Does anyone have a policy for how long you wait before you write-off pledges, particularly with telefund and direct mail pledges that haven't been paid off or even paid at all? Right now I track the outstanding pledges, but since we don't have an actual policy for when to give up, I think we write them off much later than we should. Was just wondering what other organizations do. Thanks for the input.

Our policy is to review the outstanding pledge based on who the donor is and when the gift was pledged. We have an annual gala and an annual golf tournament for which we receive a variety of pledges some of which will not be fulfilled in the same fiscal year that they were pledged. We send reminders monthly and begin personal calls the month after the close of the event. If the pledges are still outstanding at the end of this process, we write them off. This policy is in place in order to have a firm figure that will be disbursed to the beneficiary of the events. We prefer to close the event prior to the end of our fiscal year, December 31. Since some of these pledges were made in the previous year, they actually end up being open for 18 months. In most cases, this policy has allowed us to record the expense for the bad debt in the same year that the revenue was recorded for the pledge. The auditors are OK with our policy as long as its in writing and we are consistent with our procedure. In the past, this was a problem to monitor because we had to look in several places to determine just what made up the net asset in order to grant the funds. Now, we record our pledge receivables by project so that we will be able to see the outstanding funds before we project the payouts. Also, we have a policy for restricted funds that allows us to move funds that have had no activity for three years to the general project for their restricted category. We want all pledges in the original restriction to be complete. Otherwise, the funds cannot be moved if there's an old outstanding pledge. Make sense? It's rather complicated to explain in text. We have a lot of restricted funds but very few pledges. This will change when we enter our capital compaigns however. We might have to rethink the pledge write off policy as far as timing is concerned if the campaign is a lengthy one. Call me if you need more specific info.

Carol, I think you did a good job of describing your policy. You brought out two important keys: 1. The auditors signed off on it, and 2. Consistent treatment. As long as you have a good reason for keeping a pledge alive, you should keep it on the books. Document your reasoning with notes about your phone calls, collection efforts, or other evidence that supports your reasoning. On the other hand, if you do not have a good reason for keeping it alive, write it off. Same reasoning applies. Good luck.