How to acknowledge gifts from donor-advised funds
Posted November 30, 2017 by Virginia Davidson

donor-advised fund acknowledgement

Not exactly sure what donor-advised funds are or what to do when your organization receives a gift from one? Here’s a quick guide you can use.


A donor-advised fund, otherwise referred to as a DAF, is a philanthropic vehicle established by institutions like investment firms or community foundations. Some of the largest DAFs are at Fidelity, Schwab, and Vanguard. The way it works is a donor makes a charitable contribution to their donor-advised fund and receives an immediate tax benefit.

Then, while the donor no longer has legal control over the money in their DAF, they can recommend that grants be distributed from their fund to charity. Unlike foundations (public and private), donor-advised funds are not required to disburse to nonprofits each year.

There is an increasing likelihood that your organization may see a gift from a DAF because, according to the National Philanthropic Trust, annual contributions to donor-advised funds totaled $22.26 billion in 2015 and DAFs are some of the largest charities in the country.

What to expect

When you receive a gift from a donor-advised fund, it will likely be accompanied by a letter that reads something like this:

It is a pleasure to present a $1,000 grant to ABC ORGANIZATION to be used for PURPOSE. This grant was made at the recommendation of a fund advisor through a donor-advised fund at the XYZ Foundation.

Fund Advisor: Jane Doe
Fund Name: Jane Doe Family Fund

Please note that it is not necessary to send the XYZ Foundation any tax receipt or acknowledgment letter, and we ask that you do not add the XYZ Foundation to your mailing list.

The check is made directly from the public charity, such as Fidelity Charitable, so you won’t see the individual donor’s name on the check.

Entering the gift

To record the gift, you’ll do the following:

Enter the gift under the record of the donor-advised fund.

Here’s why: While the individual donor made the recommendation to send this donation, the final decision and the distribution of the money is managed by the donor-advised fund.

Enter a soft credit on the record of the individual who made the recommendation to send the gift.

Here’s why: A soft credit is used to track and steward supporters who may not make a gift directly, but who have considerable influence over the decision to make a gift to your organization—as is the case with a donor-advised fund.

It’s important to note that IRS regulations prohibit a donor from fulfilling or reducing the balance of a pledge with a payment from a donor-advised fund.

Acknowledging the gift

You do not need to send a tax receipt or acknowledgment letter to the donor-advised fund itself. It is important, however, that you express your gratitude to the person who recommended the grant. You can create a letter template that’s specifically used for this purpose. Keep the following in mind:

  • Do express your appreciation of the grant made through the donor-advised fund. This letter is your opportunity to thank and steward the person who recommended the grant.
  • Do not include tax deductible language—the supporter received a tax deduction when they put the money into the donor-advised fund.

Here’s a quick example:

Thank you for recommending that we receive a generous grant of $1,000 through your donor-advised fund at XYZ Foundation. We have received the grant, and the funds will make a profound difference in the lives of homeless children in our community.

Thank you again for caring so deeply about the mission of ABC Organization. We are grateful for your support.


With donor-advised funds on the rise, it’s important to establish procedures to record and acknowledge these gifts and the supporters who are recommending them.

11 thoughts on “How to acknowledge gifts from donor-advised funds

  1. Very helpful article.

    Would the crediting be the same if the constituent who recommended the gift is deceased?

    E.g.– constituent names DAF as beneficiary of retirement fund, and recommends that gifts be made Charity

    Charity receives gifts as recommended and provides ‘hard’ credit to DAF, and ‘soft’ credit to the (estate of) the constituent?

    1. Hi Ann,
      Glad this was helpful! Yes, it would be the same – the deceased constituent would be soft credited. If you haven’t already done so in your database, that constituent’s record can be marked as deceased.

  2. In an annual report, should the organization managing the DAF, such as a community foundation, be acknowledged or should the donor him/herself be acknowledged – or both?

  3. Is it necessary to acknowledge the foundation, as well as the DAF when a donation is made? For example: The Smith Family Foundation is managed by Fidelity Charitable. The gift is recorded on Fidelity’s record, is the foundation a constituent that needs to be soft-credited in addition to Jane and John Smith? How is this gift acknowledged?

    1. Hi Karen,
      No, in a case such as the one you describe, you do not need to acknowledge the Smith Family Foundation, as that is essentially the name of the donor-advised fund, and is not a separate entity from Fidelity Charitable. Thanks!

  4. Very helpful article.

    The sample acknowledgement language includes the name of the DAF which made the donation. Presumably the acknowledgement letter would originate from the Advisor’s record but I can’t find a mail merge field that draws from the separate DAF record connected by a Relationship. One option is to repeat the Fund name in the Organization field of the Advisor record then use the mail merge field [[org_name]], but this means the field won’t be available for other purposes. Is there a better way to do this ?

    1. Hi Joe,
      Great question. If you’re using Little Green Light, you can use this merge field in your letter for the soft credit:


    1. Hi Jan,
      Soft credits allow you to appropriately track, acknowledge, and steward constituents who may not make a gift directly, but who have considerable influence over the decision to make a gift to your organization. Soft credits are entered in the Related Gifts section of the LGL gift entry form.

      Thanks, Timi

    1. Hi Heidi, You do not need to account for DAF gifts separately on your 990 unless you receive gifts totalling $5,000 or more from a certain source (such as Fidelity Charitable). In that event, you need to include Fidelity Charitable in your list of donors who contributed $5,000 or more in your fiscal year. Thanks!

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