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When you think of how the process of making a donation works, the thought of a single supporter filling out a donation page and making a gift from their own wallet (on their own behalf) likely comes to mind. However, some types of giving are not this straightforward. Maybe that donation came from a donor-advised fund or a board member referred them to your site—or perhaps they have a corporate matching gift program.
It’s important, but sometimes challenging, to report these situations and make data-driven decisions on donors’ true giving capabilities. Fortunately, you can implement tools to help collect this data, more accurately track your donors’ giving habits, and take advantage of the wealth of data at your disposal.
Let’s get started by exploring what soft credits are and how your organization can use them.
What are soft credits?
Soft credits occur when a donor makes a gift and attributes it to someone else. The hard credit goes to the person or account who made the gift while the soft credit goes to the supporter the donor credited for the gift. This can happen when:
- An organization or company makes a matching gift
- The donation is made through an investment firm
- A donor makes a gift in memory of someone
For example, if someone submits a matching gift request, their company will later make a matched gift to the nonprofit. In this case, the company has the hard credit for making the donation, and the employee has the soft credit for influencing the gift.
Soft crediting allows nonprofits to credit supporters (other than the original donor) for influencing a donation and use that information to acknowledge the credit and leverage it for future campaigns.
Why track soft credits?
Tracking soft credits is incredibly important to the success of your year-end fundraiser. According to the 2022 Donor-Advised Fund (DAF) Report compiled by the National Philanthropic Trust, grants distributed by donor-advised funds were estimated at $45.74 billion—an increase of about 28% from the previous year. Contributions to donor-advised funds also increased by 46%, to a total of $72.67 billion.
Similarly, an estimated $2 to $3 billion are donated in corporate matching gifts every year. With these fundraising methods increasing annually, it’s essential that nonprofits can accurately create attributions and segment donors.
How can nonprofits leverage soft credit attribution?
Record soft credits in your supporter database so you can reference all the supporter’s soft credits, who the original contributor was, and how the contribution was made. With this data within your nonprofit’s grasp, you can ensure you’re properly thanking donors for both their direct contributions and the contributions they influenced.
Beyond using this data for acknowledgments, utilizing soft credits in reporting allows for a deeper analysis of a donor’s giving potential. For example, a donor with several soft credits is clearly a supporter who is influential and passionate about your cause. During your next fundraising campaign, mobilize these supporters through continued engagement opportunities like volunteering, hosting events, or joining your board.
Once you apply soft credits to a contact record, your staff can easily run and customize reports on soft credits, helping you better understand and analyze your soft credits data. To keep data organized, you can set up attribution reports with fields like attributed contact, attribution amount, attribution type, and attribution thanked.
Start making the most of every contribution
Soft credits are an invaluable way for nonprofits to gain a 360-degree view of their donors. When you prioritize collecting and analyzing this data, it can reveal some of your most loyal, dedicated supporters. Then, you can thank and mobilize them to retain their support and attract new donors.