 we want to thank our presenting sponsors who've been with us, who continue to join us on this amazing journey. We're now into the nonprofit show for more than a year. And what's really exciting is that we have continued to grow and to move through this. I'm Julia Patrick, CEO of the Nonprofit Academy, American Nonprofit Academy, I should say. And my co-host, a little bit of a tip to everyone. She's wearing a sombrero. What do you think that means, Sasha? I think she's on vacation a little bit. I think she's working in Mexico. So she chided me about I'm not on vacation. I'm still working, but I'm just in a different city. So she will join us tomorrow. But oh my gosh, I think she's on a beach somewhere. We're just going to call it as we see it. Sasha Lewis is here today. Sasha was one of our very first guests when we first got started. And one of the reasons why we loved Sasha was because she had this really interesting high energy look at what to do in the world of data. And she's the one that said, hey, we need to make data sexy again. And from that, she became one of our favorite guests of all times. And so we have you back with us, Sasha. So thank you for joining us today. My pleasure. Well, today, we are going to talk about one of the great mysteries in the nonprofit sector. Third party donations that often come from third party events. It's a mystery. It gives us heartburn. It can be a total windfall. It can be a total drag. It has it has all the elements of a good mystery and a good story. So first and foremost, can you define or describe tell us what a third party donation even is? Thank you, Julia. This is actually one of the biggest questions I get from clients or just individuals in the nonprofit community of, you know, how do we manage these third party gifts and how do we record them? And so the first thing that I like to talk about is really defining what is a third party gift, because all too often, we'll get this, well, what about this one? And what about that one? And I'm like, well, if we look at the behavior of the type of donation that we're receiving, they're all really about the same. So how do we handle and set precedence so that we're tracking and going with those third party donations? So I define and many others to find third party gifts as those checks that are written on behalf of the donor to help support the gift. So they are the donor advised funds. They are the gifts that come in from Vanguard and the charitable entities that help that are helping to write donations on behalf of other individuals, also things like the charitable tax credit companies. Those are all the also examples of third party gifts. So very, and I hope that helps. But again, it's any gift that is written on behalf of another donor or by a donor on, let me start this over again. It is any gift that is written or any check that is written by another company on behalf of a donor in which the other company is taking care of the charitable transaction part of it. That's actually one of the biggest indicators of who's writing the charitable tax credit piece of it. So we'll come back to that here in a moment when we talk about recording. But again, these third party gifts are the ones of, you know, we get a donor advised fund, where are we recording this? Are we putting it on the actual donor individual's name? Are we putting it on the company like Vanguard that wrote the check? Or are we actually giving it and creating a donor record for the donor advised fund itself? You know, what's the proper recording? And that's what we're going to talk about today. So what if you had, would this also be the same thing as like if you have, let's say a woman's auxiliary or a men's group, or you have, you know, a neighborhood event, or you have some sort of thing like this big trend of having birthday events where you don't bring a gift, but you, for that person's birthday, but you make some sort of charitable donation or you, you bring something of value to that event. Would that be the same thing? Or are we talking about that in a different way? To be honest to me, that's a little bit different. So third party events are truly a whole nother as you've articulated a whole nother, you know, opportunity within the nonprofit sector. It has some similarities in the sense that we have another organization that's helping to transact charitable dollars on behalf of the org. But what is really different is thinking through from a straight gift entry process. With third party events, you're typically, and there are so many what ifs. And so I want to be mindful not to get down to the what ifs and so talk about, you know, things that we can address. But let's say that third party event. Yeah, I'm going to leave it simply, Julie, that I think those are two little bit different things because again, with a third party check, it is very clear that it's a, who do I soft credit? Who am I putting the hard credit on? It's really truly around donor advice funds. The, the Vanguard type funds, the, you know, I'm getting a gift from tax credit genie. Do I put the donation on tax credit genie's record? If I put it on the donor that's giving the gift. Those are the ones that we're really honing into on how do we actually handle these in our donor systems so that we are putting them in correctly consistently and then also taking care of something that we've been forgetting about, which is the stewardship of these. You know, I am thrilled that you have pointed this out because I would say that with all the guests that we've had on, we haven't really had somebody that has drilled down on this and really explained why we need to be thinking about it. Because when you look at all of the editorial and the data that's coming down the pike, these DAFs and these funding mechanisms are exploding. And when we, we look at this in terms of the huge migration of wealth in this country and not to mention the wealth that's being built, I think these instruments are just going to take off even more. And for those nonprofits that don't know how to manage this