Soft Credits
Soft credits are acknowledgments in a donor's contribution record to recognize their indirect role in facilitating a donation. However, soft credits do not qualify as tax-deductible donations because they do not represent a direct financial contribution from the credited individual to the charitable organization.
- Foundation – If the Gilmore Family Foundation donates $10,000 to a church, Jane Gilmore may request that her account be "soft credited" to show that she influenced the foundation's decision.
- Matching gift – If Angela Smith gives $100, triggering a match for her employer to give $100, then Angela may receive a soft credit of $100 for the matched funds.
IRS Guidelines on Soft Credits
- The donor did not own or control the funds being given.
- The donation is legally attributed to another entity or individual, such as the foundation or employer.
Soft credits cannot display as deductible donations on tax statements because the IRS does not recognize the soft-credited party as the donor of record.
Implications for Contribution Statements
- Separate soft credits from tax-deductible donations, indicating that soft credits are for informational purposes only and are not included in the donor's deductible donation totals.
- Include descriptive language. For example, "Soft credits are shown as an acknowledgment of your influence in facilitating the donation. These amounts are not tax-deductible and do not display in your deductible donation total."
- Donations may be assigned to the actual donor's statement and the donation distributions may also be assigned to the soft donor's statements. All soft credit donations display on their own separate page on their respective statements.
Soft Credits in MinistryPlatform
MinistryPlatform has a special Soft Credit Donor field on the Donation Distribution record to help churches track these. This is where you can select the donor who receives soft credit.
As an option, you can include soft credit donations on a separate and dedicated page of the soft credit donor's standard statement. The donation does not display on the soft credit donor's statement. Instead, it displays on the primary donor's statement with no indication that a soft credit was entered.
Staff users can see which donations are "credited" to each donor by viewing the Soft Credit Donation tab on the Donor record or the Soft Credits tab on the page.