Questions asked and FAQ's: March 2013

This is a difficult topic to find good benchmarks on. AHP has done some work in the Health Care world and AFP did do a survey which are referenced below. Most of the material we’ve seen does reference rates in relation to capital campaigns.

There is an AHP study Charitable pledges down due to slow economy (This is on Health Care) which also includes Canada

http://www.healthcarefinancenews.com/news/charitable-pledges-down-due-slow-economy

http://www.ahp.org/publicationandtools/News/Releases/2012NewsReleases/Pages/3612.aspx

Most of the material speaks to pledge default rates and related material.

From AFP

http://www.afpnet.org/Ethics/EmergingIssuesDetail.cfm?ItemNumber=4220

http://www.afpnet.org/Audiences/ReportsResearchDetail.cfm?itemnumber=11481

Coverage in Advancing Philanthropy(you may need to be logged in as a member)

http://www.nxtbook.com/nxtbooks/afp/ap_20120708/index.php?startid=54

There is a discussion on Michael Rosen’s Blog

http://michaelrosensays.wordpress.com/2013/01/25/to-sue-or-not-to-sue-over-unpaid-pledges/

From other sources

http://www.journalofaccountancy.com/Issues/2012/Mar/20114938.htm

https://connect.wels.net/AOM/Subsidiaries/foundation/Leadership%20Resources/Educational%20Resources/Partnership%20for%20Philanthropic%20Planning%20Papers/Pledges%20-%20Good%20Understandings%20Make%20Good%20Gifts.pdf

http://www.supportingadvancement.com/faq/pledge_collection_rate.htm

http://list.case.org/cgi-bin/wa.exe?A2=ind0706&L=ADVANCE-L&T=0&F=&S=&P=10431

http://lawprofessors.typepad.com/contractsprof_blog/2005/09/ny_high_court_t.html

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This is some material that was shared with us by a member that they found elsewhere. I have no direct source for this material.

II. From Indiana University’s Center on Philanthropy:

“To our knowledge, studies have not investigated the issue of pledge payment fulfillment ofcommitments of longer than five years. CASE Management and Reporting Standards recommend that acampaign be no more than seven years in length and that donors should fulfill their pledges within aperiod of five years, though longer period commitments can be accepted. However, there is nostatement that this recommendation in any way correlates to the issue of lessened likelihood of pledgefulfillment in the case of longer pledge commitment periods.”

III. From the Association for Healthcare Philanthropy:

“We are not aware of any studies or statistics on this issue. However, we generally agree with yourhypothesis that the longer the pledge period, the more likely someone will be to default on a pledge,especially in times of economic instability. Thus, the industry standard is that the pledge payment period should not exceed five years.

In our experience, we have seen very low default rates for well-solicited and documented capital pledges. You may see a write off percentage of 2-3%, but this is usually made up of smaller donors sotheir overall percentage is small. It is important to have good pledge collection procedures in place tokeep the uncollectibles to a minimum. These procedures should include regular updates to donors on theuse of their funds (i.e. project updates), pledge reminders notices, post campaign events, etc.Intervention on pledges which become delinquent is also important to making sure pledges are paid ontime. Most successful campaigns do not meet their goal and "stop on a dime". Going over your goal by 2percent or so would generally take care of any uncollectible pledges. One area where we have seen a problem with pledge collection is in campaigns which have a long pledge payment history of 8-10 years

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A general reminder that nothing we provide should be considered or should substitute for appropriate legal advice.