Question: How Do I Book a Group Pledge?
What is the proper way to handle a pledge amount from a group of individuals who want the gift to come from the entire group? In other words, how do I book a group pledge? We’ve been contacted by a group representative for ten alums who want to pledge $100,000 in total from “The Friends of Jane/John Doe” (FRIENDS) to establish a fund. They want the pledge to get created in the name of the fund with the ten alumni each responsible for $10,000 over five years.
Answer:
There are two issues involved in this request:
the people who will be making the pledges and payments AND
the entity (in this case “The Friends of Jane/JohnDoe”) that will receive the donor recognition for the gifts.Unfortunately, the donor’s intent and development office’s reporting preference don’t match with the accounting principles that your finance office needs to follow.
The ten individuals are the people making and fulfilling the pledges, not the “friends group.” There needs to be a signed pledge from each of the ten individuals for $10,000 over the five years. Those individuals are making the promise and are also the people who will be receiving hard credit for the charitable gift per IRS rules.
“The Friends of Jane/John Doe” can be set up as the group to receive soft credit for all of the pledges and payments. I would recommend you set up “The Friends” as a record in your CRM with the ten individuals’ records linked to “The Friends” record.
These group requests are very common in fundraising to set up gifts “In Honor/Memory” of someone, a class gift for a reunion, or a group gift from an on-campus organization. It’s critical to get all of the information about the pledges before you set up agreements and pledges in your CRM.
Hard and soft credits are often confusing. Hard credits boil down to the entity that the IRS would define as making the gift. Soft credits are how the donor(s) wished to be recognized – Anonymous, “The Friends of”, Class of XXXX, etc.