Pledges vs. "Gift Intentions"

James Belich · November 17

Like a lot of organizations we're seeing more and more donors give from donor-advised funds, including donors who want to make multi-year commitments and pay from a DAF. Legally, of course, DAFs cannot be used to fulfill binding pledges, so we have some cases where we're working on a letter of "gift intent" with the donor, rather than a pledge agreement.

The question we're now facing is how to track these gifts in RE. In one sense these are "pledges" as the donor is agreeing to donate a certain amount on a specific schedule and we'd like to be able to send reminders, as well as give the fundraisers credit. But at the same time these aren't considered bookable pledges (technically they're one-time gifts when the money comes in) and so these should be excluded from those types of reports.

I'm curious to hear from others how you've handled these types of "gift intentions." Searching through the forum, I've seen a few threads talk about this and the main options seem to be 1) use the Pledge gift type in RE but add coding that allows these gifts to be removed from a list of bookable pledges, and 2) use Opportunities to track the total expected amount and link gifts to the Opportunity as they come in.

I'd love to hear from anyone who has implemented one of the above strategies and what you've found to be the pros and cons, or if you have any other suggestions on how to treat these gifts.

Aldera Chisholm · November 17

For me, this all comes down to how will you want to report on these intentions? Opportunity amounts won't show up in Committed/Raised income dashboards, Pledges will. If you want them to be one-time gifts when they come in, that leans me toward Opportunities, as long as you have a plan in place for how you will combine that into your reporting.

Carlene Johnson · November 17

I subscribe to the following:

1) use the Pledge gift type in RE but add coding that allows these gifts to be removed from a list of bookable pledges

I use the Gift Subtype to exclude from being booked by finance. This allows the organization to:
*Send pledge reminders
*Treat the donor the same as we would if it were a "bookable" pledge by easily pulling into queries, reports, recognition lists, etc…
*See their giving all in one place rather than having to instruct gift officers to look in two different places.
*See the balance on the intention if they are paying in multiple installments, or half with their own money and half from a DAF.
*Link the pledge to the opportunity which allows us to mark that opportunity as "funded"
*Provide gift officer credit.

Terminology that I use is "Formal Pledge" vs. "Informal Pledge".
Formal Pledges are those that are multi-year, above a certain threshold ($25K), or to a restricted fund, AND are not being paid by a DAF. Formal pledges must be have a signed gift agreement.

Informal Pledges are those that are under a certain dollar threshold, single-year, unrestricted, and/or are being paid by a DAF. Informal pledges must be in some form of writing: gift agreement, email, letter.

In other words - Finance will not book a $5,000 pledge to the annual fund which is being pledged and paid in the same year - regardless of whether it is being paid by a DAF or not.

Verbal pledges are never recorded as a pledge, but are tracked in opportunities.

I, personally, have never found a negative to using this system. As long as there is good documentation and training across advancement and finance there is no down-side. Let me know if you have any questions!

Aldera Chisholm · November 17

Carlene, I love that. How are you excluding them from RE Dashboards? That is the piece where I get tangled. (Dedicated Campaign?) Although, I shouldn't assume others are using those Dashboards! 😂

Austen Brown · November 18

I second @Carlene Johnson's response. The gift subtype is the key to that method, and can be used elsewhere to filter out these gifts where needed.

Carlene Johnson · November 18

@Aldera Chisholm , great question! This system was developed LONG before any of us were using dashboards so I'll have to go do some testing. Thus far, every organization where I've implemented this system has always wanted to include those pledges rather than exclude them. I wouldn't want to go down the road of a different Campaign as the idea is to keep it as identical as possible to regular pledges.

Tell me more about the scenario where you would want to exclude these Informal Pledges from dashboards? I would absolutely count it towards $$ raised and the only time I would not want to count it is when dealing with Finance.

Good stuff to think about, so tell me more! :)

Bill Connors · November 18

I love what Carlene wrote, except I do the same thing for verbal pledges as well based on criteria each org develops that indicates they're reasonable and real pledges, not fundraisers' wishful thinking.

Aldera Chisholm · November 19

https://community.blackbaud.com/discussion/comment/308731#Comment_308731

I'm basing my thoughts on the OP's comment about wanting to see them as one-time gifts and excluding from reports. Personally, I'm a stickler for a policy that if it's in RE - then it's going to be in Reporting. (Although reporting for fundraising teams and what finance counts may be two different things!) Our rule was that if we didn't want to see it in our dashboards, then it wasn't ready to be in RE as a gift, so it stayed in Opportunities until it was "ready."

Carlene Johnson · November 19

https://community.blackbaud.com/discussion/comment/308771#Comment_308771

100% I would do this for verbal pledges which can meet criteria that indicates they're reasonable and real. Depending on the organization part of the criteria might be a dollar threshold and adding actions which would prompt the gift officer to follow up via text or email to confirm the pledge in some form of writing.

