End of Fiscal Year Income Report include or exclude Write Offs?

Christine Cooke 2 · July 2016

I am looking to see what other orgs do about end of fiscal year reporting totals. I guess depending on the size of your organization and the programs you run, you may or may not have one-year pledges. (meaning they are committed and fulfilled in the same FY) We have them. But, like with any other pledge, the donor can change their mind, have their circumstances change etc. At the end of the FY year you write them off, because that is what you do with pledges.

So my question comes in here. Most orgs, I believe, when reporting their income through the year, say monthly, report on pledges and cash gifts. So then, at the end of the year, when there are pledges that are not going to be fulfilled (and you know this from contacting the donor), you write them off. When you do your FY end reporting on income do you substract the Write Off amount from the Total Income for the year? And do you do this manually? It does appear, and I have tried everything, and checked with a consultant, that there is not a report that subtracts Write Offs for you. That makes me wonder if RE is just missing a tool it should have or if peeps do not reflect the difference at FY end.

Any sharing is appreciated! Thanks

JoAnn Strommen · July 2016

The whole way RE reports/deals with write-offs is really not what most users expect. "It's working as designed" is what support says. I've debated using adjustments to gifts that are actually written off so that report amounts would be accurate but haven't done it yet as it really isn't an adjustment.

Our FY ends 12/31. Early in next FY we do list of write-offs for review. Write off those we do not expect to receive. Accounting/audit does manual adjustments needed. The written off pledges do not affect actual income received amounts. For our accounting all those pledge amounts are in accounts receivable so that amount is adjusted.

John Heizer · July 2016

Christine Cooke:

I am looking to see what other orgs do about end of fiscal year reporting totals. I guess depending on the size of your organization and the programs you run, you may or may not have one-year pledges. (meaning they are committed and fulfilled in the same FY) We have them. But, like with any other pledge, the donor can change their mind, have their circumstances change etc. At the end of the FY year you write them off, because that is what you do with pledges.

So my question comes in here. Most orgs, I believe, when reporting their income through the year, say monthly, report on pledges and cash gifts. So then, at the end of the year, when there are pledges that are not going to be fulfilled (and you know this from contacting the donor), you write them off. When you do your FY end reporting on income do you substract the Write Off amount from the Total Income for the year? And do you do this manually? It does appear, and I have tried everything, and checked with a consultant, that there is not a report that subtracts Write Offs for you. That makes me wonder if RE is just missing a tool it should have or if peeps do not reflect the difference at FY end.

Any sharing is appreciated! Thanks

From an accounting perspective, a write-off is an "expense," not a reduction in "income," so RE really is "working as designed" and as expected by an accountant. A write-off doesn't change the amount of money you raised, it's an uncollected debt; a "cost of doing business," like credit card fees and the electric bill. Of course development folks want RE to be a fundraising tool, not an accounting tool, but it also has to be designed to integrate with accounting software so we sometimes have to work around how RE treats things. If you want to change your "income" you need to either change the amount originally pledged or adjust the pledge, not perform a write-off. If the pledge hasn't crossed fiscal years an adjustment should work fine. Regardless, I'd check with your financial folks and your auditors because every organization can handle things differently.

Unknown · July 2016

Christine Cooke:

I am looking to see what other orgs do about end of fiscal year reporting totals. I guess depending on the size of your organization and the programs you run, you may or may not have one-year pledges. (meaning they are committed and fulfilled in the same FY) We have them. But, like with any other pledge, the donor can change their mind, have their circumstances change etc. At the end of the FY year you write them off, because that is what you do with pledges.

So my question comes in here. Most orgs, I believe, when reporting their income through the year, say monthly, report on pledges and cash gifts. So then, at the end of the year, when there are pledges that are not going to be fulfilled (and you know this from contacting the donor), you write them off. When you do your FY end reporting on income do you substract the Write Off amount from the Total Income for the year? And do you do this manually? It does appear, and I have tried everything, and checked with a consultant, that there is not a report that subtracts Write Offs for you. That makes me wonder if RE is just missing a tool it should have or if peeps do not reflect the difference at FY end.

Any sharing is appreciated! Thanks

I constantly run into this problem. You can reference my post on it over here. In short, I've created an Excel file that I punch numbers into from Gift Detail and Summary reports and embedded in that spreadsheet is a place for me to enter write offs which are then subtracted from our commitment totals. Once I put the write offs in the spreadsheet I also include a note about each gift amount, gift date, and gift Id and that information says in the spreadsheet so that each month I don't have to track down all write offs from the fiscal year, only the new ones from the previous month. To complicate things we only subtract write offs from our total commitments if the pledge was made in the same fiscal year. If the pledge was made in a previous fiscal year we don't subtract the write off because the commitment was not being counted towards this fiscal year's commitments in the first place. It's a pain and I'm working on a Crystal report to automatically calculate all of this for me, but short of building your own Crystal report, I haven't found a way to easily account for write offs using Gift Detail and Summary reports.

Jen Claudy · July 2016

Write Offs are the worst. I have a comment in the thread that Aaron linked to, but will add that since then, I've discovered that Write-Offs don't appear correctly in NXT unless you use the actual Write-Off function (the one that is functioning as expected but doesn't actually provide what most of us need).

What I would prefer is to have a Gift Type of Write-Off that is entered like a Pay- Gift, appears as it's own Gift Record, linked to but not buried within the Pledge Gift Record. And appearing as a negative number in reports, exports, query, gifts tab, etc.

Because we don't use RE Canned Reports and due to NXT's treatment of Write-Offs, I am now working on converting the Adjustments back to Write-Offs and adding Gift Attributes so that I can Query and Export as needed. Our report processes outside of RE will use the Attribute data to turn those numbers negative so that sums and formulas work. We mirror our Finance Dept and consider Write-Offs as a debit against the revenue lines for whatever FY the Write Off is happening, rather than as an expense.

End of Fiscal Year Income Report include or exclude Write Offs?

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