data, they're going to be having some big problems. So let's talk about this. I mean, you are the data guru, you do make data sexy, even though it shrouded in mystery. Talk about properly recording these types of donations. Thank you. This is to me one of the biggest opportunities we have to clarify because I see how these are reported very greatly amongst organizations and sometimes within the same organization. And so it gets very challenging on how do we run reports? How do we make sure we're not over and stating? How do we consistently understand what's happening in our database? And by actually using proper and best, what I do believe are best business practices and seedings, you can actually address all of those variable needs pretty easily. But the fact that we're not consistently applying the same data structure makes it hard to answer these. So let's take, for example, what we're just going to keep talking about a donor advice fund. We all understand those. They come in, you know, Don and Jane Smith donor advice fund written on the local community foundations checking account. And we've been soliciting these donations from this donor. But how do we, you know, what do we do when we get this check in hand? Where does it go? And immediately, all too often, we have this desire or thought that we need to put it on the individual donors record because we want to make sure that we understand they gave a gift. Well, if you properly record it, you can manage that during the other features of your donor database. And so the reason why this is important, and it's not only from a gift interest standpoint, we're going to talk about that, you know, as we keep moving forward. But when you shift over into a donor profile, donor prospect management standpoint, this is one of the most incredibly important information key pieces of information. The mere presence of a donor advice fund or DAF for that individual immediately means they're more charitable. They're more likely to give a charitable gift because they've already gone through the process of planning their financial charitable strategies. So I love and I want to know this donor gives this much money from the personal, they give this much money from the donor advice, you know, whatever those those strategies or those methods in which they did give their gifts. So when I get that hard copy check in the reason and there's a very specific reason why we always want that check to be written hard credit on to the Community Foundation that wrote the check. And that and most people do not agree with or there's a lot of controversy around that but it absolutely belongs on the Community Foundation's record. And the reason why is because the Community Foundation is the one that's transacting that they're the ones that providing it and they're the one that if anybody calls and says where's this gift, you're going to go look at the Community Foundation's record because they're the checkwriter. Now for financial credits, they are the they're the checkwriter. Now we're not talking about stewardship, financial recording and stewardship are two entirely different things. You don't look at them at the exact same way. So when I'm when I'm running financial reports, I look at it one way to get stewardship differently. What I want to also deal with that gift that's recorded to the Community Foundation and some systems only allow you to do this once and so if it's once you have to kind of alternative but if you can have more than one soft credit or pass through gift or however your donor database applies it, that's where you want to do so. So not only do I put the hard credit on for the Community Foundation, I soft credit the end of it. Okay, wait a minute. We had like a little bit of a freeze just just for a second there. Okay, you have blown my mind because this is not the direction I would have thought. So first let's back up. You want to track through that that pay I would say you know where the check came from the payable aspect of it and then you want to soft track that was your word the actual name of who that family that organization individual is. So it's a two-step piece. And sometimes again it could be three depending on your system if you can track multiple soft credits that's really the best thing because again we want to understand that these are all of the donor advice funds coming out of this Community Foundation. So not only and this is more from a gift entry standpoint not only my soft credit in the gift but where the donor database allows I'm creating a relationship between that Community Foundation and all of the individual donor advice funds so that I can have a very holistic list of how many of my donors are gifting through that particular Community Foundation and we all understand how important it is to have good relationships with those groups and so then I can have an understanding again of how many DAFs are coming out of my Community Foundation but because I'm also soft crediting things appropriately I can go on to that individual donor's record and see oh they gave so much money from their personal gifts they gave this much money from this DAF because a very sophisticated donor is going to have more than one donor advice fund and many of those use them for very specific purposes and so if you start treating that donor advice fund also as a prospect you're going to have a better understanding of your donor you're going to have a better understanding of your donor. Well and I think you have to go back simplistically so to the the definition or to the description donor advised fund in that there is a third party there and you want to have a relationship with that fund because if they're going back to the donor or donors that they manage and saying yeah we're not recommending that you you work or engage with this organization right now that's a big problem that's a big big problem so yeah I can see where you you need to have that two-tiered conversation or level of stewardship and it's just fascinating absolutely fascinating okay so this comes back to another