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payroll deduction gift recording

  • 1.  payroll deduction gift recording

    Posted 24 days ago

    Good afternoon.

     

    We are evaluating current gift processing and associated business process practices associated with our employee payroll deducting giving. Is anyone willing to share their standard operating procedure for how they record these types of gifts (specifically – do you record as a commitment/pledge, or just outright) and the best practice reasoning behind your protocol? Also happy to be pointed to IRS guidelines or additional resources on this topic.

     

    Gratefully,

    Kate

     

    Kate Kiser

    Director, Development Operations

    IU Health Foundation

    317.962.9304 | kkiser@iuhealth.org

    www.iuhealthfoundation.org

     



  • 2.  RE: payroll deduction gift recording

    Posted 24 days ago
    Kate, I would follow the same protocol you follow for your monthly recurring credit card donors.

    What I normally see are pledges only when a donor specifies a certain number of payments or a finite dollar amount.  But if they say to zap them for a specified amount until they say stop, then there typically isn't a pledge to record.  However, for organizations that are in a multi-year campaign, I have seen cases where they ask these donors to make a specific campaign commitment.

    Regardless, I tend to see payroll deduction and recurring credit card donors treated pretty much the same way.  It's all about consistency!

    John

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987






  • 3.  RE: payroll deduction gift recording

    Posted 24 days ago

    We use RE for gift processing and have two options we can use when it comes to our payroll deduction. The forms that the employees fill out list both options.

     

    1)  They can request that X dollars be pulled from their checks for the next X number of months. In these cases we figure out the total that will be given and add a pledge to the system with the payment schedule as monthly to match the deduction.

     

    2)  The second option is they can request that X dollars be pulled from their checks until they request (in writing) for the deduction to stop. In these cases we enter a recurring gift with the dollar amount matching the amount requested to be withheld.

     

    In both of these cases we send a conformation acknowledgement to the employee going over the amount of the deduction, where the money will be going, and that we will send a receipt at the end of each year totaling the amount given.

     

    We look at these gifts like we look at donors who allow us to charge their credit cards each month. Do they have a goal (amount) they wish to reach or are they just giving each month until they decide they no longer wish to give.

     

     

    Cindy Hornbeck

    Gift Processing Specialist

    University Advancement

    940-898-3894

    CHornbeck1@twu.edu

     

     

     

     






  • 4.  RE: payroll deduction gift recording

    Posted 24 days ago
    Kate,

    Employees participating in our annual giving program complete a pledge-payroll deduction authorization form in the fall of the year (we're a school with a June 30 fiscal year end).  We record the pledge in Raiser's Edge.  The payroll deduction is calculated based on the remaining number of pay periods in the fiscal year  Employees may also pay the pledge via a single payroll deduction.

    We record the cumulative deducted amounts as a pledge payment as of December 31 for payroll deductions July 1 - December 31, and as of June 30 for January 1 - June 30 deductions.  We issue acknowledgement letters with receipts for the respective amounts as of December 31 and June 30. 

    Karen

    Karen Cunningham

    Development Operations Coordinator


    North Shore Country Day

    310 Green Bay Road, Winnetka, IL 60093

    P: 847.881.8842

    E: kcunningham@nscds.org








  • 5.  RE: payroll deduction gift recording

    Posted 24 days ago
    We recommend treating these payroll deductions as pledges if there is an annual re-opt process. If there is no process, but the gift simply continues, then they're like recurring credit cards. The preference for treating them as pledges is twofold. First, it seems to capture donor intent better. Second, it takes near-certain future revenue and counts it, instead of treating it as contingent.

    Even beyond payroll deductions, treating recurring credit cards as we do, instead of as pledges, creates its own set of problems, and is perhaps anachronistic. Modern SaaS businesses use "evergreen accounts" formulas to calculate valuations for recurring payments that are more insightful and predictive of future revenues. I think it's something we need to consider as an industry. As recurring gift programs continue to grow, figuring their place in our reporting and counting is becoming more and more important. From an accounting perspective the legal enforceability of a pledge is what makes a pledge an accounting event that gives rise to a debt. But in practice, should legal enforcement be the relevant standard? Most of the time we want to know how much money we can expect to collect, and recurring gifts aren't getting counted in our normal reporting, even though they are a very reliable channel.

    /soapbox

    In any case, if you do treat these payroll as pledges, make sure you have a process in place in case of change/termination to adjust them at that point.


    Thank you,
    Isaac Shalev
    CRM Expert
    Sage70, Inc.
    (917) 859-0151
    isaac@sage70.com

    Schedule a 30-minute consultation now: