For the check that says "Fidelity Charitable" with a family's name on the stub
Donor-advised fund grant thank-you letters: who gets the receipt, and what to say to the person who recommended it
A grant from a donor-advised fund is legally a gift from the sponsoring charity, not from the family named on the check. They took their tax deduction when they funded the account, so a normal "no goods or services were provided in exchange for your contribution" receipt is wrong for them and can get them in trouble. What they should get is a warm thank-you that says it is not a receipt; what the sponsor may ask for is a short grant receipt confirming nobody received a benefit. Both templates are below, with the rules behind them.
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Who sends what to whom
| Document | From | To | Says |
|---|---|---|---|
| Tax receipt for the original contribution | Sponsor (Fidelity Charitable, community foundation…) | The account holder | Amount, date, no goods or services. Already done before you ever see the money |
| Grant letter or check stub | Sponsor | Your organization | Fund name, amount, purpose, often the advisor's name and address (or "anonymous") |
| Thank-you to the advisor | You | The person who recommended the grant | Thanks, the amount and fund, what it funds, "this is not a tax receipt", no goods or services provided to you or the fund |
| Grant receipt to the sponsor | You | Sponsor's grants department (if requested) | Received on date, amount, used for charitable purposes, no benefit to any advisor or related party, no pledge satisfied, 501(c)(3) status |
| Year-end giving statement | You | The advisor | List DAF grants in a separate section labelled "grants recommended through donor-advised funds (not deductible to you)", apart from their own cash gifts |
Five things that go wrong
- Sending the advisor a receipt. It states a contribution they did not make to you and tempts a second deduction. Replace the receipt language with the not-a-receipt paragraph.
- Letting a grant buy a benefit. Gala tickets, auction items, golf foursomes, memberships with perks, or the "deductible half" of a ticket are more than incidental benefits (IRC §4967; Notice 2017-73). The advisor pays for those personally.
- Writing "in payment of your pledge". You may privately treat the pledge as satisfied, but neither you nor the sponsor should document the grant as paying it (Notice 2017-73).
- Hard-crediting the person. In your books and on Form 990 Schedule B the donor is the sponsor; the person is a soft credit. Get this wrong and your top-donor list and your Schedule B disagree.
- Mailing the sponsor receipt to the advisor. The sponsor's grants team wants it; the advisor finds it baffling. Two documents, two addresses.
Thank-you letter to the person who recommended the grant
Warm, specific, and explicit that it is not a receipt. Stating the amount is fine; calling it their deductible gift is not.
[Organization legal name] [Mailing address] EIN [00-0000000] [Date] [Advisor name] [Advisor address] Dear [Advisor first name], Thank you for recommending a grant of $[amount] to [Organization name] from the [Fund name] at [Sponsoring organization, e.g. Fidelity Charitable]. We received the grant on [date received] and it will support [program or "our general operations"]. This letter is a thank-you, not a tax receipt. Because your charitable deduction was taken when you contributed to [Sponsoring organization], no additional deduction is available for this grant, and no goods or services were provided to you, to any family member or to the fund in connection with it. [One or two sentences about what the grant makes possible.] With gratitude, [Signer name] [Title]
Grant receipt to the sponsoring organization
Send only if the sponsor asks (many do for larger grants). Keep the no-benefit and no-pledge sentences; they are the point.
[Organization legal name] [Mailing address] EIN [00-0000000] [Date] [Sponsoring organization] [Grants department address] Re: Grant [reference number] from the [Fund name] [Organization name] gratefully acknowledges receipt on [date received] of a grant of $[amount] from [Sponsoring organization], recommended by the advisor(s) of the [Fund name]. The grant will be used exclusively for charitable purposes, specifically [program or "general support"]. No goods, services or other benefits were or will be provided to the fund, to any donor or advisor to the fund, or to any related party in connection with this grant, and the grant does not satisfy a legally binding pledge of any individual. [Organization name] is a public charity exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code and is not a private foundation, a supporting organization or a donor-advised fund sponsor. Sincerely, [Signer name] [Title]
Note for anonymous grants
When the sponsor withholds the advisor's identity, a line in your newsletter or annual report is the only way to say thank you.
We also received a $[amount] grant on [date] from [Sponsoring organization] recommended anonymously by one of its account holders. If that was you: thank you. We cannot send a receipt (your deduction was taken when you funded the account), but we would love to tell you what the grant did — reply to this message or call [phone].
DAF grants and cash donors from the same spreadsheet
Put the advisor's name in the Donor column and the fund or sponsor in a Notes, Fund or Source column (for example Fidelity Charitable – Smith Family Fund, or simply DAF). The generator recognises the major sponsors and the words "donor-advised", prints the amount with the not-a-tax-receipt paragraph, leaves out the "keep this with your tax records" line, and flags the row so the hard credit goes to the sponsor. Everyone else in the file gets a normal receipt. Export as PDF, Word or a mail-merge CSV.
Pasting the sponsor's own grant report (Fidelity Charitable, DAFgiving360, Vanguard Charitable, Daffy, Charityvest, a community foundation's grant export) works as-is: the Recommended By / Advisor Namecolumn becomes the addressee, Giving Account Name / Account Holder go into the notes, every row gets the DAF wording even when no cell says "donor-advised", and a Recognition = Anonymous row is skipped with a note instead of a letter to nobody.
Donor-advised fund questions
Who is the donor when a grant comes from a donor-advised fund?