thing that you told us again probably six months ago is you need to be looking at your database in two ways from your donor cultivation and then you have your accounting piece those two pieces don't always and actually this is one of the bigger is you this support your accounting process while still allowing you to have the donor development side of things so from an accounting standpoint I am always going to be able to check back to my deposits where the check was written because think about through your audit yes we can go through the work and we can figure it out but if I've been looking at my audit my auditors going where's this gift and it's not written on again the community foundation I'm not going to intuitively know to go dig in now granted the correspondence should all be there that articulates it but the easiest way would be to start out that particular community foundation record and then drill into the donors this behavior of the third party gift also applies for united way gifts it applies for any of those gifts that again tax credit genie um wherever somebody else is writing a charitable gift on behalf of a donor so I think it's helpful whether it deserves hard credit on the individual donor or that check writing agency is who took care of the tax deductibility language if the language already states your donor has already received the tax deductibility language do not include it but you can send a stewardship piece that is explicitly telling you you have absolutely no reason to put that record or that donation directly on the individual donor record it belongs on the check writer again the daf the community foundation it belongs on excuse me their record for that reason because again they've already taken care of the tax deductibility piece and because if we record it the other way and we just throw in our standard donor thank you letter then we're going to send them this thank you letter that has a tax deductibility piece on and they may accidentally double up and you know claim more deductions than they're entitled to because they don't just you know we all have all sorts of needs and so I'm always careful because I don't ever want to be the reason that a donor isn't you know going to have a bad audit type of mindset so to me this is about donor intent donor integrity and helping them as much as possible here you know is it something that as an organization is seeing more and more of these dafs coming and I love that you used you know community foundation because community foundations are really ramping up across this country I mean you're seeing even small American regions or small American communities getting their own community foundations and this is really an action that we're just seeing explode is it worth having a conversation with their their teams or their book their accounting departments how would you navigate that conversation so that you're on the same page I mean I think that could be a discussion that's warranted it absolutely is and you absolutely need to have that conversation with the accounting team because often you know they may think why need it on the individual donor's record and there needs to be a dialogue yes we know we've done it this way but truly here I'm looking at best practices best practices say you know let's put it on the check write and let's soft credit let's use the database to do what it's intended to do and that's actually what the soft credit feature of every database for the pass through giving depending on you know the system but that's what they're designing to do that's its entire purpose so let's use it instead of recording it wrong let's record it correctly because I can also assume that all of the other reports that you have built into your system are based off of that logic and when you break the logic your candle reports don't work as expected and so then you're frustrated because you can't understand how your donors are giving you don't know that and you just sent a lapsed donor letter to that donor because you didn't soft credit them and you didn't count the soft credits correctly so it again it goes back to the pause and taking the time to ask what is the proper way to do this and then changing your business practices once you make the decision you know switch everything over in that current you know in the fiscal year and and you know put it into your practices these should be documented as part of your gift entry procedures again it is the the nature of the behavior of the check so it doesn't matter who wrote the check it doesn't matter whether it's a DAF or united way or vanguard it's what is the behavior of the check this check was written on behalf of another donor this company took care of the tax credit piece third party direction it's very simple behavior then we fold it into this coding system and what it'll give us the opportunity as we start to wrap up is talking about stewardship because right now these gifts are not being stewarded and we're missing so many opportunities to say thank you and we're because we're not taking the time to pop with a record we're not stewarding these third party gifts left and right and it's the most opportunity so it you know we we we talked about who gets the credit and I think it's really important to say yeah there's tax credit and then there's stewardship credit there's benevolence credit you know what how does the family or the person or the company I mean who's being to your point acknowledged and stewarded because this is a big deal and I've got to believe that this is such a new process for nonprofits I mean this is really kind of like a 10-year a lot of nonprofits aren't going to have experience with this really further than 10 years I will tell you and when I'm when I'm visiting with organizations this is a major pain point this is a pain point for gift entry this is a pain point for stewardship this is a pain point for understanding well my donor says they gave I can't figure out they gave because we didn't you know understand the process in our database to how to actually manage