Stake in a company paying off a pledge

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Robert Brown
Robert Brown ✭
Tenth Anniversary Facilitator 1 Photogenic
in Blackbaud Raiser's Edge NXT®: General Discussion
Hi everyone.


This is a very odd situation I have never encountered in my 18 years using Raiser's Edge.  We have a constituent that has half a million dollars in open pledges.  But instead of receiving any kind of cash or stock/property for it, he has given us a stake in his company. 


Now, if we were going to cash out the equity for it, it would be really straightforward.  But the upper management here want to hold onto it (since it is rising) and sell it when it's hopefully at its peak.


Now, they want me to show that the pledges are satisfied.  But there was no money involved, exactly, and I can't write it off because it needs to be shown as paid in full. 


Help?
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  • JoAnn Strommen
    JoAnn Strommen ✭✭✭✭✭
    Ancient Membership Facilitator 4 Name Dropper Photogenic
    Just when you think you've seen it all. LOL


    Doesn't sound like it's what management wants, but until the stake is sold the pledge isn't paid IMO. If they are persistent to show it as paid, you'll probably need to talk to your finance office. You could enter a gift amount to pay the pledge and see if they're okay with the gift date and/or GL post date changing to the date the stake is sold.


    Is the stake not stock? Actual ownership of the company? I'm not sure that would meet the gift accepance guidelines for our org. If the company took a dive in value tomorrow, what would management do?  Are they sure they can easily sell it?


    Very interesting!


     
  • Joshua Bekerman bCLO bCRE
    Joshua Bekerman bCLO bCRE ✭
    Tenth Anniversary Facilitator 3 Name Dropper Photogenic
    Enter it as Pay-Stock/Property applied to the pledge, and then change it to Pay-Stock/Property (Sold) when management decides to sell it.


    I also agree with JoAnn, I've never heard of anything like this.  How will they know when its at it's peak?  $500k is a lot to gamble with.




     
  • JoAnn Strommen
    JoAnn Strommen ✭✭✭✭✭
    Ancient Membership Facilitator 4 Name Dropper Photogenic
    Just another thought...

    Has your management consulted your legal counsel? If you are a non-profit school, will 'owning' this, I'm assuming, for profit company for what might be some time to 'hit its peak' affect your non-profit status?  The government has tightened and increased scrutiny on non-profits so I'd want to be sure it's clear if this is truly part ownership of the company. I'm wondering why the donor just doesn't sell his stake and give you the money.
     

  • Robert Brown
    Robert Brown ✭
    Tenth Anniversary Facilitator 1 Photogenic

    JoAnn Strommen:

    Just another thought...

    Has your management consulted your legal counsel? If you are a non-profit school, will 'owning' this, I'm assuming, for profit company for what might be some time to 'hit its peak' affect your non-profit status?  The government has tightened and increased scrutiny on non-profits so I'd want to be sure it's clear if this is truly part ownership of the company. I'm wondering why the donor just doesn't sell his stake and give you the money.

     

     

    Hi JoAnn,


    Thanks for the advice!  It helps a lot.  And yes, I have heard that this decision has been checked and cleared, and that the edict comes from on high.  If the head boss wants to take that gamble, it's his feast if it goes up or famine if it goes down.  I've done my duty by bringing up the problems to my supervisors.

  • Robert Brown
    Robert Brown ✭
    Tenth Anniversary Facilitator 1 Photogenic

    Joshua Bekerman bCLO,:

    Enter it as Pay-Stock/Property applied to the pledge, and then change it to Pay-Stock/Property (Sold) when management decides to sell it.


    I also agree with JoAnn, I've never heard of anything like this.  How will they know when its at it's peak?  $500k is a lot to gamble with.




     

    Hi Joshua,


    That's the perfect answer to my question.  Thank you!

  • Sonia Vazquez
    Sonia Vazquez ✭
    Ninth Anniversary First Reply

    Robert Brown: The only problem you can encounter is the value of the gift at the moment the donor made it, just like stock. For example) stock was given yesterday an the value is $50 tomorrow it goes up or drops. What are you acknowledging the donor for the value of the the gift at the moment he gave it or when you sell it? 

    JoAnn Strommen:

    Just another thought...

    Has your management consulted your legal counsel? If you are a non-profit school, will 'owning' this, I'm assuming, for profit company for what might be some time to 'hit its peak' affect your non-profit status?  The government has tightened and increased scrutiny on non-profits so I'd want to be sure it's clear if this is truly part ownership of the company. I'm wondering why the donor just doesn't sell his stake and give you the money.

     

     

    Hi JoAnn,


    Thanks for the advice!  It helps a lot.  And yes, I have heard that this decision has been checked and cleared, and that the edict comes from on high.  If the head boss wants to take that gamble, it's his feast if it goes up or famine if it goes down.  I've done my duty by bringing up the problems to my supervisors.

     

     

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