Offsetting pledge

Tim Bodamer

We have an  unusual situation where a major donor will commit (i.e. $5M) for a special project. But our fundraising team is tasked to also fundraise to offset the aforementioned "seed money" So, the $5M will be reduced by the amount of follow-up commitments. So, my question is how to treat the pledges. We want to give credit to the donor but not have it appear as a write off when other dollars come in. In a perfect world, the original donor would give a small amount and we fundraise to match the remaining goal. Do any of you run into this situation? We don't want  to  diminish the donors' commitment but rather incorporate the secondary commitments to the original goal (if that makes sense)? Any best practices will be appreciated.

Melissa Nelson 2

Hi, Tim -


We haven't had to deal with this specific situation, but it sounds like a good choice for you folks would be to enter the pledge for the full $5M and make a gift adjustment to that pledge each time it needs to be reduced due to a secondary commitment being made. This way the changes won't show up in your system as a write-off, however, the pledge amount will be changed per the donor's intent, and in the "notes" field of the adjustment record you can list information for each follow-up gift which resulted in the corresponding adjustment of the original pledge amount for your own tracking purposes.

Using the gift adjustment function also means that any changes to that pledge amount will be properly reflected in your reconciliation for the month in which it was made, for example, if you reduce the seed pledge by $500k in January due to a follow-up pledge being made and also add said new $500k pledge to RE in January, your organization's pledge balance will remain stable for the month of January while each donor's record is properly reported.


An example of how we use this at our organization is when a donor makes a pledge, then makes payments on that pledge through a charitable giving fund. As the pledge payment is entered under the charitable fund's constituency with a soft credit to the donor, it does not automatically reduce the donor's pledge commitment. So we go in, add a reference line on the pledge of "Original Pledge X$, Paid by FDN, see adjustment notes", make an adjustment to reduce the pledge by the proper amount with an adjustment date in the current month, and add a line in the adjustment notes indicating how much was paid, via which charitable fund, and the date. This way the donor receives accurate pledge reminders while the payment is not improperly entered as having come directly from the donor when it was actually a soft credit, and our overall pledge vs. revenue amounts remain stable for the month.


As far as incorporating secondary commitments to the original goal, if you enter the original pledge under a unique fund for this project (or appeal, campaign, or whichever way your organization tracks such things), and enter all of the secondary commitments with the same unique fund, you will be able to report on all of the pledges made for this project together without having each individual's pledge incorporated into one gift. And, again, as you enter new pledges to the fund and adjust the original seed pledge down, that overall $5M fund amount will remain stable.


This was a very convoluted answer on my part -- I hope I understood your question properly and that this all makes sense!