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Is It Time To Rethink The Age Old Fundraising Pledge Form?

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We all know older traditions sometimes live well beyond their proper lifetimes. This seems especially true regarding print and online forms.

One such form, which comes in numerous flavors, is the fundraising pledge form. I am guessing such forms first came about as part of the early existence of capital campaigns in the world of philanthropy.

The main purpose for the existence of a fundraising pledge form is to establish and reinforce the commitment to give at a certain level. Obviously, the need for such a form is just as high today as it was back at the turn of the 18th to the 19th century. (I fondly recall seeing a few of the early case statements and documents housed within the Joseph and Matthew Payton Philanthropic Studies Library Archives within the Lilly School of Philanthropy at IU.)

Besides slight changes to our languages, there have not been a large number of reasons to radically change or at least slightly update the traditional donation pledge form.

Now there just maybe such a reason…

Donor Advised Fund Giving Is Prompting Change

Simply stated, donor-advised fund charitable giving and the use of pledges do not mix. The donor who establishes a donor-advised fund does so for possible tax advantages. Gaining those tax advantages mean that they can now just recommend donations to be made, which are almost always done as outlined. However, the donor cannot legally obligate the fund, which is usually held by a financial institution or a community foundation. Here is an explanation from an accounting firm that explores the subject fully.

This alone should prompt changes in the use of pledge forms by any nonprofit. Since a larger percentage of total giving is going to be done with the use of donor-advised funds in each year going forward perhaps the time has come for your organization to move away from pledge cards.

Hopefully, there are other ways to outline or express intent to give rather than stating it in a pledge. Most boards now utilize a document, which states the expectations regarding attendance, volunteering, giving, etc.

Let’s hope this blog post can spur a discussion about best practices in this key area of philanthropy. Please share in the comment area how you and your organization plan on handling this. I personally think a healthy debate might benefit all of us!

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Jay Love

A 30+ veteran of the nonprofit software industry, Jay Love co-founded Bloomerang in 2012. Prior to Bloomerang, he was the CEO and Co-Founder of eTapestry for 11 years, which at the time was the leading SaaS technology company serving the charity sector. Jay and his team grew the company to more than 10,000 nonprofit clients, charting a decade of record growth. Prior to starting eTapestry, Jay served 14 years as President and CEO of Master Software Corporation. MSC provided a widely used family of database products for the non-profit sector called Fund-Master. He currently serves on the board of the Center on Philanthropy at Indiana University and is the past AFP Ethics Committee Chairman. Jay is also the author of Stay Together: How to Encourage a Lifetime of Donor Loyalty.

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Comments

FayM

First, I would ask how many nonprofits would really take a donor to court over an unfulfilled pledge? Since the answer would hopefully be close to zero (let's talk positive relationship-building), then the matter of a pledge being legally obligatory becomes somewhat pointless. If an organization has no intent of enforcing the legal pledge obligation, then why couldn't we simply re-word the pledge form somehow to reflect that it is a "good-faith" pledge rather than a legally-binding contract?
Karen Ferguson, CFRE

My understanding is the a DAF cannot be used to fulfill a pledge. Therefore while a pledge form does not obligate their method of payment if the intent is to use a DAF or the actual payment when received is from a DAF then the not for profit is not supposed to use this gift to fulfill that pledge. I have not had a lot of experience with DAF gifts as of yet but I know that I was required to attest to the fact that these gifts were not in fulfillment of any pledge. So while I agree that DAF giving is a smaller percentage of overall giving I think we need to look at the issue and some how develop some "pledge" document that takes this requirement into consideration. Maybe that is the gift agreement that Michael references. I would be interested in seeing one of these.
Michael Shumway CFRE

I tend to agree with Ms. Kerber. Use of a pledge form usually (but not always) does not specify the vehicle for giving unless the donor wants it to. But from a broader perspective, let's consider the "grown up" pledge form... also known as the "Gift Agreement." A formal gift agreement is not only a good idea, but may be required in cases of large gifts that not only obligate the donor, but also obligate the organization. This would include naming opportunities, endowments, and the like. Such forms provide clear, written, and signed evidence of donor and institutional intent regarding the gift. They protect the institution AND the donor. The use of DAFs in no way affects the need for such agreements.
Keith Kerber

While always good to rethink the use of ANY form and whether it serves a valuable purpose, to do away with pledge forms because of the rise of DAF giving is a terrible thesis in my opinion. According to National Philanthropic Trust and Giving USA research, $16 billion was recommended/granted via DAF vehicles compared to $390 billion total charitable giving in 2016. Less than 1% of charitable giving was made via DAFs. That is not a reason to do away with pledging forms. Secondly, most pledging forms that I have seen and used obligate the donor NOT their chosen method/vehicle by which to donate. I am in the midst of a capital campaign right now. Pledge forms have several purposes: 1)helps institution to know what to expect over the payment period for a campaign 2) provides institution the ability to remind its donors (pledgers) what is outstanding and conversely allows the donor to know where he/she stands in regard to their decision and desire to support an initiative, 3) allows the institution to provide documentation when needed to get a loan in order to go ahead with initiative before end of pledging period 4)helps institution collect and/or clarify donor data such as contact info 5)provides the donor information they might want to know/keep that reminds them to fulfill their pledge..... Yes one should always rethink a pledge form for the specific initiative and institutional needs but I do not believe that pledge forms have outlived their useful life.
Anne Marie Watson

Jay, I agree, many forms, policies and and practises need to be rethought and redesigned for today's giving climate. I would love to see the form you mention above which outlines attendance, volunteering and giving. How is it used- is it an internal document, left behind for donors etc? Thank you,

Is It Time To Rethink The Age Old Fundraising Pledge Form?

Easily Manage Your Donor & Fundraising Needs in Bloomerang!

Donor Advised Fund Giving Is Prompting Change

How to Write a Fundraising Plan in 2 Steps!

Easily Manage Your Donor & Fundraising Needs in Bloomerang!

Exclusive Resources

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