[nancy-d]

I think it is important that fiscal and fundraising are consistent. We use Quickbooks and Exceed Further (not Salesforce) since they are compatible and donations are booked the same in both systems. We code the donation in our chart of accounts based on how it was solicited. So if it comes in an annual appeal envelope or the donor refers to the annual appeal, it is counted toward the annual appeal whether it is a check, donated on the website, or through a DAF. Our chart of accounts includes the various giving categories so events are tracked separately from annual mail appeals or special appeals that may only go to major donors. We often get DAF donations from our Board members and sometimes they are tied to a particular appeal and they are reflected as a donation to that specific appeal. Board members often solicit gifts on our behalf for their birthday or anniversary. We can track it for both fiscal and fundraising and tie it to that solicitation regardless of the method they use to make the donation (check, wire transfer, stock donation, website donation, etc.)

[laurel]

Hi Joseph,

Our organization works in Salesforce and QBO as well. We revamped our income chart of accounts this year to be scale down on types of income (i.e. Board of Directors giving, etc) and more uniform in individuals vs. small family foundations vs. foundation/trust grants vs. corp/business, etc.

For DAFs, we almost 100% of the time code these to individual or major gifts income accounts. As DAFs are donor-advised funds, it is an individual who is either recommending or requesting for this donation, so that is how we categorize it.

In Salesforce, we’ve created a custom dropdown field in addition to payment method that lists all the DAF companies that most of our donations come from – this way we can identify the check to the donor. We also have added class coding to Salesforce, so if a donation comes in for a specific campaign, we code it that way. This coding flows nicely into QBO.

I hope this is helpful to you. Happy to discuss further if you need additional support.

[Director]

Our finance department and advancement departments use the same categorizing so the reports line up.

I think this raises a bigger issue about why Finance/Quickbooks is tracking by these categories when the donor tracking system/Salesforce is designed for this type of breakdown. You don’t need to duplicate. The advancement department needs to understand source of funding for fundraising purposes, but the value on your financial reports is in knowing if funds are unrestricted, temporary restricted, or permanently restricted. Keep the financial reporting simple.

As a school, our financial reports used to break down by category of donor: alumni, parents, foundations, etc. But donors fit into multiple categories, so any breakdown on the financial reports is never entirely accurate. Donor advised funds are becoming more prevalent, and for the most part mimic an individual donor activity, but at some point could mimic an established foundation. Let the advancement area break down their financials by multiple categories, but from a finance perspective, track unrestricted, restricted, etc. But to the extent you do duplicate the advancement system categorization in your financial system, have the advancement dept. categorize the item and the finance dept. should match it.

[Jim]

Great questions, Joseph. There is a lot of confusion about DAFs, and they are growing in popularity with both middle-class individual donors as well as with billionaires with foundation staffs exceeding 100 people.

I whole-heartedly support changing your internal policies about DAF gifts. The existing approach sounds a lot like getting a check from an individual or organization who banks at JP Morgan Chase, and deciding you should treat those like they were gifts from the bank, not the entity with the checking account. DAFs are much more like bank accounts than they are like foundations. Fidelity Charitable or Schwab Charitable are extensions of a brokerage business, not foundations making decisions about grant proposals!

The goal of separating individual giving from foundation grants in nonprofits is because of the vastly different skill sets needed for these different types of donors. Crediting the institutional giving team with DAF gifts from individuals is disastrously misguided. As would be crediting individual giving with a foundation grant that happens to come out of a billionaire’s DAF account after a proposal iteration process of six months of hard work from the institutional giving team. I know, because we regularly get both kinds of DAF gifts at the four nonprofits where I sit on the board (two of which I founded).

The moral of the story is: look to whose name is on the check or DAF grant who is the decisionmaker, not the bank or DAF operator who provides the services to the decisionmaker.

Jim Fruchterman, founder Benetech and Tech Matters,

[Andy]

<div>I have dealt with this issue both as a former nonprofit auditor and now as a Treasurer/Bookkeeper. It seems the best approach as alluded to in some of the responses is to put priority on substance over form. When I was involved in audits we did compare the fundraising database total to the relevant total numbers shown as revenue. As long as the two numbers were reasonably close, that indicated some integrity between the two systems. There were of course times when they were not close and that had to be reconciled by the organization.

I have been recording DAF funds as individual donations rather than foundations when it is clear they represent an individual payment routed through the DAF or equivalent. It is best for the substance to indicate the true type of the donation. In my experience in many audits, there were often differences between the GL and donor database on specific classifications. Rather than spend time to fix such things (when time is always at a premium) it was most efficient to compare totals between systems. So one method is keep showing the funds as intended by their substance and then have a quarterly or periodic total reconciliation to show that both systems agree.

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