Pledges, Payments, and Projects

Kim Martinez

Hi there, I'm a brand new user to FE NXT so appreciate your help. Our 501c3 organization posts pledges to revenue (with a project) and recognizes the contribution income when the pledge is made. Then when a payment comes in, the pledge is reduced. During transition, temporary staff posted pledge payments to contribution income instead of reducing the pledge. Result is contribution income and pledge receivables are both overstated. There are many transactions that need to be adjusted across many months; what is a good way to do that? Should we post a JE in the current month to remove the revenue (with a project) and apply the payment to the pledge? Thanks for your suggestions/guidance!

Christina Fedorick

@Kim Martinez
Hi Kim! It depends on who you are reporting to and how “fussy” they are about having everything posted in the month that it happens. My Board wouldn't mind me correcting it all in the current month by doing what you are suggesting--backing it out of revenue and applying it toward the proper pledges. Hope this helps!

Sannyasin Siddhanathaswami

@Kim Martinez

Aloha!

While we don’t enter pledges in a temporary way like that, we do a similar thing with expenses. We treat certain expenses as spent as a way of saving up funds for a specific purchase.

To do that we use the “encumbrance” type of transaction. That way we can do reports with or without showing this type of transaction. When you enter a journal entry, it can be either “regular” or “encumbrance”.

I bet it would work for pledges (it may even have been designed for that). Something worth looking into.

Sannyasin Siddhanathaswami

Beckie Osterman

@Kim Martinez
Hi Kim,

I would chat with your auditors. If it affects multiple years that revenue is overstated then they will probably recommend adjusting the years (depending on $ amounts). If its all within the same fiscal year, I would adjust in the month I am working to close. Good luck!

Kim Martinez

@Beckie Osterman Thanks for your reply. It's all within the same fiscal year. Is the best way to do the JE? Or is there something else recommended, being a new user?

Beckie Osterman

@Kim Martinez
I would do a JE with lots of backup documentation.

susan correa

@Kim Martinez You should reverse the entry that the temp employee did. (find the JE and reverse that) So, it will be reversed, then make the correcting entry (apply the payment to the pledge) on the same JE batch with the reversal. So you know what was being done. Try to keep all together and do it by month. Do you reconcile your pledge balance with a pledge schedule?