Delete a Pledge Write-Off?

Theresa Dougherty · July 2016

Just discovered a situation I could use your opinion on -

1. Donors make a Pledge

2. Pledge then paid by donor's company

3. The original Pledge was written-off (Pledge-WO, one entry - not a pledge and then a corresponding write off) and Donor soft credited

4. Pledge Write-Off and Soft Credit balance each other out so can appear as no gift credited to the donor

So, should the orignal Pledge-WO be deleted? If not, how do we solve this problem?

Thanks!

JoAnn Strommen · July 2016

When we have that scenario, we enter gift on donor's company record, use option to apply to pledge and load in the pledge from the donor. We would also SC donor payment so that it shows on the gift tab of the donor's record and no question about the $0 balance. In most cases with a donor owned company records are set to SC automatically by us.

Don't know if write-offs matter to your org. I know in some cases write-offs are statistically looked at and having a lot can reflect negativiely. If the above entry doesn't work for you, I'd consider an adjustment to the gift and document in adjustment that pledge was paid by company.

Deleting the pledge can depend on if it was posted to your accounting and what effects that could have for them also.

My 2 cents...

Linda Allen · July 2016

Theresa Dougherty:

Just discovered a situation I could use your opinion on -

1. Donors make a Pledge

2. Pledge then paid by donor's company

3. The original Pledge was written-off (Pledge-WO, one entry - not a pledge and then a corresponding write off) and Donor soft credited

4. Pledge Write-Off and Soft Credit balance each other out so can appear as no gift credited to the donor

So, should the orignal Pledge-WO be deleted? If not, how do we solve this problem?

Thanks!

I do similar to JoAnn, I put the gift on the company record and use it to pay off the pledge. The tax receipt goes to the company and we continue to steward the donor for making the gift, the donor gets invites and shows on donor lists. We have this a lot and have asked donors how they prefer to be recognized. We also have some that pay pledges half and half (or family ones where multiple family memebers are making payments on one pledge) so this was a good way for us to keep track.

Our team has learned to look at the installment paid tab when pledges have a zero balance and no payments I do not SC these, the installment tab lists who the payment was made by.

Theresa Dougherty · July 2016

Linda Allen:

Theresa Dougherty:

Just discovered a situation I could use your opinion on -

1. Donors make a Pledge

2. Pledge then paid by donor's company

3. The original Pledge was written-off (Pledge-WO, one entry - not a pledge and then a corresponding write off) and Donor soft credited

4. Pledge Write-Off and Soft Credit balance each other out so can appear as no gift credited to the donor

So, should the orignal Pledge-WO be deleted? If not, how do we solve this problem?

Thanks!

I do similar to JoAnn, I put the gift on the company record and use it to pay off the pledge. The tax receipt goes to the company and we continue to steward the donor for making the gift, the donor gets invites and shows on donor lists. We have this a lot and have asked donors how they prefer to be recognized. We also have some that pay pledges half and half (or family ones where multiple family memebers are making payments on one pledge) so this was a good way for us to keep track.

Our team has learned to look at the installment paid tab when pledges have a zero balance and no payments I do not SC these, the installment tab lists who the payment was made by.

It was my understanding that a company could not pay on a pledge (tax purposes?) Can anyone confirm or comment on? Thank you.

Faith Murray · July 2016

Theresa Dougherty:

It was my understanding that a company could not pay on a pledge (tax purposes?) Can anyone confirm or comment on? Thank you.

Yes, many matching gift companies stipulate that a matching gift cannot be used to pay for an employee's pledge. However, I don't know if that's the same in the case of a sole-proprietor business. A sole-proprietor business technically shares the financial liability of the business owner himself, and vice-versa. My understanding also was that the tax issue with pledges was somehow related to whether the pledge was legally binding in a court of law.

Typically, in the rare instaces when we encounter these situations, we like to keep the pledge and pledge payments on the same record, even if it means Adjusting the original pledge to reduce the amount, and then creating a second pledge on the business record; or deleting the original pledge and creating a brand new one on the other Constituent record. We prefer to avoid soft credits when possible. But I could see making the employee a Solicitor for the employer's gift perhaps.

JoAnn Strommen · July 2016

I'm not aware of any reason a company can not pay a pledge. I've never seen a discussion on companies. Only entities that I know can not pay a person's pledge is a personal or family foundation or donor advised fund paying an individuals pledge. It's called self-dealing in the case of a foundation.

Over the years I've seen more and more payments come from individual's business accounts when we expected a personal check. We've never had a problem with it. We credit gift to account the payment is drawn on.

Susan Leslie · July 2016

Theresa Dougherty:

Just discovered a situation I could use your opinion on -

1. Donors make a Pledge

2. Pledge then paid by donor's company

3. The original Pledge was written-off (Pledge-WO, one entry - not a pledge and then a corresponding write off) and Donor soft credited

4. Pledge Write-Off and Soft Credit balance each other out so can appear as no gift credited to the donor

So, should the orignal Pledge-WO be deleted? If not, how do we solve this problem?

Thanks!

When we receive checks from businesses for a personal pledge, we enter the gift on the business record and then apply it to the personal pledge. We only soft credit the payment if the individual is true owner of that business (Business is not Incorporated).

We only write off a pledge if the pledge was not completed as promised. If a pledge was entered in error, then we either delete if that month has not been closed/completed with financial edge, or we adjust down to 0 to show no amount due. That way if one of our development officers looks at the gift screen, they will not misread the writeoff gifts and come to the conclusion that this personal is not making promised gifts.

Christine Robertson · July 2016

Theresa Dougherty:

Just discovered a situation I could use your opinion on -

1. Donors make a Pledge

2. Pledge then paid by donor's company

3. The original Pledge was written-off (Pledge-WO, one entry - not a pledge and then a corresponding write off) and Donor soft credited

4. Pledge Write-Off and Soft Credit balance each other out so can appear as no gift credited to the donor

So, should the orignal Pledge-WO be deleted? If not, how do we solve this problem?

Thanks!

Definitely talk to your Finance department and work hand-in-hand with them to clean this up. You want to stay in line with your organization's procedures as defined by the auditors with anything to do with pledges.

Beyond that, how to remove the write off that will partly depend on whether or not you've posted it. If it's been posted, you have to unpost the gift first (there's a plug in for that) and then you can delete it. I'd put notes all over the gift explaining what happened, when and why.

Delete a Pledge Write-Off?

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