Pledge Accounting      0061-01    ZZall

                                           - - - Rejoice in the Lord always ... again I say Rejoice !!! - - -

                              TO:  Interested Ministries                                                                                                 FROM: Jim Bramer, Retired Auditor-CPA
                                                                                                                                                                              FILE:  0061-01/all

                               RE:  PLEDGE ACCOUNTING                                                                                        Originated:   June 2000                                    

    Before us are some issues about accounting and reporting for "Pledges" made to Ministries .... especially in a church setting. Below is our 'spin' on such matters.


    A number of Ministries seek a financial commitment from their constituents for a variety of needed purposes. Some are annual commitment for the Ministry Operations,  but most, in my experience, are for special endeavors like Church or Ministry Building programs. Some Churches fund their Missions budget via this process..

Giver Records

     Of course, records of such financial commitments are a part of the DonaMail system -- Go Here  for more information about DonaMail. The Ministry usually tracks how the constituent is doing compared to their commitment. Also Go Here for some information about using QuickBooks (TM) (QB) QB GiverDBase Accounting - with portions adaptable for Pledge Accounting..

Commitment Types:

    Within the context of our discussion here, there are a number of ways such things are handled, but, in our opinion, there are two basic financial commitment (Pledges) types.

       Type One   

    The donor makes a pledge, or promises to pay xxxx dollars at a certain time over a period of a year, or more. Evidences of Type One pledges include such practices as:

  • The Ministry is more likely to maintain "Receivable like"  records;

  • That could include Accounts Receivable aging information;.

  • They virtually send out bills by reminding the donor of unpaid pledges;

  • If pledges are not made as promised, I am told they could even apply legal pressure --- which seems kinda unwise from a public relations perspective.

       Type Two

    The donor makes a contingent pledge. This donor promises to trust the Lord for the needed funds with which to pay this commitment as the Lord provides --- these are often called Faith Promises. Evidences of this type of agreement include:

  • Occasionally the agreed amounts appears within the DonaMail records;

  • But the Ministry seldom sends a reminder because the Ministry knows that the amount of Faith Promise giving is between the donor and the Lord.

Pledge GAAP Issues

    The current accounting regulations (GAAP, or Generally Accepted Accounting Principles) have some Pledge accounting and reporting requirements. We interpret them as follows:

  •    The above Type One pledges should be recorded as tangible assets on the Ministry books; including the necessary "Bad Debt, or uncollectible" steps. See below as to Pledge Reporting issues.

  •    The above Type Two pledges (Faith Promises) do NOT appear as tangible assets. See link at  5709  and go to a sample of how we would generally place such information into a Ministry's "Notes of the annual financial statements."  If anything, such dollars might appear as a contingent asset as a part of such year end Notes.

Pledge Reporting

        As expressed Here, we strongly believe that the Ministry Finance Team needs meaningful and complete operational data for daily finance decision making.

        But, in our judgment, Pledge Receivable (net of any allowance for Bad Debts) information is basically for annual reports to the Ministry's public, or to it's constituency.    Recording and reporting of pledge income during the year is unnecessarily complex and not a helpful management tool for the Ministry Finance Team.   Further, in our judgment, the annual reports should show the Unpaid Pledge Income as a separate income line and not be commingled with Donation Income.

    . The bulk of this Publication originated in January 2000 and was   . UPTD: March 10, 2010  


       (1) An Online Document, or WRIT (Writing), may be applicable to all Ministries, or it may be designed for just groups like: Evangelical Church, School, Missionary Agency or Organization, Christian Camp / Conference, or other named group.
        (2) WRIT formats include the perspective of   via IOMs (Inter-Office Memos) to the Ministry Finance Team (MFTeam); THRDs, a hypothetical Online conversation with members of the MFTeam; GLEANINGS, or Scripture within context of the MFTeam; FWIW; A periodic editorial (For What it is Worth); TRUISM, or believed Ministry Finance principles; and via FAQ, response to Frequently Asked Questions