second page addressing the donor. An example of this letter is attached. This is done by adding a tribute to the gift entry record for the donor.
Mark the Tribute toggle to YES, and identify the Tribute Type. In the example below we created a new tribute type of "Donor Advised Fund." Enter the name of the donor in the In Tribute Of field. Select the name of the donor in the Tribute Notification Name field. You can also enter any other details in the Tribute Notes or Memo field at the bottom of the page. Note there there can only be one constituent included in the tribute notification. If you have multiple donors receiving the soft credit, you will need to use Option 1. You can create the acknowledgement letter using the Save & Acknowledge button at the top or bottom of the page. As the attached example shows, the first page includes the merge fields associated with the contribution and is sent to the DAF. The second page includes the merge fields from the tribute area and is sent to the donor.
