Question

When should nonprofit organizations record a pledge receivable, and when would they NOT record a pledge as a receivable and a current year contribution?

Answer 1

A Pledge is a commitment where the donor promises the organisation to give some amount or any asset on future date.

A Pledge receivable is recognised in the current year if it is (1) A firm promise made by the donor

(2) The promise is unconditional.

For example a pledge that says - I will donate $5000 for next 3 years , then the accounts department will recognise $15000 as revenue on the date of pledge.

But any pledge would not be recognised as pledge receivable if there is any kind of condition is to be met. Pledge receivable cannot be recognised before the condition is met.