Heidi, it depends on what you and the donor are trying to achieve, and what your policies are with regards to DAFs paying pledges.
If you do not accept DAF payments against pledges at all, and your donor wants to fulfill this pledge with DAF payments, you will not be able to book a gift based on the pledge, and the pledge will need to be phrased as a non-binding intention. If the donor had originally misunderstood the DAF issue, it is reasonable to amend the existing agreement - and your business office will need to deal with correcting the books. If you keep the pledge, and the donor continues to pay by DAF, you'll have to do the write-off dance each time, but in theory, you can keep the pledge on your books.
If you do accept DAF payments against pledges based on the IRS's guidance in notice 2017-73, there is no need to revise the agreement at all. So long as the DAF payment itself does not reference an existing pledge, you may apply it as payment against that pledge. Moreover, there is nothing special about the word 'pledge' vs 'commitment.' The donor is welcome to make that change if they wish, but it will not operate any differently - even if they think it would. A court would assess whether the gift agreement created a binding promise to give, or merely an intent to do so. The word 'commitment' would have the same effect as the word 'pledge,' all other things being equal.
Thank you,
Isaac Shalev
Data Strategy Expert
Sage70, Inc.
(917) 859-0151
isaac@sage70.com
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Original Message:
Sent: 3/29/2024 10:42:00 AM
From: Heidi Findlay
Subject: Change to Pledge Agreement - Removing "Pledge" Wording
Good morning,
What is the best thing to do in this situation? A donor signed a pledge agreement a few years back and has since signed an amendment increasing the commitment. We have reduced the current pledge amount by one previous DAF gift, and moved forward. The donor's financial advisor is now asking that we redo the agreement to remove "pledge" and substitute with "commitment" since this will likely be satisfied through donor's DAF. We have made no mention of the DAF in the agreement. While waiting for our advisors to chime in, I wanted to hear from you for best practices. Do we backdate the agreement? Start anew?
Thank you,
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Heidi Findlay
Rollins College
hfindlay@rollins.edu
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