How can I add a tag to contributions and pledges labeling them as conditional in RE?

Shandal Johnson · September 2023

Alex Wong · September 2023

@Shandal Johnson
Can you explain your ask? What do you mean by “conditional”?

Shandal Johnson · September 2023

@Alex Wong Hi Alex, we are recording conditional contributions and pledges for an event which will take place in 2024, so the contributions for this event will be treated as deferred revenue and the pledges will need to be removed at year end, because we can't account for them till the event takes place. I would like to tag them in some way in RE, so I can identify them easily at year end

JoAnn Strommen · September 2023

@Shandal Johnson If it's not possible to distinguish them just by the fund, I would consider Gift Subtype. If your RE is integrated with accounting software, that field is accessible to accounting and can be separated out for reporting.

Alex Wong · September 2023

@Shandal Johnson

If you want to just tag a gift, you can use gift custom field, define a new category to your liking and use it.

However, the bigger issue is how are these “revenue” considered in the financial system (not sure if you are using FE or not). If they are not going to be “reported” on in the current year, can't you just code the gift date in the future year and these gifts doesn't post into your financial system?

Shandal Johnson · September 2023

@Alex Wong We do use FE. Thank you for this idea, I am going to think this through.

Shandal Johnson · September 2023

@Alex Wong Hi Alex, my 1st thought on this is that I believe I will need the cash to post in the current year, but the revenue to be deferred. If the gift date is in the future year, would the cash posting also be in the future year?

Alex Wong · September 2023

@Shandal Johnson
Hi, I am not an accountant, so I have no idea what is it that you/your finance want to do and what “defer” revenue means to your org.

I can only say that a gift has 2 dates, Gift Date, and GL Post Date. They “can” be same or different. Gift Date will determine your revenue report ran from RE. GL Post Date will determine the date that is posted on the FE transaction. Generally they are the same, but what will “difference" in these 2 date field means is up to your finance team.

Stu Manewith · September 2023

@Shandal Johnson - first and foremost, I would check on the accounting treatment with your finance team leadership and/or your accounting firm.

That said, you have to post the cash when you receive it since you own it at that moment, and it becomes an asset on your books (and, in your bank account). That's the debit side of the transaction. The offset, the credit side, would typically be posting to a liability account (ie, rather than revenue); something like ‘deferred revenue’ or ‘conditional revenue’. When that transaction ‘lives’ on your balance sheet that way, it rolls over to your next FY. Then, next year, when the event actually takes place and you can actually recognize the revenue, you can move that deferred and/or conditional revenue from the balance sheet to actual revenue on your income statement.

On the RE side, somebody suggested using a gift subtype, which I agree with, unless that upends how you otherwise use subtypes. What I like about subtypes is that they support using the Fund Distribution grids, into which you can populate the proper cash and liability accounts discussed above.

Karen Diener · September 2023

@Shandal Johnson:
How can I add a tag to contributions and pledges labeling them as conditional in RE?

You mentioned that you use FE as well. Are RE and FE integrated?

I worked at an organization that differentiated between “conditional” and “non-conditional” pledges. The non-conditional ones were not mapped to the GL but the conditional ones were. That was easy to do in the GL Distribution of the Fund record, because Gift Subtype can be included to direct gifts in different directions, essentially.

Pledges to the Annual Fund were non-conditional so they did not sync to FE. The idea was that finance would recognize the payments as cash when they were received, but development wanted the ability to send reminders and otherwise steward donors.

Pledges that were conditional did have a subtype and were were mapped as accounts receivable in the GL. These were typically to programs or bricks and mortar projects.

Karen

How can I add a tag to contributions and pledges labeling them as conditional in RE?

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