In the world of non-profits, there is often confusion about the difference between a donation and a pledge. While there are many similarities between the two, they are treated very differently in CircuiTree’s DonorLink.
A donation is a tax-deductible cash gift to an organization. A pledge is a promise of a gift or several gifts allotted over time. The main difference between the two is that a donation is counted as revenue while a pledge is not. When you create a pledge in CircuiTree, you are essentially creating a record that a gift is going to come in on a future date. A donation has to be added to the account when payment is received for the gift to be considered revenue. When the pledge payment is received, the pledge status changes from “Active” to “Fulfilled”. If the pledge payment is not received by the pledge date, the status changes to “Ended Unfulfilled”.
Pledges can only be made with three payment methods: check, electronic check, and credit card. When you record a pledge using an electronic check or credit card as the payment method, CircuiTree will automatically add the corresponding donation when it runs it’s nightly processes on the date of the pledge. When you receive a paper check as payment against that pledge, you will create a new donation and under the pledge drop-down, select the pledge that correlates to the gift. The revenue for the pledge is only posted when the payment is received. That way, the pledge payment will be included in your daily batch and all accounting revenue will balance.
When your customers make online donations for future dates or recurring gifts, those will be recorded in CircuiTree as a pledge. This helps you to track the date the pledge was created along with the date the actual gift was received.
Below are some posts and screen shots that will help you gain a better understanding of donations and pledges: