Contributions from donor-advised funds and RMDs

[pvmchurch]

Hi there,

I did a little searching through the forums and found a few posts that address my question but am not 100% satisfied with the solutions offered. Hoping for a bit more advice and/or to perhaps make a suggestion for future updates.

We have many people who give through various investment accounts, including IRAs or other accounts where they have already received a tax benefit. We also have many folks who give through donor-advised funds, which similarly have already received a tax benefit but are acknowledged a bit differently. We write thank-you letters to all these donors to acknowledge their gifts (the IRAs etc. receive a different type of letter than the donor-advised gifts).

So far, we've kept track of these types of gifts by actually adding additional "members" as "donor-only" ... so for instance, Joe Smith has a regular envelope number of 150 for his giving by check, but has an additional "Joe Smith - IRA" entry with an envelope number of 50 for his giving through his IRA. Then we send two different contribution reports to Joe Smith: one with his regular tax-receiptable giving for envelope 150, and one with his non-receiptable giving (but giving we still want to acknowledge and thank) for envelope 50. This gets even more complex if Joe also starts giving through a donor-advised fund. Then he gets yet another entry (Joe Smith - DA), envelope number (51), and another contribution report.

Obviously this is less than ideal and is becoming increasingly complex as our congregation ages and more folks choose to give this way (it's a very sensible way to give, just makes it harder for us to keep track of!) Our treasurer suggested that maybe there could be "sub-envelopes" assigned, i.e. Joe would now have envelope 150, with 150.1 being his IRA giving, and 150.2 being his DA Fund giving. Unfortunately, that doesn't look like something PC+ is set up to do.

In my search through the forums, I basically found two suggestions: use a "slush" contribution account, i.e. don't assign the contribution to a specific donor (not great because we do want to keep track of and acknowledge their giving); or create parallel "funds" and send contribution receipts that reflect the appropriate funds (better, but still pretty messy because we have a LOT of funds that people would potentially give to... probably close to 100). I could also envision using only one "non-tax-receiptable" giving fund that I would then manually transfer into the appropriate other funds. That might work if I also used memos noting the intended destination for the money, so that that info would show up on people's contribution reports (they like to know that it went where it was supposed to).

Any comments? Additional suggestions? The most recent posts I found were from 2021, so it's possible that maybe this has been addressed in more recent versions. If not, I would love to see a better way for the system to handle this. Perhaps a way to mark individual contributions as tax-receiptable or not, and/or a way to note where funds are coming from (i.e. Joe Smith's IRA, his Happytown City Community Donor-Advised Fund, and also his second Donor-Advised Fund, Save the Whales.)

Thanks in advance, especially as I am still learning about all this myself (I am not an accountant, just the bookkeeper who is learning all the ins and outs).
April

[sgbani]

While I have not handled donor-advised-fund donations, I setup our system such that all contributions for a person are associated for their specific envelope number. Instead, we alter the contribution fund number.
I have it such that contribution funds numbered 5000 and over are non-deductible, also indicated on the fund name as ND.

Then, when running contribution statements for the year for each person, I limit the report range to only the deductible range. I also list the funds in 5000 range and higher as to not show on contribution statements. I believe there is a check-box on whether to include on a contribution statement.

However, in your case, one idea is to always have the the non-deductible contribution funds that you want to put on a contribution statement as visible on contribution statement, but then restrict the range of fund numbers when running the contribution statements (as I described above). This would allow you to run two separate contribution statements batches.
One for deductible, one for non-deductible. You can also have different contribution statement formats saved when creating, so you can then have it say different things.

By doing it at the contribution fund level, you do not have multiple 'people' or multiple envelope numbers. it is all tied to one person, one envelope.
It also makes reporting easier to find out how much was given via non-deductible methods, as now the sorting is at the contribution fund level, not multiple envelope level.

For example:

General operating expenses contribution fund 100 - (considered deductible donations)
General operating expenses contribution fund 5100 - (considered non-deductible sources)
Both funds point to the same accounting funds. When I run contribution reports, I can see how much is given via non-deductible methods.

if I run certain reports on an individual envelope number, I can show their contributions to all funds, including the non-deductible ones. When I generate annual contribution statements, I restrict the statements to funds up to 4999, which omits anything non-deductible.
In your case, you could allow it such that you run a second batch of contribution statements for funds 5000 and over (or some other defined fund number) that are for the non-deductible contributions.

Hope this gives some insight how I would approach the problem.

[pvmchurch]

Thanks very much! It's helpful to hear that you do it that way. The issue for me would be duplicating all of our contribution funds--we easily have dozens. (We use a different one for each Sunday School class, special project, etc... I didn't set it up......!) But if we don't find a better way, we may try that.

[sgbani]

Thanks very much! It's helpful to hear that you do it that way. The issue for me would be duplicating all of our contribution funds--we easily have dozens. (We use a different one for each Sunday School class, special project, etc... I didn't set it up......!) But if we don't find a better way, we may try that.

I fully understand. We have many contribution funds as well, plus on top of that, a number of designations available to certain contribution funds.
However, organizing the contribution data by using different Contribution Funds, in my opinion, is the better choice. it is a bit of effort to organize properly, but once done correctly, it makes the reporting and posting to fund accounting much easier.

I am willing to hear other ideas / suggestions, because that would potentially help us out as well, but I cannot think of any other straightforward approach.