Recording Business Donations

When a donation comes through a business or a Donor-Advised Fund (DAF), the first thing to consider is: Does the organization/DAF need a tax receipt? Or do you only want to acknowledge the individual donor? Once you know your situation, you can choose one of the two recording methods below.

Option 1: The “Formal” Way

If the business or DAF needs a tax receipt, and you want accurate tracking of the payment source:

  1. Record the donation under the business or DAF contact
  2. Add a soft credit for the individual donor

Important: The individual does not receive any thank-you letter or tax receipt from this transaction. The soft credit simply allows the donation to appear in their Contribution tab for recognition and reporting.

Result:

  • The business/DAF gets the proper tax receipt
  • The contribution will appear on the individual's profile via the soft credit (but receives no acknowledgment letter)

This is the proper accounting method, but it is more administratively heavy (requires creating organization contacts and managing soft credits).

Option 2: The “Relationship” Way

If the organization/DAF does not need a tax receipt, and the most important for you is only to thank or track the individual donor:

  1. Record the donation under the individual donor
  2. Create a unique financial type (e.g., “Donor-Advised Fund”) and mark it as non-tax-deductible
  3. Optionally, add a note that the payment came from their business or DAF (e.g., in the Dedication field or a custom field)

Important: The individual will not receive a tax receipt (as the financial type is a non-tax deductible), only an acknowledgment.

Result:

  • The donor receives a personal thank you letter
  • Their profile remains clean and accurate
  • No unnecessary organization contacts are created
  • Easy to track the financial relationship with the contact

This is the easiest and most practical method for most donations that do not require an organization receipt.

Quick Summary

  • Organization needs a tax receipt → Use Option 1 (record under organization + soft credit the individual)
  • Organization does NOT need a tax receipt → Use Option 2 (record under the individual, use a non-deductible financial type, optional notes)

Both methods are valid; the choice depends on receipt requirements and your relationship focus.