Development Revenue vs Finance Income

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Joshua Bekerman bCLO bCRE
Joshua Bekerman bCLO bCRE
Tenth Anniversary 500 Likes 500 Comments Name Dropper
in Blackbaud Raiser's Edge NXT®: General Discussion
Greetings!  Are there any other organizations (hospitals? universities?) out there that follow your finance/accounting department rules when it comes to calculating how much has been raised by the development department?  For example, if you receive a $100,000 pledge does your finance department book the pledge at a discount (maybe around $70,000) and then development is only 'credited' for raising the book value of $70k?  In other (finance?) words, anyone using the book value instead of face value when calculating how much development has raised?  'Cash' gifts are the same value either way, so this mostly applies to pledges.  My current org is the only place I have been in 20+ years that basically uses book value, so it would good to connect with others that do the same.


Thanks,

Josh

 
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  • Aaron Rothberg
    Aaron Rothberg
    Eighth Anniversary 500 Likes 100 Comments Name Dropper
    Hi Josh-


    Which types of  Pledges are you referring to? For instance, if someone where to book a pledge which they later paid with a check, we're going to get the full pledge amount and would book it as such. Are you referring to Annuities or other gifts that may have one value today and a different value in the future? Annuities are the only thing that come to mind where you might book less than what was pledged. If it's a stock gift we have a policy to sell the stock immediately after we receive it so we wouldn't see a big difference (e.g., 30%) between book value when we get the gift and book value when it's sold the next day...unless it's Bitcoin. laugh
  • James Andrews
    James Andrews
    Ancient Membership 100 Likes 100 Comments Photogenic

    Joshua Bekerman bCRE:

    Greetings!  Are there any other organizations (hospitals? universities?) out there that follow your finance/accounting department rules when it comes to calculating how much has been raised by the development department?  For example, if you receive a $100,000 pledge does your finance department book the pledge at a discount (maybe around $70,000) and then development is only 'credited' for raising the book value of $70k?  In other (finance?) words, anyone using the book value instead of face value when calculating how much development has raised?  'Cash' gifts are the same value either way, so this mostly applies to pledges.  My current org is the only place I have been in 20+ years that basically uses book value, so it would good to connect with others that do the same.


    Thanks,

    Josh

     

    I don't get it.  What's the "book" value? How is that calculated?  less overhead?  Present value?


    We recently switched up our reporting so that we show funds raised FOR this fiscal year instead of funds raised IN this fiscal year so they match up with Finance budgeting, but that's a horse of a different color entirely than what you're talking about.

  • Elaine Tucker
    Elaine Tucker Community All-Star
    Ancient Membership 500 Likes 100 Comments Photogenic

    Joshua Bekerman bCRE:

    Greetings!  Are there any other organizations (hospitals? universities?) out there that follow your finance/accounting department rules when it comes to calculating how much has been raised by the development department?  For example, if you receive a $100,000 pledge does your finance department book the pledge at a discount (maybe around $70,000) and then development is only 'credited' for raising the book value of $70k?  In other (finance?) words, anyone using the book value instead of face value when calculating how much development has raised?  'Cash' gifts are the same value either way, so this mostly applies to pledges.  My current org is the only place I have been in 20+ years that basically uses book value, so it would good to connect with others that do the same.


    Thanks,

    Josh

     

    This situation can have many nuances. A big factor is WHEN the pledge will be paid off.  If you have a pledge that is being paid in full during the SAME fiscal year then no pledge discount need apply.  Pledge discounts are normally done when you have multi-year pledges that will be paid over different fiscal years.  


    That being said - pledge discounts are an ACCOUNTING function, NOT a development function.  Accounting and GAP standards are a completely different animal than AFP or development reporting standards.  I'm all for collaboration between the finance and business office (we are lucky that our two offices work together so well)...but Accounting/finance should NOT dictate how development/advancement offices report their percent to goal or amount raised.  


    I am also assuming that the advancement/development office has in place GOOD gift procedures and documentation on when to count a pledge as a "committment".


    Just my two cents

  • Jen Claudy
    Jen Claudy
    Tenth Anniversary 1,500 Likes 1000 Comments Name Dropper
    If you need to keep track of pledge discounting and such, then I would use Gift Attributes to do so.  At a previous org, I did something similar so that when Development and Finance would reconcile (which we did monthly), we wouldn't see any of these transactions appear as discrepancies.

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