these types of connection points and stewardship is the bigger opportunity here it isn't about the tax you know credit language and all of that it's about stewardship to the donor that other agency already took care of that legal you know the legal ease of the tackling tax language but they have provided you in many cases addresses phone numbers to these donors and so if we are putting in the gift correctly where we're saying you know hard credit to the check writing agency soft credit to these donors and then we create a letter type that is third party donation where we're actually not going to pull in the check agency information but we're going to pull in the donor information and we're going to say thank you for your gift from your donor advice fund through your community foundation we appreciate your support it's going to help us do insert by the description into your thank you letter and now you've created a heavily personalized thank you letter all from merch fields that just came out of a gift entry process that's the opportunity at hand and when I especially you know in areas that do the tax credit type gifts there's a lot of companies I've mentioned tax credit to me just because it's come up so much for clients here locally where I'm at is that's a great agency that helps you know communities that deal with tax credit giving opportunities they give you every you know piece of information you can't have write that down a thank you letter and most every organization I am aware of is not and it's not that they don't want to they just don't understand this is how I record it to make my current thank you letter process work the way I do it too right and I think it's just going to be amazing going forward I think this is just something that we have got to get on on track with I just have to read this somebody writes in it's not a family member I just got to say Sasha is a true rock star family promise greater phoenix loves you thank you that's cool that's like super cool I just had to share that with you okay I want to clarify really quickly one thing that you said or maybe not clarify but amplify and that is that you see or this is what I heard you say that your donors working with a DAF they've kind of already addressed the cash the tax issue so really when they're navigating through their funding they're really looking for impact right because they're they're using a structure that long ago before your your nonprofit ever received a check the tax thing was figured out and managed so that's not as much of a value to them as the impact I mean am I reading that right well it's it's just somebody's already taking care of it for us and so we don't want to spend our time worrying about that part of it we want to go to that next level of you know their stewardship so don't acknowledge the transactional thing that we have to do to meet IRS regulations and you know for those gifts donor stewardship the steps above and beyond that enhance our relationship to increase our return on relationship that's that's the stewardship part you could acknowledge a letter left and right but did you steward the donor did you take that extra step to say hey we appreciate you and again shifting out of a data entry mindset but into a data or excuse me a development manager development fundraiser the presence of a DM immediately said that person is more charitable why am I not doing everything I can within my my database systems as well as my extra steps to make sure that they understand that I that I'm aware that I'm you know that we're grateful that we understand they're giving that we can acknowledge that this is actually how they gave their gift I mean how kind and gracious is that of us as an organization to be able to actually say hey donor we get you versus oh here thank you for your letter but I'm not even going to mention the donor advice fund because I put it directly on the individual record and maybe that donor advice funds titled after a family member that's a legacy name and we just omitted the most important part to that donor like it is it is stewardship it is kindness it is donor care to put it into our database correctly so that we can actually acknowledge all of this information that the donor whether they realized it or not graciously share with us okay so this dovetails to a perfect question it just came in so I'll just read it to it's as many times we don't get the donor's contact information with the gift especially when it is an employee payroll deduction we have sent our thank you letters directly to the company and they come back to us undeliverable any ideas on how to get the information that we need to recognize our donors is exactly what you're talking about absolutely so one I would honest us also tell you stop sending letters and acknowledgement letters to the check writing organizations every one of those explicitly tell you not to do it it is not helpful you're not helping them you're costing that organization money so if the organization explicitly says do not send us receipt please honor them and don't send them a receipt as well but what I actually do is it's a little stalkerish I go google their name and address I will go back to prospect research tools you know if you are check out community or property records go you know white pages used to be a thing that you could go look up and it had everybody's address and it was a great tool it's a little more cumbersome to look at but truly honestly google it see if you can search the first name last name and the white pages try that linked in if you can find their name especially because let's say that's united way often you know it's city of so and so or this particular company most of those companies email handles are all in a certain pattern and if you can identify the pattern you can then assume what that individual's email address is and possibly send it to them before you do make sure you have everything in place for them to choose to opt out and be able to do that as well but there are ways for you to do some deductive reasoning and prospect