Pledge from donor where they indicating they would be paying it from their DAF

Jeanette Hanlein · August 7

Does anyone have a system of recording these agreements in RE? I know that it is not an official pledge but if this is a substancial donation, we want to be able to record it to show in fundraising numbers and not in our audited official numbers.

Austen Brown · August 7

You could enter the 'pledge' in as an opportunity on the record to show the full intended amount. Unfortunately, without the pledge record you'll need to be okay with counting each 'installment'/donation as it is received, rather than the lump sum of the pledged amount up front.

Carlene Johnson · August 7

In the past I have created gift sub-types of "Formal Pledge" and "Informal Pledge".

Formal Pledges are pledges that meet internal guidelines of booking a pledge with Finance. At one organization, the guideline was: Pledge of $25,000 or more, AND, has a signed pledge agreement, AND is multi-year, AND is not being paid by a DAF.

Informal Pledges were less than $25,000, OR being pledged & paid in the same fiscal year, OR were being paid by a DAF. (These still needed a signed pledge agreement as well, though for some smaller pledges we'd allow an email from the donor to suffice.)

Our reporting was set up so that reports to Finance only included Formal Pledges. Reports for Advancement and Pledge Reminders were included both Formal and Informal Pledges.

Any pledge that was verbal - meaning there was no signed pledge agreement or email documentation was recorded via Opportunities with an Attribute/Custom Field, tracking the verbal date, amount, and status (paid or unpaid).

Hope this helps!

Alex Wong · August 11

We handle this as real pledge gift record on the donor. Our finance (newer members of the team) has question this before and I researched into this a bit. So Copilot answer is: (so I think it's something your finance team has to gauge).

✅ When It Is Allowed

According to IRS Notice 2017-73, a DAF can make a grant that satisfies a donor's pledge if all of the following conditions are met

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No Reference to the Pledge: The DAF sponsoring organization must not mention the pledge in the grant letter or check. The payment should appear as a regular grant.
No Excess Benefit: The donor must not receive any benefit beyond incidental recognition (e.g., no gala tickets, naming rights, or other perks).
No Additional Tax Deduction: The donor cannot claim a second charitable deduction for the DAF's payment, since the deduction was already taken when the donor contributed to the DAF.

If these conditions are followed, the IRS does not consider the grant to be a prohibited benefit, and it can legally fulfill the donor’s pledge.

Elizabeth Johnson · August 11

Wow @Alex Wong (and Co-pilot) that is great info to share. @Carlene Johnson I love your subtypes. In the case of a pledge from a donor that gives through a DAF - we put the pledge on the donor's record and give it a sub-type of Non-binding and then pay it down with the DAF. We follow all the IRS Conditions.

We do not report on pledges made to our business office if they are conditional (challenge needs to be met for instance) until they are realized and use and attribute to suppress them.

We consider any pledge in writing (doesn't need to be a signed form document) a pledge and require all back up be on the gift note.

Pledge from donor where they indicating they would be paying it from their DAF

Answers

✅ When It Is Allowed

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