There’s constant pressure in fundraising. Boards and Presidents look to stabilize the organization while growing giving revenue to fund impact. Vice Presidents and Chief Philanthropy Officers strategize how to reach goals and need to show constant progress and the overall health of those efforts. Fundraisers and Advancement teams identify, solicit, and steward donors to produce a stream of charitable donations. Growth isn’t just a mindset, it’s a requirement to fulfill a nonprofit’s mission.
This general model works well, as long as gifts are consistently booked throughout the year. To get there, many fundraising leaders seek out donor intent to get revenue on the books as soon as possible. While a great strategy, not all donor intent is equal. In fact, using verbal intent to book revenue can cause you to fail an audit – which can have devastating effects that no nonprofit organization wants to see, including lost funds and even a shutdown.
Yet, the verbal pledge is critical for fundraising operations. In this post, we’ll examine how to convert verbal pledges into formalized, and bookable donor intent.
Booking Verbal Pledges is Risky
While many nonprofit fundraisers may want to book verbal pledges, it’s quite risky to do, even if you know you can depend on a donor like clockwork. Verbal pledges or agreements simply don’t stand up to accounting standards, and can certainly draw attention during the annual audit. Of course, failing an audit is not a death sentence, however, it can lead to the loss of grants, previously pledged funds from donors, federal or state funding you may use, and eventually impact your ability to serve your constituents.
When Does a Pledge of Gift Agreement Become Bookable?
The Financial Accounting Standards Board (FASB) says that a gift becomes bookable revenue when the donor formally confirms their commitment in writing. The gift amount, due dates or payment structure, gift designation, and confirmation must all be documented in writing. When these criteria are met, that’s precisely when a gift becomes bookable.
That sounds like a lot of steps. In many senses, it is. That’s why formalized gift agreements and pledges are typically reserved for only the largest gifts.
How to Complete a Successful Audit & Consistently Book Pledges
It may seem that getting revenue on the books is at odds with proper accounting standards and your ability to pass an audit. That may have been so in the past, but that’s quickly changing with Digital Gift Agreements.
Digital Gift Agreements empower frontline fundraisers to document and convert verbal gift and pledge agreements into formal documentation that makes these gifts immediately bookable, without a lengthy process.
Digital Gift Agreements capture and document a donor’s intent to give, the size of their gift, any sort of payment structure, due dates, and designations, and a digital signature that meets or exceeds guidelines for confirming a gift.
Not only do Digital Gift Agreements empower your fundraisers to immediately get gifts on the books today in a manner that meets audit-level scrutiny, but they also do so for years to come, with multi-year capabilities. Additionally, Digital Gift Agreements can be created and sent to donors in seconds, with a mobile-friendly design. This means that gift officers can secure pledge agreements on the spot in real-time versus when they get back to the office (or remember to log it).