For tax purposes, donors may make large contributions to an organization or foundation but not specify how the money is to be spent. The money from such donations is held temporarily in a Donor Advised Fund. Over time, the donor allocates money from the Donor Advised Fund to the organization's other funds.
This topic describes how Aptify tracks Donor Advised Funds and allocations made from a Donor Advised Fund.
It covers the following sub-topics:
- Creating Donor Advised Funds
- Allocating Money from Donor Advised Funds
- Reversing a Donor Advised Fund Allocation
Creating Donor Advised Funds
A donor's initial contribution is recorded via a Pledge in Aptify. Typically, an organization should create a specific Fundraising Campaign and Fund (with its own credit general ledger (GL) account) to track a large donation that is being used to fund a Donor Advised Fund. See Creating Funds, Creating Fundraising Campaigns, and Managing Pledges for information on these topics.
Once the donation has been recorded to the GL account, follow these steps to create Donor Advised Funds in Aptify:
- Open a new record from the Donor Advised Funds service.
- Select the Donor Type.
- Donor types can be either Individuals or corporations.
- Specify a Name for the Donor Advised Fund record.
- Specify the fund to which the donation has been initially allocated in the Fund field.
- This identifies the Fund where the donor's contribution currently resides until it is allocated for other purposes in the future.
- Enter the Manager, who is the employee who oversees this Donor Advised Fund.
- If needed, modify the currency in which you want the Donor Advised Fund to be based in the Currency Type field.
- When opening a new Donor Advised Funds record, the Currency Type field defaults to your organization's functional currency or the system's default currency if an organizational currency is not specified. You can modify the currency type as needed to create Donor Advised Funds in a different currency.
- If an Individual Donor Type, specify the donor for the fund in the Donor field. If a Corporate Donor Type, specify the Donor Company and a contact person at that company.
- On the General tab, specify the Date Launched, if different from today's date.
- Specify an Expiration Date for the fund, if applicable.
- Save the Donor Advised Funds record.
- Note that the Threshold field and the fields on the Notifications tab do not drive system functionality by default. These fields are provided to be used in conjunction with Aptify's Process Pipeline technology to automate processes related to Donor Advised Funds. See Managing Process Pipelines for details.
Allocating Money from Donor Advised Funds
Once a Donor Advised Fund record is created, a user can track allocations made by the donor out of the Donor Advised Fund and into other funds. In some cases, an organization may propose an allocation to the donor that the donor later either approves or rejects. Or, the donor may later choose to cancel this allocation.
The steps below describe how to track an allocation to another fund. See Reversing a Donor Advised Fund Allocation if the allocation is later rejected.
Follow these steps to create an allocation:
- Open the Donor Advised Funds record.
- Click the Allocations tab.
- Click the New icon to open a new Donor Advised Fund Allocations record.
- The Donor Advised Fund field is filled in automatically.
- You can also open new records directly from the Donor Advised Fund Allocations service. In that case, enter the Donor Advised Fund in the field provided.
The Currency Type field on the Donor Advised Fund Allocations record is determined by the currency specified on the Donor Advised Funds record and is always disabled. When a new record is opened from the Donor Advised Fund Allocations service, the Currency Type field defaults to your organization's functional currency, when specified, or the system's default currency. When a Donor Advised Fund is specified in the Fund field, the Currency Type field is populated with the currency associated with the Donor Advised Fund.
- Select the Allocation Mode: Fund or International Support Fund.
- If money is being allocated from the Donor Advised Fund to a standard organizational fund, select Fund.
- If money is being allocated from the Donor Advised Fund to an international support fund that has its own International Support Funds record, select International Support Fund.
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- See Managing International Support Funds for more information.
- See Managing International Support Funds for more information.
- If you selected Fund as the Allocation Mode, enter the Fund to which money is being allocated.
- If you selected International Support Fund as the Allocation Mode, enter the International Support Fund to which money is being allocated.
- If this allocation is being made to a fund that provides money for a Grant, enter that Grant in the field provided.
- Donor Advised Fund allocations that specify a Grant are included in a Grant's Balance calculations. See Managing Grants for details.
- On the General tab, modify the Date Recommendation Received (the date the request to make the allocation was received) and Date Allocated (the date money was allocated to the specified fund) fields, as necessary.
- By default, these fields default to today's date.
- If the donor specified that he or she would like to control where the funds are allocated, clear the Donor Releases Control option. Otherwise, leave this option selected.
- If money is being allocated to an International Support Fund, this option determines to which fund the money is transferred. If the donor releases control, the money is transferred to the International Support Fund's Unrestricted fund. If the donor does not release control, then the money is transferred to the International Support Fund's Restricted fund.
- See Managing International Support Funds for details.
- Specify the amount allocated from the Donor Advised Fund to the specified fund in the Amount field.
- Add any additional information about this allocation on the Comments tab.
- Save the Donor Advised Fund Allocation record.
- Aptify will generate the corresponding Scheduled Transaction to debit the Sales GL account for the Donor Advised Fund and credit the Sales GL account for the specified fund.
- Aptify automatically generates the Scheduled Transactions record and adds the ID for that record to the Donor Advised Fund Allocation record's Scheduled Transaction field.
- To review the details of the transaction, click the Scheduled Transaction hyperlink to open its corresponding record.
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- Note that the scheduled transaction is expressed in the currency type of the allocation.
- Note that the scheduled transaction is expressed in the currency type of the allocation.
- Aptify automatically generates the Scheduled Transactions record and adds the ID for that record to the Donor Advised Fund Allocation record's Scheduled Transaction field.
- Save and close all open records.
Reversing a Donor Advised Fund Allocation
If a donor later rejects or cancels an allocation after a Donor Advised Fund Allocation record has been saved, follow these steps to reverse the allocation:
- Open the Donor Advised Fund Allocation record.
- Change the Approval Status from Approved to Rejected.
- Save the record.
- When prompted, click OK to process the reversal.
Aptify automatically generates the Scheduled Transactions record to reverse the originally scheduled transaction and adds the ID for that record to the Donor Advised Fund Allocation record's Reverse Scheduled Transaction field.
- To review the details of the transaction, click the Reverse Scheduled Transaction hyperlink to open its corresponding record.
- Save and close all open records.
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