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  • 1.  Pledge Schedule Greater than 5 Years

    Posted 05-08-2023 04:32 PM

    The pledge schedule we had set in our campaign GAP was 5 years or less.  We are now at the end of our campaign and our major gift officers and the business office would like to explore extending this period (or adding criteria for greater than 5 years) in a revised GAP that will take affect post campaign on June 30th.  Additionally, we have a donor wishing to establish an endowment with an outright gift now but also add to the endowment over the next 13 years (they prefer including this time period in the endowment agreement).  Does anyone have a GAP that addresses both pledges of for 5 years or less and those over 5 years?  I'd be interested to see your policy and what discount/NPV you might utilize that has passed muster with the auditors.  I also imagine there should be some language on how any given pledge is counted in a campaign if and when it commences in one campaign and its final payment is with a future campaign.


    Any Advice or existing policies you might be able to share?

    Rick West
    St. John's College



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    Richard West
    SJC Business Card
    west.richarda@gmail.com
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  • 2.  RE: Pledge Schedule Greater than 5 Years

    Posted 05-08-2023 04:58 PM
    I have had three clients since the early 1990s who applied discount rates for extended pledges. In all three cases, their auditors told them the rate to use.

    One institution agreed to use the Fed Funds Discount Rate as an arbitrary starting point. Ultimately, it will have to be something your auditors are comfortable with - so I'd ask them at the beginning!

    15-20 of my clients have decided to follow CASE Standards and only count these pledges in five-year increments (regardless of whether they are in a campaign). Meaning that they will note the entire pledge amount and payoff period in a reportable field, but they will only "book" five years at a time. And that's all that gets fed to the GL. Then, per CASE, after five years, they book another five years.

    John

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987






  • 3.  RE: Pledge Schedule Greater than 5 Years

    Posted 05-09-2023 04:27 PM
    Building on this, John, I have this scenario.

    A donor wants to give a five year pledge but it won't start until two years from now. So it's effectively a seven year pledge.

    Can I count the first three years in this FY and then the remainder amount in five years? 

    I feel like the answer could be...have the donor sign and start now or sign in two years. Why try and do both?

    Thanks as always (and to Richard for kicking off my question before I knew I needed it!).

    Elizabeth




    Original Message


  • 4.  RE: Pledge Schedule Greater than 5 Years

    Posted 05-09-2023 04:44 PM
    This scenario does not arise that often. And CASE gives you great flexibility, especially if you are in a campaign. On page 67 CASE states, "If a donor makes multiple pledges during a campaign, count all scheduled pledge payments
    that will be received during the campaign or within five years of the end date."

    CASE is actually stating you could count a much longer pledge as long as it does not exceed five years past the campaign end date! They even give an example of a ten-year pledge made in year #1 of an eight year campaign - indicating you can count the whole thing! But if made in the last year you could only count five years.

    But for annual reporting, you do only count pledges in five-year increments. From page 40: "New Funds Committed reflects the impact of fundraising activity in the current year and up to five years into the future, capturing the value of new cash gifts, gifts of securities, gifts of real property, gifts-in-kind, the value of new gift commitments and pledges for up to five years duration"

    So, yes, if the pledge were made today, you would only count the first five years - the first two of which are null. And five year hence you would count the remaining five years.

    John
    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987





    Original Message


  • 5.  RE: Pledge Schedule Greater than 5 Years

    Posted 05-09-2023 05:09 PM
    Thanks for allowing me to answer a question from my leadership while I was commuting home via two trains, with a day care pick up in the middle to keep it interesting. 

    Have a good rest of the day, all.

    Elizabeth




    Original Message


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