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Expectancy question

  • 1.  Expectancy question

    Posted 06-24-2021 04:18 PM

    We've received notification of an estate expectancy of a significant amount.  The fundraiser wants us to record and reflect in our fundraising activity.  Accounting has indicated they will not record it.

     

    How do we ensure that this money is not double counted when realized possibly 10-15 years in the future as well giving the GO credit for the gift and appearing in our fundraising for the year?

     

    Thanks

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  • 2.  RE: Expectancy question

    Posted 06-24-2021 04:24 PM
    Accounting should never record bequest expectancies.  They are revocable instruments and less dependable than binding pledges!

    You avoid double counting by recording the expectancy as a form of pledge in the advancement CRM - and not feeding that information to Finance.  When the bequest is realized you will record that against the expectancy, much like a pledge payment.  That payment is fed to accounting.

    Your gift accounting staff should be trained to always look for outstanding expectancies when receiving a payment from an estate.  That will ensure you don't count it twice!

    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: Expectancy question

    Posted 06-24-2021 04:28 PM

    Thanks, John.  I'm thinking it might not be revocable, though.

     






  • 4.  RE: Expectancy question

    Posted 06-24-2021 04:32 PM
    Bequest expectancies are almost always revocable.  But if Finance doesn't want to book it even if it is irrevocable, I think your process would still follow the same logic.

    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







  • 5.  RE: Expectancy question

    Posted 06-24-2021 04:58 PM
    Scott, 

    Irrevocable bequests, if this is what you're dealing with, are basically just pledge agreements. If a donor makes a pledge, and then passes, the beneficiary is a creditor to the estate, whether or not the pledge instrument indicates that the pledge would be paid in life or in death. In practice, what makes these types of pledges most collectible is if the donation is in exchange for recognition of some kind and that recognition was given, you've stewarded the gift over the years, and... here's the kicker... your finance department recognized it as an asset. If they did not, well, that's really good evidence that you, as the creditor, don't really think you're owed anything! 

    Sadly, if your finance office has determined that this expectancy is revocable, you should probably treat it the same way, since their decision diminished your claim that this is a legally enforceable debt obligation. Ideally, you could work with them to figure out what they would require to record the expectancy. They may want both the signed pledge agreement and a documented bequest intention to fulfill the remainder of the pledge.

    Note that if there is no recognition involved, this is unlikely to be irrevocable, no matter what. Part of what the courts are looking for here is whether the nonprofit performed their part of the bargain in reliance on the promise. If the nonprofit was not promising anything, or was awaiting payment to provide the promised recognition, courts have not been convinced that the pledge was truly a binding contract.


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

    Schedule a 30-minute consultation now:







  • 6.  RE: Expectancy question

    Posted 06-25-2021 08:58 AM

    Thanks, Isaac.  2 primary issues-Development wanting credit and me making sure this gift isn't duplicate when it is actually realized.

     






  • 7.  RE: Expectancy question

    Posted 06-25-2021 10:33 AM
    Most CRMs allow recording a contingent pledge type, as John outlined. If you happen to be in RE, the gift sub-type is usually where this functionality is parked. 

    Crediting is a policy question first, and at the data level you can ideally align crediting with gift and pledge types. 

    Alternatively, you could take the position that you see this as an irrevocable, non-contingent gift, record it that way, and throw the problem over the wall to finance. That would solve your internal tracking issues, and if Finance doesn't mind managing this exception, that's a reasonable way to go about this too. 

    Isaac Shalev
    Data Strategy Expert
    (917) 859-0151
    isaac@sage70.com

    Autocorrect was used in composting this email, please excuse any typos






  • 8.  RE: Expectancy question

    Posted 09-14-2021 04:08 PM
    To piggy back off of this discussion, we record revocable bequest expectancies in our CRM but I'm reviewing one that just came through where we are only listed as a contingent beneficiary of the estate plan. I suppose this isn't any more or less reliable than other revocable bequest expectancies we count but it did make me hesitate as to whether we should enter this one to count toward our campaign and, at the full amount. Any advice/thoughts?

    Thanks,
    Leah

    ------------------------------
    Leah Richards
    Director of Advancement Services
    St. John Fisher College
    lrichards@sjfc.edu
    ------------------------------



  • 9.  RE: Expectancy question

    Posted 09-14-2021 04:14 PM
    I think it depends on the contingency.  I tend to avoid counting these as they feel more revocable than the will already is.  However, if something like this has not been addressed in your campaign counting rules, I would let the Gift Acceptance Committee decide.

    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







  • 10.  RE: Expectancy question

    Posted 09-15-2021 03:23 PM
    Thank you, John. Funneling to the gift acceptance committee is a good idea. I don't like the idea of counting it either but if we do, it would be preferable to have this sort of backup and approval in place.

    Thanks again for the good advice!
    Leah

    ------------------------------
    Leah Richards
    Director of Advancement Services
    St. John Fisher College
    lrichards@sjfc.edu
    ------------------------------