Multi Year Pledges and future gifts

Alicia Van Straten

Two questions with what I think may be the same answer but want to see what everyone else does.  We have not found a good way to accurately record pledges that will get paid out over a number of years.  Donor pledges $10,000 to be paid over 5 years.  If we put the full pledge in now, it will hit our revenue for this fiscal year even if I set the installment date out for 5 years.  So, when goal setting or planning, we have to constantly exclude that full gift.  How do you best track/record it.  Do you do 5 seperate gifts with 5 different campaigns (each fiscal year out a payment should come in?)



Also, on that same note... our fiscal year ends June 30.  We have worked really hard on totally revamping our campaigns/appeals to create a truer picture of actuals and projections and from where.  So, we are obviously making asks for our next fiscal year that starts July 1.  If a gift comes in with a purpose to get spent out in next fiscal year (scholarship/project...) do I just create the next years campaigns/appeals and enter gifts/proposals under that campaign?  (we use the actions tab for proposal as we do not have any prospect modules)



Thank you in advance for any help!!

 

Marie Tuhy

It took implementing another system (not RE) to look at multi-year pledges in a whole new light. That "other systems didn't allow multi-year pledges made with one gift, which made me look at multi-year pledges very differently. Each installment had to be individually tied to the appropriate fiscal campaign which kept the accounting super clean, and our financial analyst LOVES that he can quickly view projected income throughout the FY and beyond.



For one example of this, if a donor pledged a 5-year gift at the annual luncheon for $5,000 ($1k per year) it would be broken up into 5 x $1k gifts--the "other system" viewed future installments as a fiscal restriction--the money for 2016 was intended to be spent in 2016 and so that portion was indidvidually entered as a 2016 pledge. What RE does brilliantly is everything can be tied back to the appeal. So any multi-year pledges made this year would carry the 2015 Annual Luncheon appeal through all five years. The campaign might be 2016, but the appeal will still have "2015 Annual Luncheon"--that way the money is counted and reported in the correct fiscal year, the projection reports are very clear, and the appeal gets the credit it deserves. We can still tell what the 2015 luncheon made in total based on an appeal report, but then we can break down what each fiscal gets from the luncheon income based on campaign reports. 



As for 2016 gifts that arrive in FY15, we worked with the finance team to clarify the system. Basically the gift is coded for the 2016 campaign and put into a restricted GL account in 2015 and then the funds are released in 2016. This happened a lot more with grants than individual gifts for us at least--the grant funding would come in during FY15 for an FY16 project and had to sit "on hold" until 2016 although the donor was receipted immediately.



 I have applied the logic from the "other system" and it has changed my life! Really has simplified so much reporting and the finance department loves it. Another great tip: the "other system" had users build out campaigns at least five years out (or more if needed). This ended up being a great practice as it made tracking proposals and pledges for future projecs much more efficient (we have the proposals tab). I learned a lot from implementing that "other system" and have found applying a lot of their logic to RE has made RE function significantly better for my org!



Hope this helps! Good luck!

Nicole S

I'm not sure what to tell you except that think about your reporting and the pros and cons of one way versus another.  I imagine that many orgs do this lots of different ways.



We re-use our funds year to year.  Typically, I have worked at places that want to see reports on cash received for our development committee, board and others.  Our finance office handles most of the reporting regarding pledges this fiscal year and payments coming in over the next 5 years.  We do have some campaign codes that  change year to year.  This helps use track those gifts that come in early meant for a campaign falling in the next fiscal year.  For reporting purposes, we tend to use a footnote to indicate any areas of overlap and multi-year campaigns.  I have found that by keeping fund or campigns the same pulling numbers is easier.  If you cange BOTH each year it's much harder.



As Marie points out, you can use a variety of methods to figure out what works for you.

JoAnn Strommen

Alicia,

To me you can have two different situations with multi-year pledges. 



1.  A 5-year pledge made to a campaign/fund where that campaign/fund is open/used for 5-years.  We do these for our capital campaigns.  Payment schedule set for payments due each year, gifts posted to RE as received/accounts receiveable/long-term accounts receivable per our accounting procedures.  We've never had any issues reporting accurately on these. There are reports to show what is due for each of the 5 years.



2. For a multi-year pledge that will need to hit dfferent campaigns/funds it's not quite as clean.  When we have received gifts for upcoming campaign year, we have done as you said and gone ahead and created in RE the fund for the next year and put gifts there.  This was set up as procedure with accounting so they are aware of this and at end of fiscal year makes needed adjustments/notes for that deferred income.  Creating the fund needed to record future years is the cleanest way to me. 



My suggestion is work with your accounting office to get a workable plan.  Don't try to do the accounting in RE.



 

Nicole S

My suggestion is work with your accounting office to get a workable plan.  Don't try to do the accounting in RE.

 

Oh my god I wish I could like this answer 100 times!