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Counting/VSE categorization of bequest payment by living individuals

  • 1.  Counting/VSE categorization of bequest payment by living individuals

    Posted 08-30-2022 12:03 PM
    Greetings, colleagues.

    I found an older thread (2019) on a piece of this, but wanted to ask more specifically.  When a living individual makes a "pre-payment" on their bequest intention, we treat it as a payment against the original bequest intention (similar to previous thread); however, we are wondering whether this pre-payment is included as a "realized bequest" or in the outright gifts/payments category.  Right now, we are concerned specifically with VSE, but also want to ensure we categorize these correctly in general.

    I appreciate your input.

    Courtney

    ------------------------------
    Courtney Sims
    Director, Gift Processing & Data Management
    Bucknell University
    courtney.sims@bucknell.edu
    ------------------------------


  • 2.  RE: Counting/VSE categorization of bequest payment by living individuals

    Posted 08-30-2022 12:10 PM
    The prepayment is an outright gift.  Realized bequests only come when the requestor is deceased.

    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: Counting/VSE categorization of bequest payment by living individuals

    Posted 08-31-2022 02:30 PM
    When you say "pre-payment", are you recording the gift as a (partial) actualized gift against the PG, thus reducing your documented expectations balance for the Bequest?  That would keep the reporting tidy as far as not double-counting the PG and the pre-payments, especially across campaigns.  

    If as John says you should report these as outright gifts, would that mean you'd have to record the payment not as a pre-payment but as a gift, and then make a secondary entry every time payment was received, to withdraw and re-write the PG entry, potentially over and over again?  And having to remember to use the original campaign whenever the outright "pre-payments" were received (especially if payments were received in a different campaign than the PG)?

    Or do you have a cleaner process?  

    We also have a donor considering making payments in his lifetime that would reduce what is paid out through his will at time of death.








  • 4.  RE: Counting/VSE categorization of bequest payment by living individuals

    Posted 08-31-2022 03:02 PM
    On the VSE side it's certainly an outright gift, but I agree with Gwen that tracking it against the bequest intention is going to be really helpful for internal reporting. Of course, the bequest intention itself might not be documented to a specific sum - it depends both on your database practices and the capabilities of your donor database. 

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

    Schedule a 30-minute consultation now:







  • 5.  RE: Counting/VSE categorization of bequest payment by living individuals

    Posted 08-31-2022 03:28 PM
    My experience with this suggests that the following steps are deployed:
    • A bequest expectancy is entered - much like a pledge.  However, as it is revocable, it is not treated as a pledge.  You can, though, report internally on outstanding bequests.  Also, the VSE asks for new bequests recorded during the year.  CASE does not track them after.
    • While the donor is alive, they wish to accelerate the satisfaction of their bequest by sending in an outright gift.  As the bequest was recorded much like a pledge, you can record the gift like a pledge payment.  It retains normal gift characteristics without any planned giving coding.  For reporting purposes, it can be isolated from standard pledge payments as the bequest expectancy isn't a pledge but a placeholder (and a revocable one).
    • The above notwithstanding, by applying the gift to the expectancy, you automatically reduce the amount you expect to receive upon the donor's death.
    • When the donor dies, the proceeds are recorded exactly as above, but this time with coding indicating it is a realized bequest.
    Alternatively, but not my advice, is to treat these early payments like a gift from a DAF.  You record it as an outright gift.  But, you must manually reduce the bequest expectancy by a similar amount.  Of course, this treatment does not "tie" the two events together - an unknowing individual will not realize the gift is an accelerated payment toward the bequest.  Therefore, you would want to add thoughtful comments on both transactions to explain the relationship between the two.

    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