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Pledge fulfillment is important for nonprofit sustainability and fundraising, but sometimes pledges can go unfulfilled, resulting in setbacks for your nonprofit organization. In cases where the pledge is from a major donor, getting it fulfilled is essential for earning the significant funding your nonprofit was counting on.
The rate of pledge fulfillment can vary by organization, but all nonprofits should have a plan of action in case any pledges go unfulfilled. This guide will help your nonprofit prepare for this scenario by examining common reasons why pledges aren’t fulfilled and exploring practices that can help reduce that unaccounted-for amount.
Why do people pledge donations?
Pledge fulfillments allow donors━especially major ones━to give a large amount of money in smaller increments over time. Unlike recurring donations, pledges establish a schedule of incremental payments that will be given over time, eventually accumulating into an agreed-upon major gift total. Major pledge donations sometimes also have binding contracts that establish the parameters of the pledge and outline how the donated funds will be used.
Why do some pledges go unfulfilled?
Pledges fall through for a variety of reasons that vary from donor to donor and nonprofit to nonprofit. Some of the most common reasons can even be beyond your control, such as unexpected financial hardship or death.
However, there are causes that organizations can and should focus on to earn promised donations. There are also steps that nonprofits can take to increase the likelihood that pledges will be fulfilled, including:
Document pledge agreements
For smaller gifts, documenting all a pledge’s terms often isn’t crucial, but getting down the specific agreements in writing is essential when it comes to large gifts.
Once a major donor expresses interest in pledging, your first step should be setting out the exact terms and conditions for the pledge. By documenting the terms of the pledge right at the beginning, you can mitigate any potential issues or confusion that may occur later on. For example, you can outline the payment schedule, establish contingency plans if the donor is unable to give, and clarify exactly how funds will be spent.
Establish a timeline
As mentioned, part of the documentation process should include a detailed timeline for payments. Also, add an outline of the actions that will be taken if a pledge is unfulfilled or needs to be deferred.
Donors may be unable to meet a scheduled pledge payment for reasons beyond their control but still want to honor their promise as best they can. Work with your donors to restructure their arrangements in these situations. For example, your nonprofit can provide pledge deferrals to help donors by changing the donation schedule, reducing the amount, or substituting a cash payment for an agreed-upon asset.
Creating a new arrangement will ensure your nonprofit eventually earns the otherwise lost funds and maintains a positive relationship with the donor, which can lead to more support once the issues disrupting their pledge are resolved.
Staying in touch with your donors keeps your relationship with them strong and ensures their pledges are fulfilled. The frequency of communication should be just enough to remind them about their pledge. Plus, if they want their pledge to go to a specific program, providing updates about that initiative can reassure donors that their gift will be put to good use.
Monitoring your rate of unfulfilled pledges
Even with a documented pledge agreement and excellent donor communications, unfulfilled pledges happen as some events are simply out of your nonprofit’s and donors’ control. This is why calculating your pledge fulfillment rate year over year is an essential performance measurement. Work with donors to find alternative methods to secure their pledged gift and have a back-up plan prepared in case a percentage of pledges fall through.