What is the difference between a hard credit and a soft credit, and when would you use each?

The hard credit answers who legally gave the money. The soft credit answers who made it happen.

1. The hard credit sits on the Gift Transaction itself and belongs to the legal donor — the foundation, the donor-advised fund, the company.
2. A Gift Soft Credit attributes influence to a person or organisation that is not the donor: the board member who made the introduction, the spouse who signed the appeal, the employee whose employer matched the gift.
3. You use soft credits for portfolio management and relationship reporting. You never use them for financial reporting, because two people crediting the same $10,000 would double-count revenue.
4. There is a defaulting layer worth knowing: gift default soft credits can be configured so that commitments generating transactions automatically credit the constituents who influenced them, which saves a great deal of manual attribution on recurring gifts.
5. The practical advice I give clients is to write the rule down. “Who gets soft credit for a matched gift?” is a policy question, and if it is not agreed, two gift officers will answer it differently.