Another alternative would be to create an additional gift subtype of Verbal Pledge rather then adding them as Informal Pledge as that would allow additional filtering and follow up.

@Bill Connors - can you share some examples of criteria you have helped orgs develop to establish what "reasonable and real" verbal pledges are? I'd love to grow my thinking more on this.

If those verbal pledges never turned into a real pledge would you use the Write Off functionality on these or some other option?

Carlene Johnson · November 19

Ahhh… I see. I was interpreting that OP meant they would have finance treat them as "one-time gifts" and would exclude from Finance reports - not that all of Advancement would treat them as one-time.

I, personally, wouldn't exclude from any dashboards. I might make a report for leadership that provides the breakdown of all pledges into Formal, Informal, and Verbal (if used) so that leadership knows why Advancement and Finance are showing different numbers in different places.

So, yes! if it is in RE as a gift it should be showing up on reporting!

Carlene Johnson · November 19

https://community.blackbaud.com/discussion/comment/308775#Comment_308775

Ahhh… I see. I was interpreting that OP meant they would have finance treat them as "one-time gifts" and would exclude from Finance reports - not that all of Advancement would treat them as one-time.

I, personally, wouldn't exclude from any dashboards. I might make a report for leadership that provides the breakdown of all pledges into Formal, Informal, and Verbal (if used) so that leadership knows why Advancement and Finance are showing different numbers in different places.

So, yes! if it is in RE as a gift it should be showing up on reporting!

Bill Connors · November 19

https://community.blackbaud.com/discussion/comment/308834#Comment_308834

Carlene, I don't have a ready document on this question for a quick reply. TBH, usually in my work I'm asked "what do we do with verbal pledges" or "should we enter them as pledges or opps" etc., and I'm called on to help with the tech/RE part of it. I then tell them yes, you should add there, here's why, here's how (all this thread so far), and then I encourage them to have their own meeting to think this through and DOCUMENT the decision.

I feel that in this day and age, when orgs are actually suing donors for non-payment of pledges and it's been in the press, we have to acknowledge that verbal pledges can be legit pledges that the donor doesn't want to consider themselves legally on the hook for "just in case…" But from a FR perspective we need and want them in RE to manage from a FR perspective even if they're not bookable. So I have no qualms arguing they should be in RE, but there's a big gray area. I also think it depends on the maturity of the FR team. Are they young to the work and don't know how to tell the difference? Is someone likely to try to game the system to impress their boss? Or are these not issues to worry about? I think culture is likely more important than rules. Somehow the FR has to be mature and professional to know that, yes, this donor "really," sincerely plans to send us this money, all indications are this is sincere and not a blowoff, and we can expect the money if something horrible doesn't happen to them. That's what I meant in my short and quick post above, not a set of items 1 to 5 that the verbal pledge can be weighed against.

And yes, if they don't come in I would write them off. It's partly how we hold the fundraisers responsible for their decisions to have them entered. A good manager will talk to a fundraiser or the team, as necessary, if too many of these verbal pledges are getting entered and written off.

If you've got better ideas, I'm all ears, but I can't think of any more criteria than "the donor would otherwise have signed a form committing to the pledge" except they're not comfortable making that kind of signed commitment. Maybe that is the one criteria?: it was explicitly talked through by them that their objection to signing a form was only about signing a form, nothing else?

Aldera Chisholm · November 20

On a somewhat related note. When I worked at the zoo, we created a protocol saying what documentation was needed, and what our process was if we didn't have the required doc for entering the gift in RE. It saved a lot of stress. This is a hyper-shortened version.

Pledges Over x amount require the following documentation to be entered into RE - Signed gift agreement, or written intent provided by the donor in the form of a letter/email
Pledges Under x require either: email from the donor with intent, or documentation created by the fundraiser that includes specific dates, location, amount.

If documentation cannot be obtained for gifts under x, the fundraiser will create a thank you letter for the donor which contains these details, and this letter will be kept on file. Directors approval of this letter is required for gifts over x. Once any of these pieces is received by the Gift Admin, the pledge will be entered into RE.

James Belich · November 24

Thank you everyone for the feedback on this. We're leaning towards entering these gift intentions using the pledge gift type in RE, then coding them in such a way that we can separate them from formal pledges in our reports. We've built several standard reports in Power BI, so the reporting piece shouldn't be difficult.

As others have pointed out, this shouldn't be done unless the "gift intention" represents a firm commitment. In our case, we just had a donor sign an "agreement of gift intent" - it's as firm a commitment as any pledge, it just can't be considered a bookable pledge as the donor is going to give from a DAF.

Pledges vs. "Gift Intentions"

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