January 14th, 2019 Both Art & Science: Collecting Pledged Donations By Linda Marie Pearson, CPA, CFE, Principal Helpful Tips for Collecting Pledged Donations A pledge to a nonprofit is generosity without cash up front, making it a popular option for donors. The organization benefits too, because an unconditional pledge becomes an asset the moment the donor agrees to give it. Pledged receivables enable robust planning and spending. But they may already be budgeted before the donations are actually made. A collection shortfall could then significantly disrupt your organization’s work. Why Aren’t Pledges Fulfilled? Some donor defaults are beyond your nonprofit’s control, like serious illness or a sudden loss of income. So too is a decision to simply not donate. But most pledges go unfulfilled for less dramatic reasons. Donors forget dates and numbers, lose envelopes, miss e-mails or can’t navigate your online payment system. Some harbor second thoughts about the amount pledged, while others just procrastinate. And these hurdles often overlap. Set Terms at the Outset A pledge is a contract: a promise to pay an amount by a date, sometimes in increments. Help your team understand this in soliciting pledges and learn to communicate it to donors without being crass. For smaller pledges, a simple signed form with a due date is usually adequate. But for larger promises, always spell out the terms in a detailed contract with help from your legal advisers. Communicate Thoughtfully Before the pledge drive begins, decide how you’ll communicate after a donor commits. Then create a schedule to manage communication. A quick follow-up — such as a grateful, positive note about the pledge drive conveying enthusiasm about the coming year — should be mandatory. Some donors fulfill their entire pledges early after such a prompt. Unless the due date is far off, send a friendly reminder a week or two before. If a week passes after the date with no donation or message, send another note to be sure the check wasn’t lost in the mail. Better Collection Tactics Here are three easy ways to improve pledge collection: Empathize. Unlike your staff, donors aren’t focused on your pledge drive. Assume every pledge represents a sincere desire to help and then consider your donors’ busy lives, looking for ways to help them help you. Make payment easy. Don’t be the organization that sends a pledge letter without a return envelope, or an e-mail without a payment link. Teach your staff to critique its own communications with a donor’s eye. Be prepared with alternatives. For a devoted donor who pledges and pays every year, but has yet to pay on time, would recurring payments be better? You’ll forego early recognition of an asset, but reliable monthly payments via automatic funds transfers are valuable too. For more information on Sansiveri’s Nonprofit Specialty Group and further insight into improving your collection tactics, please contact Linda Pearson at 401-752-0566.