The sponsoring organization. A donor-advised fund is an account owned and controlled by a public charity such as Fidelity Charitable, Schwab Charitable (now DAFgiving360), Vanguard Charitable, National Philanthropic Trust or a community foundation (Section 4966(d)). The individual who opened the account gave their money to that charity, took their deduction then, and now only has advisory privileges over where grants go. When the grant check arrives, the sponsor is the legal donor and the person named on the check stub is the advisor.
Do we send the advisor a tax receipt?
No. The advisor already received a contemporaneous written acknowledgment from the sponsor when they funded the account, and nothing is deductible to them a second time. Sending a letter that says "no goods or services were provided in exchange for your contribution of $5,000" invites a double deduction and is wrong on its face: they did not contribute $5,000 to you. Send a thank-you that states the amount if you like, names the fund, and says clearly that it is not a tax receipt.
Should we still say that no goods or services were provided?
Yes, and it matters more here than in a normal receipt. Section 4967 imposes an excise tax on an advisor who receives a more than incidental benefit because of a DAF grant, and on the sponsor's managers who knowingly allow it. Sponsors therefore ask grantees to confirm that no benefits went to the advisor. Put the statement in both letters: to the advisor ("no goods or services were provided to you, to any family member or to the fund") and to the sponsor.
Can a DAF grant pay for gala tickets, auction items or a membership?
Not if the advisor gets the benefit. Tickets, dinners, auction purchases, golf, and memberships with real perks are more than incidental benefits. IRS Notice 2017-73 also says a grant cannot be split so the DAF pays the deductible portion of a ticket while the advisor pays the fair-market-value portion. If an advisor asks, the safe answer is: pay for the ticket personally and recommend a separate grant for the gift element. Memberships whose only benefits fall under the insubstantial-benefit limits are generally fine; when in doubt, ask the sponsor.
Can a DAF grant satisfy a pledge the advisor made?
Under Notice 2017-73 the IRS will not treat a grant as conferring a prohibited benefit merely because the advisor had made a pledge, provided three things are true: the sponsor makes no reference to the pledge when it sends the grant, the advisor receives no other more-than-incidental benefit, and the advisor does not try to deduct the grant. Practically: do not write "in payment of your pledge" in the advisor letter, do not send the sponsor a pledge invoice, and you may still mark the pledge as fulfilled in your own records.
What date do we record for a DAF grant?
The date the sponsor issued the grant (the check date or ACH date), not the date the advisor logged in and recommended it. The gift belongs to the sponsor's tax year, which does not affect the advisor at all, so year-end timing pressure disappears; the advisor's deduction happened when they funded the account. Tell advisors who want a grant to arrive before December 31 that most sponsors need the recommendation by early to mid-December.
How do we record a DAF grant in our donor database or spreadsheet?
Hard credit (the legal gift) to the sponsoring organization; soft credit (recognition) to the advisor. On Form 990 Schedule B the contributor is the sponsor. In your mailing list the advisor is the human relationship: they get the newsletter, the impact report and the invitation to give again. If the sponsor withholds the advisor's name (anonymous grants), record the sponsor only and thank them through the sponsor's anonymous-donor channel if it has one.
Do we have to send the sponsor anything?
Usually nothing is legally required, because the sponsor is a public charity that is not deducting the grant. Many sponsors nevertheless ask for confirmation of receipt and of no advisor benefit, especially for larger grants, and community foundations often require a brief grant report. The sponsor receipt above covers what they ask for. Send it to the grants address on the check stub or portal, not to the advisor.
What about a grant from a private family foundation?
Same logic, different statute. The foundation is the donor and needs no receipt for its own deduction, but it must show the grant was for charitable purposes and conferred no benefit on its disqualified persons (self-dealing, Section 4941). A receipt to the foundation stating the amount, date, purpose and that no goods or services were provided to the foundation or its insiders is appreciated and sometimes required by the grant agreement. Thank the family separately without tax language, exactly as for a DAF advisor.
Can a donor make a qualified charitable distribution from an IRA to a DAF, or to us?
To you, yes; to a DAF, no. Section 408(d)(8) excludes donor-advised funds, supporting organizations and private non-operating foundations from receiving qualified charitable distributions. A QCD that comes to you directly from the IRA custodian is a cash gift from the IRA owner and gets a normal acknowledgment with the no-goods-or-services statement and the amount; the owner needs it even though a QCD is excluded from income rather than deducted.
Does the 2026 deduction for non-itemizers cover gifts to a DAF?
No. The new above-the-line deduction for people who take the standard deduction (up to $1,000, or $2,000 on a joint return, starting with 2026 returns) is limited to cash gifts to public charities and specifically excludes contributions to donor-advised funds and supporting organizations. That is one reason a smaller donor may prefer to give to you directly rather than through a fund; it does not change anything about how you acknowledge a grant that does arrive through a DAF.
How does the generator handle DAF grants?
Put the advisor's name in the Donor column so the letter is addressed to a person, and put the fund or sponsor in a Notes, Fund or Source column (or type "DAF" there). The engine recognises the common sponsors and the words "donor-advised" and "DAF", prints the amount with a paragraph saying the letter is not a tax receipt and no additional deduction is available, drops the "keep this letter with your tax records" line, and flags the row so you remember the hard credit goes to the sponsor. Mixed batches are fine: cash donors in the same file still get normal receipts.
General information based on Internal Revenue Code §170(f)(8), §170(f)(18), §170(p), §408(d)(8), §4941, §4966 and §4967, IRS Notice 2017-73 and IRS Publication 1771. Not legal or tax advice; advisors and sponsors should confirm their own treatment with a tax adviser.