I am dealing with an issue that I could use help and input on.  The background for the issue: 1. we are in a capital campaign; 2. last year we recorded a pledge from a guild connected with our organization, this pledge was recorded for the net amount that we will receive toward the capital campaign and has annual payments for 5 years starting this year; 3. the gross donations raised by this guild are recorded in RE as revenue.

 Our finance department has raised the fact that both the pledge and the donotions that will provide the net payment to decrease the pledge are being counted as revenue in RE (double-counting) and they will need to make adjustments to the financial information.  They want to have the adjustments reflected in RE as well, but we have not come up with a way to do this that would satisfy the needs of the Foundation and Finance.

Ideas we have looked at include writing off portions of the pledge in the amount of the net distributions as they are made.  This doesn't work for capital campaign reporting (the revenue disappears from Capital).  We looked at adjusting the pledge down which causes the same problem.  We looked at paying the pledge off using Pay-Other gift records in the amount of the distribution, but this does not correct the Financial issue of double-counting revenue.  Finance would like for us to adjust down the gifts representing the funds raised by the guild, but this violates the integrity of our donor information (how much raised, from whom, for what).

 What I have been asked to do is put the question of how we might be able to record information in RE that will match with what Finance will need to do (adjust the revenue coming in so that it is not double counted), if there is a way to record it.  I have made the point that RE is not a financial tool it is a donor database (development tool), but if anyone has any suggestions, I am open to looking at them to see if we have any options to persue.  I'd be happy answer questions to give a little more detail if that would make this more understandable.  Let me know.

Thanks for your input and I hope I have not given anyone else a pounding headache!

It may help to know how you report to finance your income.  I assume you are paying off the pledges in RE but when you send the cash to finance they can't tell what is new revenue and what is a receivable payment.  If so. is sounds like you are not using the GL distribution functions on your funds to have the proper GL codes show as different between outright cash and pledge payments.  If you are using Financial Edge or some electronic process I highly suggest you start using the GL function but it also works well even if you report to your finance office using paper reports.  You would want to use reports that show the GL codes so that finance does not even have a chance to enter the cash coming in as revenue when it is a pledge payment.  There is more to it but I suggest you look through the knowledgebase on GL codes and also search past postings.

When entering "the gross donations raised by this guild" are you entering them against the pledge as pledge payments, or are you entering them as new income (cash)?  Finance should follow your lead as to where and how the $$$ should be counted.  If you post the "gross donations" as pledge payments, thus reducing the amount owed monies should not get double counted.  

We do not use an electronic process.  Instead, we do a combination of reports at month end which Finance uses to complete their financial statements.  We have been using the GL distribution grid on the funds to help us link gifts directly to the accounts in the GL.  These show up in a Revenue report we provide each month (custom crystal report).  The other report that we use is a monthly pledge status report for the Capital campaign which shows the pledge balance at the beginning of the month, all transactions affecting the balance during the month and the balance at the end of the month.

 I had suggested using the 'Pay-other' gift type to record a reduction in the net pledge from our guild, without counting this 'payment' as new revenue.  In RE, the pledge balance decreases based on the net amount distributed from our guild's gross fundraising and their gross fundraising is still properly recorded and credited to the donors (another issue is that the money raised by the guild is not directly applied to the pledge, either by coding or by linking it as a pay-cash).  It looked like it would take care of our concerns for the database.  But the accountants brought up the fact that the pledge was still revenue (receivables) and that the gross fundraising from our guild represents double-booking, since it will be applied to the pledge (once expenses for the fundraising events are deducted).

 So, from the Finance side of things it appears that they need to see the guild's fundraising as directly paying off the pledge (which they seem reluctant to do, because it would remove it from the guild's financials, also there is the issue of gross fundraising vs. a net receivable) or the receivable needs to be decreased (which is unattractive to development staff because it looks like funding for the Capital campaign has been lost).  I hope that brings more clarity to the dilemma.

Thanks for the input.  As always, you provided very good suggestions.

We do not record the gross donations raised by the guild as payment against the pledge.  The guild has separate financial statements (though the money runs through our Foundation and our Finance department prepares their financial statements) and the line items need to reflect what they raise.  At a future point the guild will disburse a payment on the pledge from the net proceeds of their fundraising.

Since we are recording the guild's fundraising, but have also recorded the pledge that the net proceeds will pay, we run into the problem of potential double-counting of revenue, unless we make an adjustment.

I hate to say this but I am SOOO confused.

You recorded a pledge in RE.  Presumably Finance also recorded that pledge.  You get payments on that pledge.  You report to finance when these payments come in and tell them that they are pledge payments (not new revenue).

Where is the double counting?

It sound like you are running two different campaigns through your RE, the Foundation's and the Guild's.  Do you use the same campaign in RE for two different?   If you enter the Foundation under one campaign and the guild under another, you could separate the records when pulling reports.