Unallocated pledges which will have multiple purposes?

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James Andrews
James Andrews ✭
Ancient Membership Facilitator 2 Photogenic
in Blackbaud Raiser's Edge NXT®: General Discussion
EDIT: SORRY FOR THE WALL OF TEXT -- FOR SOME REASON HITTING ENTER DOESN'T SEEM TO DO ANYTHING... Occasionally we have donors who will make large pledges to our organization -- and often will start paying them off -- without specifying a purpose for them. Like, 'I am pledging $1,000,000 -- we'll discuss the allocation as needs arise.' Which is great, but poses some problems -- namely that you have to have a holding/discretionary fund for these gifts. One thing RE allows you to do is pay off pledges to one campaign/fund with payments to another. So imagine a person makes a $1,000,000 pledge, and their first $200K payment, and they decide that $75K of that payment is going to support two initiatives, and they'll decide the other $125K later. I'm currently testing a situation like this (note that we don't use split gifts, and we don't post pledges to FE): --Pledge $1,000,000 to discretionary fund --Payment $50,000 to initiative1 --Payment $25,000 to initiative2 --Payment $125,000 to discretionary fund When they decide about the last portion, we adjust that payment as necessary. Eventually you will end up having a record of one large pledge, which it was, with payments to the various initiatives it actually supported. Which, I mean, that seems fine, data wise -- they're linked and you can easily see what's going on. And what I don't want to do is adjust the pledge and make it a bunch of smaller pledges and payments, or gifts. But something about it is rubbing me the wrong way. Do any of you do anything like this? Want to reassure me that it's fine, or alternately tell me what you do in this situation?
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  • JoAnn Strommen
    JoAnn Strommen ✭✭✭✭✭
    Ancient Membership Facilitator 4 Name Dropper Photogenic
    James Andrews:
    EDIT: SORRY FOR THE WALL OF TEXT -- FOR SOME REASON HITTING ENTER DOESN'T SEEM TO DO ANYTHING... Occasionally we have donors who will make large pledges to our organization -- and often will start paying them off -- without specifying a purpose for them. Like, 'I am pledging $1,000,000 -- we'll discuss the allocation as needs arise.' Which is great, but poses some problems -- namely that you have to have a holding/discretionary fund for these gifts. One thing RE allows you to do is pay off pledges to one campaign/fund with payments to another. So imagine a person makes a $1,000,000 pledge, and their first $200K payment, and they decide that $75K of that payment is going to support two initiatives, and they'll decide the other $125K later. I'm currently testing a situation like this (note that we don't use split gifts, and we don't post pledges to FE): --Pledge $1,000,000 to discretionary fund --Payment $50,000 to initiative1 --Payment $25,000 to initiative2 --Payment $125,000 to discretionary fund When they decide about the last portion, we adjust that payment as necessary. Eventually you will end up having a record of one large pledge, which it was, with payments to the various initiatives it actually supported. Which, I mean, that seems fine, data wise -- they're linked and you can easily see what's going on. And what I don't want to do is adjust the pledge and make it a bunch of smaller pledges and payments, or gifts. But something about it is rubbing me the wrong way. Do any of you do anything like this? Want to reassure me that it's fine, or alternately tell me what you do in this situation?

    [quote user="James Andrews"] One thing RE allows you to do is pay off pledges to one campaign/fund with payments to another. [/quote]

    James, I don't follow this statement.  If the payment is to Fund 123 how does it pay off a pledge to FUND ABC?  Maybe I'm missing something but I don't see how that works at the fund level at all.  Or are all your 'initiatives' part of your 'discretionary' fund?

    Fortunately (Unfortunately?) we haven't had situation of large undesignated pledges.  I would have to go to policies set by board of directors on how we would or if we would even accept the pledge with no designation.  Would/Could make a huge accounting mess.  Where do you record pledge as an account receivable?  Is it short term or long term?  How long do you let the pledge extend?  If it wasn't covered in our board policiies on gifts, I imagine we would contact our auditor for advice also.

