What is the difference between revenue and recognition credits?

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This document serves as a quick reference guide to help understand the differences between revenue and recognition.

Revenue

  • Revenue represents the actual payment (cash, check, stock, etc) made on a donation, pledge, matching gift, etc.
  • Revenue will be applied to only one constituent (individual or organization) per transaction.

Recognition Credits

  • Recognition credits represent the way we recognize constituents for one particular revenue transaction.
  • Recognition Credits are mainly used to calculate an individual constituent’s eligibility for recognition programs like the Bascom Hill or Middleton Societies.
  • Multiple recognition credits can be applied to a given revenue transaction.

Five recognition credit types

  1. Self – Applied to the constituent making a gift on his or her own behalf or by an organization on its own behalf. The amount of recognition applied is equal to the revenue amount. Only one self recognition credit may be applied to a given revenue transaction.
  2. Spouse – Applied to the spouse only when a “joint gift” is made and the spousal relationship or life partner relationship is indicated. Only individuals can receive this type of recognition credit. The amount of recognition credit applied is equal to the payment/revenue amount. Only one Spouse recognition credit may be applied to a given revenue transaction.
  3. Donor Directed - Applied to an organization when an individual or company makes a gift through an organization. Usually only found on an organization’s record. The amount of recognition credit applied is equal to the payment/revenue amount. Only one Donor Directed recognition credit may be applied to a given revenue transaction.
  4. Matching Company – Applied to an organization when an individual’s gift is matched. Only found on an organization’s record. The amount of recognition credit applied is equal to the payment/revenue amount. Only one Matching Company recognition credit may be applied to a given revenue transaction. Acknowledgement letters will be sent to soft credit recipients to notify them that the match has been received.
  5. Soft – Applied to both individuals and organizations mainly in conjunction with Donor Directed and Matching Company recognition credits. The amount of recognition credit applied is equal to the payment/revenue amount. One or more Soft recognition credits may be applied to a given revenue transaction. Acknowledgement letters will be sent to soft credit recipients to notify them that a gift has been received on their behalf.

Examples

1. Mary and John Smith make a “joint gift” of $100. The revenue/payment will be recorded on only one of the constituent records in the household (Mary in this case) and $100 in recognition credit will be given to each. The recording of this donation will be as follows:

  • Revenue
    • Mary Smith - $100
  • Recognition Credit
    • Mary Smith - $100 Self Recognition Credit
    • John Smith - $100 Spouse Recognition Credit

2. Gary Johnson owns ABC Company and makes a gift of $5,000 through the company. The revenue/payment will be recorded on ABC Company’s record. $5,000 in recognition credit will be given to both ABC Company and Gary. The recording of this donation will be as follows:

  • Revenue
    • ABC Company - $5,000
  • Recognition Credit
    • ABC Company - $5,000 Donor Directed Recognition Credit
    • Gary Johnson - $5,000 Soft Recognition Credit

3. In the above scenario, if Gary is married to Lisa Johnson and they make a “joint gift”, the recording of this donation will be as follows:

  • Revenue
    • ABC Company - $5,000
  • Recognition Credit
    • ABC Company - $5,000 Donor Directed Recognition Credit
    • Gary Johnson - $5,000 Soft Recognition Credit
    • Lisa Johnson - $5,000 Soft (not Spouse) Recognition Credit

4. Jane Williams works for IBM, makes a $500 donation and informs us that IBM will match this gift 2:1. The recording of this donation (assuming all payments are received) will be as follows:

  • Revenue
    • Jane Williams - $500 for original donation
    • IBM - $1,000 for matching payment made
  • Recognition
    • Jane Williams - $500 in Self Recognition Credit for original gift and $1,000 in Soft Recognition Credit once the match is paid
    • IBM - $1,000 in Matching Company Recognition Credit

5. Jim and Sue Anderson make a $1,000,000 donation through the Anderson Family Foundation. The revenue/payment will be recorded on the Anderson Family Foundation’s record. $1,000,000 in recognition credit will be given to the Anderson Family Foundation, Jim Anderson and Sue Anderson. The recording of this donation will be as follows:

  • Revenue
    • Anderson Family Foundation - $1,000,000
  • Recognition Credit
  • Anderson Family Foundation - $1,000,000 Donor Directed Recognition Credit
    • Jim Anderson - $1,000,000 Soft Recognition Credit
    • Sue Anderson - $1,000,000 Soft (not Spouse) Recognition Credit

6. In the above scenario, if Jim or Sue has siblings that also “gave” the $1,000,000 donation, $1,000,000 in Soft Recognition Credit could be applied to each sibling’s record.

7. Jenny and Bob Richards make a $10,000 donation through their fund they hold with Fidelity Charitable. The revenue/payment will be recorded on Fidelity Charitable’s record. $10,000 in recognition credit will be given to the Fidelity Charitable, Jenny Richards and Bob Richards. The recording of this donation will be as follows:

  • Revenue
    • Fidelity Charitable - $10,000
  • Recognition Credit
    • Fidelity Charitable - $10,000 Donor Directed Recognition Credit
    • Jim Anderson - $10,000 Soft Recognition Credit
    • Sue Anderson - $10,000 Soft (not Spouse) Recognition Credit
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Comments

  • Avatar
    Maureen Brady

    Thanks, Tom. It would be great if you gave a specific example of how a pledge worked here, too - and how to view it on the system. Thanks!

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