We took an informal poll on Linked In to understand how folks doing nonprofit gift entry are handling Donor Advised Fund (DAF) gifts. We asked how you were entering and how it was going:
Technically, a gift given via a DAF is not exactly the donors' money anymore, since it was first given to the DAF itself and that's the moment when the tax deduction happened for the donor. (More info here about uses, and also a tiny bit of a peek into some of the controversy surrounding DAF's.) However, most donors feel that the money is "their" gift and would find it strange or worse if they were not thanked for it or given credit for it in the usual ways they'd expect from your organization.
This presents a problem for gift entry, since the donor feels one way about the gift and the IRS, and perhaps your auditor, feels another. (Note: A colleague pointed out that the IRS has recently given new guidance on this. More on that here.) So, we queried the wisdom of our Linked In network, and found a strong preference for entering the gift in the record of the "sponsoring organization", such as Fidelity Charitable or The Minneapolis Foundation, and soft-crediting the donor(s).
This seems to work well-enough for most organizations. We advise thinking about how your lists will pull and how you report on gifts. For example, if you report based on whether gifts are from individuals or institutions, you'll need a way to indicate that while the Minneapolis Foundation is an institution, the gifts soft-credited to donors are generated from individuals and should be reported as such.
Lots to think through, and there's lots of good thinking and helpful colleagues in the discussion on our page. Thanks to those of your who participated, and keep the questions coming.