Writing off vs Terminating pledges - looking for clarity

Daniel Wallach

We have a few pledges entered years back representing expected/committed revenue at the time, but for various reasons they are no longer practically relevant and we do not want payments to be applied to these pledges or for them to appear in reporting/donor analysis. We do not expect payments from these donors, or if we do, we do not want them applied to these pledges.

One case is a commitment of $1,200,000 in 150k installments, which instead of being entered as one pledge with an appropriate installment schedule, was entered as separate 150k pledges for each installment. Payments were never applied consistently to these pledges, and practically the campaign originally associated with the pledge isn't relevant anymore. Another pledge was entered more recently for a different campaign, and payments seem to have been applied to both pledges at different times with no clear reason (yes this is a process problem!).

In this and similar cases, it's not clear to me whether to terminate or write-off. I know both will stop payments being applied to the pledges, but I also know they affect pledges differently ex. accurately representing the original pledge amount.

I'd think in all these cases they should be terminated so pledge status is consistent when development staff are looking at the record/pledge lists, but it seems to me they should also be written off, as we don't expect further pledge payments.

Write-offs also have implications for Finance - we're trying to get moving posting to GL from RE>FE, so need to be clear on how Development's process here affects them.

Hoping for some clear direction so we can have cleaner data and move with post to GL!

Dariel Dixon

The key here is documentation! These terms are not interchangeable. A pledge may be terminated for a number of reasons, but a write-off may have other ramifications. In this case, I don't think that these pledges should be written off, but I would definitely state via a gift note that the pledges are connected. From what you have described, it sounds like the original pledge may have been completed eventually if this new funding situation didn't come up. But documenting the situation is very important so that users can understand the history of the gift.

But the one thing you mention is the most important part. Consistency is paramount.

JoAnn Strommen

I don't know that terminating will clear it as you want from reporting. Test and see.

Our procedure for unpaid/no payment expected/old pledgees is to adjust amount to $0. This works for posted and unposted, if that's a concern. Adjustment is still coming to webview but can be done in db view. Adjusting is a little more work than 'terminating' but IMO is cleaner. On gift record > Gift > Adjust. Adjusted amount =$0. We enter the reason and, for easy view, we put that reason in reference field, too. Copy/Paste.
This also leaves a clean audit trail should there be any questions.

Write-offs, as you said, can have implications for finance and/or metrics. As well as record still shows $ amount and that amount does pull into some reporting or things like # of gifts/last gift amount, etc.

@Dariel Dixon said, document and be consistent.

Elizabeth Johnson

I have to wonder if you use of the term "terminate" means they were set up as recurring gifts with an end date.

You have great responses from @Dariel Dixon and @JoAnn Strommen that I agree wholeheartedly with.

We do not appreciate how write-offs work in RE so several years ago we made the decision to adjust gifts. Lots of documentation on the record and in our procedures so that we can be consistent and use reports in a meaningful way.

We do not have FENXT and are not integrated with the business office.

Jennifer Branstrom

If your Finance Office has these pledges "booked" in their system, then I would write them off. This is what we do and we attached the email or note explaining why we are writing it off. We have FENXT.

Daniel Wallach

@Dariel Dixon @JoAnn Strommen Can either of you say more about implications for reporting/metrics, and the finance office using FE NXT? Although i mentioned the concern, this is all theory now as we are close to pulling the trigger on posting directly from RE > FE but haven't actually started this yet. So I've only found things here and there in the KB, ex:

• This about how write-offs are handled in the Gift Detail and Summary Report: https://kb.blackbaud.com/knowledgebase/articles/Article/205433
• This re: the different use cases for write-offs vs adjustments: https://kb.blackbaud.com/knowledgebase/articles/Article/52891

@Elizabeth Johnson What are the problems with how write-offs work that you have seen? Do you ever use them at all, or strictly adjustments?

Elizabeth Johnson

Hi @Daniel Wallach,

We used write-offs in the past, and I moved away from them around 2019 in favor of adjustments and now that is solely what we use. I do understand the intended distinction between the two, and I wouldn’t make that kind of shift without confirming with our auditors—they’re comfortable with this approach in our case.

A bit of context: we’re a mid-sized organization and only enter pledges when we have something in writing from the donor. Because of that, true “technical” write-offs are rare for us (typically 0–3 per year).

Where write-offs start to break down for us is operationally:

• I can’t open write-offs from a query, and I rely heavily on queries for data auditing and review.
• I haven’t found a reliable way to include them in Gift Lists—they don’t appear, even in partial write-off scenarios.
• They introduce reporting inconsistencies that are difficult to explain. Fundraisers running their own reports often see numbers that don’t tie out, which creates confusion and erodes confidence in the data.

That last point has been the biggest issue—anything that makes frontline users question the data tends to create more downstream work than it solves. Using adjustments has given us more transparency and consistency across reporting.

We also tend to report on what has actually been received and treat projections separately as anticipated revenue. Where this becomes more of a challenge is when we’re working with a consultant or volunteer who wants to view the data differently—write-offs make those alternate views harder to reconcile back to what we consider our “source of truth.”

Curious how others have handled the reporting and visibility challenges with write-offs, especially if you’re supporting fundraiser self-service.

Dariel Dixon

@Daniel Wallach When I worked for organizations that were directly connected between RE —> FE, we did not perform write-offs due to the way they worked in the GL. I'm not an expert in FE and that was some time ago, so I can't speak about it with too much detail. I would definitely bring in your colleagues from finance and ask them how they want to handle it. Regardless, there will be a change to the GL, and they are going to have to deal with that issue one way or another.

You have a partner with your finance people. I would definitely get their input and then design the new process around that. Once you have that, you can mention in your documentation that if the process needs to be updated, that you should get a sign-off from finance since this will impact them as well.

JoAnn Strommen

Not much to add to @Elizabeth Johnson and @Dariel Dixon. They covered it well.

My key preferences for adjustment are what they mentioned regarding reporting/viewing a record.

A pledge of $10K adjusted to $5K pledge will display as pledge amount $5K/balance $5K.

Below:
A written-off pledge will display as $10 pledge, show a (non-existent) payment amount $5,000 and balance $5K. As Elizabeth said this is very misleading for development staff viewing a record.

Some reports are messed up.

If you choose to go the route of write offs, be sure your credit/debit FE account # as entered in RE for every fund.

Daniel Wallach

@JoAnn Strommen @Dariel Dixon @Elizabeth Johnson Thank you all, this is very valuable input. I'm meeting with Development and Finance next week to discuss, but it's looking like adjustments will be the way to go.

Daniel Wallach

https://community.blackbaud.com/discussion/comment/312301#Comment_312301

I'm curious about this, given the preference of everyone else for adjustments. Do you not find any of the problems others mentioned using write-offs?

Jennifer Branstrom

No because we really don't write off many. I think I have done maybe 2-3 in my 6 years of being at my current job. Plus, they are mostly with donors who no longer give to the school anyway. Most of these pledges were Capital Campaign from years ago.

Dariel Dixon

https://community.blackbaud.com/discussion/comment/313202#Comment_313202

This is an important distinction! Let's be honest here…there is a big perception issue with write-offs. In @Jennifer Branstrom's case, these were donors who no longer had a relationship with her organization. In the OP's situation, there is a continued relationship with the donors of the original pledge. This may be something to consider when creating your process @Daniel Wallach.

Daniel Wallach

https://community.blackbaud.com/discussion/comment/313204#Comment_313204

This is an excellent point. The particular donor in this case does have a relationship with us, and I'd say most others needing write-off/adjustment do, although there are some outliers. It makes sense to design the process based on that.