research to be able to fill in those points okay so i'm going to ask like a pretty basic question but why wouldn't you just ask that that corporation who set up a payroll situation to relinquish that information so there's also another school thought that I also have when the donor doesn't provide it to those third party ones then I choose to believe that that's the donor's request and intention and I just move on and I don't worry about it and so that's the other part is these individual donors were opted and said do you want this organization to know about you and if they didn't check it they've already given you that answer they want to give you their money they want to move on that's okay and so it could be that you know where it makes sense go research go look for the address if you need it and it helps but in this particular case especially with the workplace giving programs all too often that donor has already had the option to include that information and if they didn't then frankly they're just at this point probably not wanting to get that close involved interesting but when I hear you answer that way I still think that there's a stewardship component to that corporate you know and a lot of this goes through HR it comes through you know marketing you still want to bind that relationship to your organization so that you're demonstrating you know good stewardship right really thank you so there's there's still the the stewardship of the workplace relationship that is helping you support so that is a whole not a level of stewardship for the development team to be thinking about you know in this mindset truly thinking about it from a gift entry standpoint and it also goes back to something I said a few months ago of you know if a donor gives a gift online is it really kind to send them a paper letter because they you know do we ever expect to get a paper receipt from Best Buy when we make an online transaction why would we expect that from our you know our donor so you know it again is looking at how that donor is engaging with you and again I do agree you have to do with the workplace giving organization but look at what that donor has given if you do opt to say I want to try to find their information once and if I do find it and they don't respond make sure you have a way to you know honor those feelings and put a strategy in place to say we reached out now we're choosing you know to close out this piece if that makes sense so if they provide it they want to be involved and if they don't maybe choose to do a once you know one time attempt and then if not respect the fact that they did not provide that information. Interesting well you know I was thinking like you know back in the day you which is only 18 months ago you would have gone back to that workplace and maybe done a pizza party or a meet and greet or you would have done some sort of volunteer activity or you would have given you know a plaque or something that you know kids made as a thank you or you would have had some sort of physical tie-in but now we don't we have a work from home workforce that's being shifted so even a lot of these organizations aren't going to have employees back on their on their campuses so you you do have to kind of you know recalibrate how you are connecting back out. That's a very good point and actually a whole another great topic for someone that works with these workplace giving programs to come on because they're such a unique and they're such a revenue generator for organizations and so we need the stewardship on the development fundraising side but shifting back into the gift entry side there is a very specific way that you want to handle these so that they don't become a burden to gift entry and I know I've got like two minutes so I'm going to quickly say around workplace giving ones if your system and your donor database allows create a reoccurring batch or batch that you reuse for gift entry that has the single workplace gift with all of the soft credits already concluded so that you just reuse those over and over again and you make minor additions or edits to a soft credits you will save yourself hundreds of hours over the calendar year so if that makes sense if you need clarity feel free to reach me afterwards. Wow well always I'm always like didn't we just start I mean time with you flies by you have so much locked in that brain of yours and every time I'm with you I learn something new but more importantly I get it like a whole mind expanding perspective change shift. Thank you and so this is really I feel like you're part of the nonprofit sector is just one of those pieces that is so incredibly important because in so many ways the pandemic has shifted how we're doing business and it's it's not going that that shift is here you know that shift is permanent it's not like just oh we put it on pause now we can go back I feel like what you're talking about is really critical to how we are working with our donors and the structures of our organization so it's super crazy to get this time with you again Sasha Lewis with Moves Management Consulting an amazing amazing perspective that you have I love it love it love it check out Sasha's information here and feel free to connect with her because this is where we are going across the landscape of the nonprofit sector as we just talked about it again I'm Julia Patrick CEO of the American Nonprofit Academy I'm Jared Ransom will be back with us tomorrow again we want to thank our presenting sponsors without you we would not have discussions like this that are so informative and really driving the nonprofit sector to do better and be better so we want to thank you again Sasha wow you blew my mind always a great way for me to start my day when I get to start it with you thank you it's truly a pleasure appreciate the opportunity to share today thank you everyone well it's been great hey everybody thank you so much for joining us for another episode of the nonprofit show we'd like to remind everybody to stay well so you can do well we'll see you back here tomorrow