I am hoping someone could help me with this. I've read a lot of older posts about pledges and write-offs and we are at the beginning of our FY with a lot of open pledges due to COVID and canceled events...mostly advertising. Some of the pledges have been partially paid and some will be partially paid, so I have the amounts of each one that will satisfy their pledge - the remainding balances need to go away. There are a LOT.
What are the implications of doing an adjustment to the pledge balance to make it zero vs. doing a write-off?? What is the difference? Is it reporting? Financial trails?
Thanks in advance!
Jen
Jennifer
Write offs and canceling pledges often get confused. From a financial point writing off a pledge results in a bad debt expense. Canceling or adjusting a pledge down or to zero is a reduction of revenue. A pledge entered in a given fiscal year can be changed/adjusted as needed BUT once the fiscal year has closed the uncollected pledge balance must be written off causing an expense.
Now another fun fact - sometimes non-financial folks will think if a pledge was entered for a future year (and therefore temp restricted) it can be adjusted at any time until it is taken as revenue. NOT true -- once a pledge has been become part of the financial statement as a temp restricted revenue -- it too has be written off if it becomes uncollectible in the future.
CAUTION - in Tessitura once you Write-off a pledge it cannot be reversed.
I am also going to encourage you to talk to the Controller or someone in your Finance area about pledge receivables, write offs etc. Years ago I handled the temp restriced pledges incorrectly - I was called up short by a new Controller when it was learned what was done. I was always glad I learned the right way to do it.
Good luck
Thank you! I will bring this to our next meeting for discussion.