Every donation counts. More importantly, every donor counts. That’s why it’s important to always recognize and thank your donors whenever they make a gift—no matter what form that gift takes or whether they are, technically speaking, the person who made it.
Enter: Soft credits. These are a way to assign recognition within your donor database to make sure that all your supporters are getting all the credit they deserve for all the ways they lift your organization up.
If you aren’t using soft credits in your nonprofit CRM, it’s time for that to change. In this post, we’re going to talk about what soft credits are, why they’re important, and give you a peek into how they work in Neon CRM.
What are Soft Credits?
Soft credits are a way to note in your CRM that someone influenced a gift to your nonprofit, even if they weren’t the person to actually make the donation.
Some common examples of soft credits include:
- Matching or Third-Party Gifts: When someone makes a gift to your nonprofit and their employer then makes a matching gift, a soft credit on the original donor’s account recognizes they’re the reason you received the second gift. Similarly, soft credits can properly attribute donations from a donor-advised fund or a third-party organization like United Way to the appropriate individual in your database.
- Household Giving: There are many cases where multiple members of a household—say, a husband and wife—both support your nonprofit, but their donations only ever come from one of them. Soft credits can make sure those other household members don’t get forgotten about.
- Gifts in Honor/Memory: When someone makes a gift with a note that it’s being made in honor of another person or in their memory, soft credits let you record that acknowledgment. They can also be used when donations are being made as a gift to someone else.
- In-Kind Donations: When someone has donated items to your organization in lieu of cash gifts, you can use soft credits to assign the dollar value of those donations to their account. This allows you to have a clearer overall picture of their support.
Basically, if someone in your donor database should be receiving at least partial credit for a given donation, adding a soft credit to their profile will do that.
Why Are Soft Credits Important for Fundraising?
If you want to build a comprehensive fundraising strategy in 2024, you need to understand your donors. You need to know where and when they want to hear from you, what sorts of stories they want to hear, and all the ways that they’ve been involved with your nonprofit in the past.
Soft credits can help. By making sure that credit for gifts is properly attributed in your database, you can better understand individual donors in ways that will affect your appeals to them.
Building up your store of donor data is deliberate, painstaking work. But using soft credits can make the job a little bit easier by ensuring that none of your current supporters fall through the cracks.
2 Examples of Soft Credits in Action
Using soft credits in your database is the kind best practice that it’s easy to ignore. After all, these credits are soft; how important could they really be?
Pretty important, actually! But since the importance of soft credits lies in the story they tell about a given donor, we’ve decided to use a couple hypothetical examples to help explain their importance.
Example #1: No Soft Credits
Here’s an example of the kinds of awkward mix-ups that soft credits were invented to avoid.
Susan subscribes to your nonprofit’s weekly newsletter and comments on your Facebook posts—but you don’t have any record of her giving to your nonprofit. Your fundraising team is excited to send her an appeal aimed at converting first-time givers.
You send her this first-time givers email, and then you receive a confused reply in your inbox from Susan stating that she and her wife, Debbie, have been donors to your nonprofit for years.
The donations come from Debbie’s credit card with a note saying that Susan is a huge fan of your work. But, despite these thoughtful tributes, Susan was never afforded any credit for these donations in your CRM.
Susan is clearly hurt, and now your executive director has to spend time and energy repairing this relationship that she was hoping to spend on growing your donor base.
Not great!
Example #2: Soft Credits Galore
Okay, now let’s revisit this scenario in a happier timeline where your nonprofit uses soft credits:
When Susan opens her email inbox, she sees a message from your nonprofit announcing your new monthly giving program and inviting her to join.
Thanks to the soft credits in her account for all of Debbie’s gifts, you know that Susan has given on 11 separate occasions in the past and is ready to become a monthly donor.
Susan and Debbie sign up immediately and share the good news on their social channels inspiring three newsletter signups and a small one-time gift.
In a shocking twist ending, your executive director breaks her hand from high-fiving you too hard.
That was much better! And, over time, small strategic wins like these ones add up to a dynamite, data-driven fundraising strategy. That’s the power of soft credits.
Here’s How Soft Credits Work in Neon CRM
There’s a ton of stuff that you can do with soft credits in Neon CRM.
First off, soft credits aren’t limited to donations. You can add them for event registrations and membership as well. And adding them is a cinch!
Add Soft Credits
Once you’ve entered a donation (or event registration or membership) as normal and you’ve reached the donation summary, just go to the top of the page and click “Add Soft Credit.”
On the next page, you can add your soft credit recipient from your database, select the amount of the donation that you wish to credit to them, add an optional note, and choose to send your soft credit recipient a thank-you by email or post.
Create Soft Credit Distribution Rules
For regular donors, you can create distribution rules that will always apply soft credit to the appropriate account for donations that meet the criteria you set out.
Run Soft Credit Reports
To get a full view of your existing soft credits in your Neon CRM, you can run a dedicated Soft Credit Report that lets you see your credits across all transaction types (donations, event registration, and membership).
If you only want to see soft credits for a certain transaction type—let’s say you’re only interested in seeing credits tied to event registrations—you can use the Soft Credit search feature in your transaction-based reports.
This is only scratching the surface. If you want the full deep dive on using soft credits in Neon CRM, check out this support article.
And if you’re curious about Neon CRM in general, join one of our regularly scheduled 30-minute group demos. See you there!
Soft Credits are Critical for Matching Gifts
Soft credits are just one tool among many that you can use to track donor behavior in your CRM, but they’re especially critical for executing a matching gift strategy.
If you’re looking to overhaul your matching gifts program, this checklist from Neon One and Double the Donation can help. Download the checklist today!
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