Lesson 6.5 – Handling Pledge Write-Offs

At some point, after a review of all your open pledges, you may find that certain donors are unable to fulfill all or a portion of their promised donations. Rather than carrying these uncollectible pledges forward into the next fiscal year, FastFund Raising allows you to issue credit memos to officially write off the balances and clear them from your receivables.

In this lesson, we will cover how to identify uncollectible pledges, the process for creating a pledge credit memo, and the critical data entry rules for write-offs.

1. Preparing for a Pledge Write-Off

Before modifying any financial data, you must identify exactly which pledges need to be written off. You can determine the outstanding balances by navigating to Reports > Pledge Subsidiary and generating either a Pledge Receivable Aging report or a Pledge Balance Due Report.

Prior to writing off the balance, it is highly recommended to open the original pledge transaction and make note of the specific Appeal and Gift accounts it was assigned to. You should also consult with your accountant; depending on your organization’s accounting practices, there may be a special income or expense account used specifically to charge uncollectible pledge balances. If so, you will need to create a new Gift code linked to that specific account before proceeding.

2. The “Credit Memo” Function

Pledge write-offs are recorded in the exact same transaction screen used to enter new pledges.

Steps to Initiate the Write-Off:

1. Navigate to Transactions on the Main Menu, and under the DONATIONS section, click on Pledges.
2. FastFund will display the standard Pledge transaction screen.
3. Locate the Options area in the upper right quadrant of the transaction screen and check the box for Credit Memo.

Crucial Data Entry Rule: When entering the pledge write-off, do not enter the amount as a negative number. When you check the Credit Memo box and save the entry, FastFund will automatically record the transaction as a negative pledge amount for you.

3. Entering the Write-Off Details

With the Credit Memo box checked, complete the remaining required fields to process the write-off:

• Donor & Date: Select the Donor Name and enter the date you are issuing the credit memo.
• Reference: Enter a clear reference for your audit trail. FastFund recommends a format that references the original transaction, such as “Write Off PL-1002”.
• Amount & Deductible: Type the amount to be written off as a positive number. The Deductible field will automatically fill with 0.00, as pledge amounts are only deductible when paid.
• Memo: Enter a clear reason for the write-off in the Memo field to maintain an accurate gift history.
• Appeal & Gift: Enter the specific Appeal and Gift the original pledge was posted to (unless your accountant advised you to use a specialized write-off Gift).

Once all details are entered, click the blue SAVE button.

4. Verifying the Write-Off

After recording the pledge write-off, the donor’s balance will be updated in the system. If you run a Donor Pledge Detail report, the report will display both the original pledge (as a debit amount) and the write-off (as a credit amount), showing that the outstanding balance has been successfully reduced to zero.