Nonprofits might expect to have past due pledges during a slow economy, but the truth is that this can happen at anytime. In fundraising, it is common that, when you seek long term commitments over a multi-year time period, you will be faced with some of those pledges not getting paid on time or defaulting altogether.
There are a myriad of reasons why this happens. Some are logical and specifically tied to the events happening in the donor’s personal or work life. Other reasons might be the actual timing of the pledge itself i.e. a cash flow crunch is taking place or investment income the donor would use to pay the pledge is down or simply not there. Regardless of the reason, it is up to the nonprofits to remain loyal to the donor!
Never stamp past due on a pledge sheet and mail it to the donor. Nonprofits should view pledges as a good faith obligation versus a legal bill for services rendered.
If you find pledges are past due and several letters have been sent with no reply, then, as difficult as it might seem, a person of authority in your organization (namely the executive director or board president) should take time to make a personal phone call or face-to-face contact with the donor or donors.
Many fundraising CRM systems, like DonorPerfect, are able to generate pledge aging reports that can be used as a call sheet for board members. When pledges are tracked in a database, it makes it much easier to take the right action to ensure that donors receive the proper attention.
Depending on the size of the pledge and importance to your organization, you might want to consider asking the donor out for lunch or dinner. Let the donor know upfront that your organization is thankful for all that has been done in the past and anything else that might be done in the future.
Give the donor a status report of how things are going with the organization.
Next, you must stop and really hear what the donor has to say! Is there a specific concern that the nonprofit is not living up to their end of the obligation? If so, this needs to be discussed openly and honestly.
Lastly, let the donor know that if they need to delay paying their pledge for any reason, the organization is more than happy to extend the time period and plan a follow up with them in either six or twelve months depending on their schedule.
In all cases, nonprofits need to stick by their donors in both good times and bad.
DISCLAIMER: This information is not intended to provide legal or accounting advice, or to address specific situations. Please consult with your legal or tax advisor to supplement and verify what you learn here.