Givzey Guidance: How Do I Properly Credit a Donor and Document a Pledge Payment Made from a DAF?

Givzey Guidance: How Do I Properly Credit a Donor and Document a Pledge Payment Made from a DAF?

Question: How Do I Properly Credit a Donor and Document a Pledge Payment Made from a DAF?

Question: We received a check from a DAF which the person who set up the DAF asked us to apply to their personal pledge. I know the DAF money cannot be used to pay a personal pledge. I’ve been directed to handle it in different ways at different organizations. What is the proper way to handle this?

Answer:

A write-off is entered on the existing personal pledge with a note that the donor recommended a DAF gift of $X,XXX.XX received from Name of DAF and the date. Then enter the DAF as a separate gift and soft credit the person who set up the DAF. This keeps the IRS, your business office, the DAF, and your donor happy.

It's important to make a couple of housekeeping notes on this, as well.

First, you do not want to adjust the amount of the original pledge as it is important to know that amount of the original pledge for future “asks.”

Second, the donor may decide to fulfill the entire pledge from their DAF. By writing down the original pledge, it would show the donor did not make a substantial commitment, and you won’t have a true picture.