The discussions I’ve had with a few nonprofits about tracking and recording soft credits in the CRM (Constituent Relationship Management) served as the basis for this post. 

When a nonprofit receives donations, it should keep track of the different types of credit it receives, such as hard credit and soft credit. 

Hard credits are straightforward: when an entity, be it an individual or an organization, makes a donation to a non-profit, the entity receives a hard credit for the donation. Hard credit is granted only to the legal entity that donated its own funds.

Soft credits, on the other hand, are a way to track a donor’s contribution to a nonprofit organization when the donor is not the primary contributor. This credit type is assigned to an entity that may not have made a direct donation but has had a significant impact on the decision to make a donation to your organization. 

Soft credits may be assigned to entities in the following situations:

• donor eligible for an employer matching gift
• board member for a contribution they solicited
• business owner for their company’s contribution
• fundraiser for the donations they raised via their peer-to-peer campaign page
• committee member for a sponsorship gift for an event
• spouse, if the check has been signed by the other spouse 
• volunteers for the funds they raise 

In any of the above scenarios, soft credits should be assigned to donation entries in your CRM. Similar to hard credits, soft credits also require an acknowledgment letter or note. However, since soft credits are not tax deductible, no receipt is required.

Recording and tracking of soft credits allow for more effective recognition and management of constituents. This also provides further insight into a constituent’s involvement with an organization and can help nonprofits strengthen donor relationships. Hence, this valuable information is crucial for a nonprofit’s long-term fundraising and outreach goals.