    Why do you feel you need to record it as one large pledge?  Query or giving history would show donation history. 

    (I wouldn't get into split gifts either.)

    Interesting dilema. 

  • Sara Kramer
    Sara Kramer ✭
    Ancient Membership Facilitator 1 Name Dropper Photogenic
    James Andrews:
    EDIT: SORRY FOR THE WALL OF TEXT -- FOR SOME REASON HITTING ENTER DOESN'T SEEM TO DO ANYTHING... Occasionally we have donors who will make large pledges to our organization -- and often will start paying them off -- without specifying a purpose for them. Like, 'I am pledging $1,000,000 -- we'll discuss the allocation as needs arise.' Which is great, but poses some problems -- namely that you have to have a holding/discretionary fund for these gifts. One thing RE allows you to do is pay off pledges to one campaign/fund with payments to another. So imagine a person makes a $1,000,000 pledge, and their first $200K payment, and they decide that $75K of that payment is going to support two initiatives, and they'll decide the other $125K later. I'm currently testing a situation like this (note that we don't use split gifts, and we don't post pledges to FE): --Pledge $1,000,000 to discretionary fund --Payment $50,000 to initiative1 --Payment $25,000 to initiative2 --Payment $125,000 to discretionary fund When they decide about the last portion, we adjust that payment as necessary. Eventually you will end up having a record of one large pledge, which it was, with payments to the various initiatives it actually supported. Which, I mean, that seems fine, data wise -- they're linked and you can easily see what's going on. And what I don't want to do is adjust the pledge and make it a bunch of smaller pledges and payments, or gifts. But something about it is rubbing me the wrong way. Do any of you do anything like this? Want to reassure me that it's fine, or alternately tell me what you do in this situation?

     I tried this for a few donors in our last capital campaign.  It looked great in the record and I think it was okay when it transmitted to our gl, but when I went to do reporting by campaign or by funds, my numbers were sometimes off or double counted in multiple categories.  This was a few years ago, so I can't remember the exact details of how the reports were off.  I will check to see if I had a case open about it and give you an update if I find it.  I would attempt to test it before jumping in.

  • James Andrews
    James Andrews ✭
    Ancient Membership Facilitator 2 Photogenic
    JoAnn Strommen:

    [quote user="James Andrews"] One thing RE allows you to do is pay off pledges to one campaign/fund with payments to another. [/quote]

    James, I don't follow this statement.  If the payment is to Fund 123 how does it pay off a pledge to FUND ABC?  Maybe I'm missing something but I don't see how that works at the fund level at all.  Or are all your 'initiatives' part of your 'discretionary' fund?

    Fortunately (Unfortunately?) we haven't had situation of large undesignated pledges.  I would have to go to policies set by board of directors on how we would or if we would even accept the pledge with no designation.  Would/Could make a huge accounting mess.  Where do you record pledge as an account receivable?  Is it short term or long term?  How long do you let the pledge extend?  If it wasn't covered in our board policiies on gifts, I imagine we would contact our auditor for advice also.

    Why do you feel you need to record it as one large pledge?  Query or giving history would show donation history. 

    (I wouldn't get into split gifts either.)

    Interesting dilema. 

    You make good points. The reason a payment to 123 pays off a pledge to ABC is that ABC is a holding fund, for keeping funds until they are allocated to specific purposes. When the funds are allocated, we adjust the cash gifts to their actual purpose, but leave the pledge in holding. Our Finance department keeps a separate recording of pledges receivable, that they update. It's not in FE. While giving history should be able to add everything up, it doesn't help when you're trying to query 'who has made a $1M commitment to the organization' for instance. You have to get into complicated querying like, 'sum up gifts by date and if the aggregate is $1M or more then it was a $1M gift' -- much easier and more sensible to have that pledge be one $1M gift record, than having to report everything outside of RE. Anyway, yeah it's interesting to me too! Interesting that RE lets you do this, and since it does, I think it's convenient -- if it doesn't cause a huge hassle in our lives otherwise.

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