How to Book Pledges with Multiple Payment Dates in QuickBooks
Published 12/17/2011 | 
We use the QuickBooks Non-profit. We are currently raising money for a kitchen renovation. I am not sure how to set it up in the chart of accounts and item list. One person has pledges $2,000.00. The $1,000 she will pay in Feb and the next $1,000 to be paid by June.
First create a revenue account called something like Pledges or Donations. Second, create a service item called the same thing using the revenue account you created.Then create two invoices (Customers > Create Invoices) for the pledges, both dated the day of the pledge – one with a due date of 2/1/12, the other with a due date of 6/1/2012. When you receive the payments, make sure to use Customers > Receive Payment.
This article is provided for informational purposes and is not intended to be construed as legal, accounting, or other professional advice. For further information, please consult appropriate professional advice from your attorney and certified public accountant.
Written by +Ruth Perryman, CMA, CFE, CFM, MBA
Ruth is the president of The QB Specialists, an Intuit Premier Reseller that offers huge savings and expert advice on QuickBooks POS and QuickBooks Enterprise. She is an Advanced Certified QuickBooks ProAdvisor and a member of Intuit’s Trainer/Writer Network. She is also certified in QuickBooks POS and QuickBooks Enterprise and has provided expert QuickBooks help to thousands of businesses all over the world since 1996.
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Ruth, I want to say how much I enjoy your blog and I agree with your solution.
Pledge accounting is always a problem, especially with QuickBooks. Posting a separate invoice to A/R for each anticipated payment definitely works. We modify the top to say “PLEDGE” not invoice. As you stated, 100% of the pledge must be booked into income on the date of the pledge, so it is critical that each invoice be dated on the same day. Of course this confuses the donor.
We have tried all kinds of methods. This one works, and you could print all of them and put them in a monthly sorter to mail in the month desired. We put a comment on the bottom that is similar to the one on (Sales) Donation Receipts but says “When payment is received, your donation will be deductable… no goods or services..”
The main problem with Pledge A/R is that the IRS requires a tax receipt (over $250) at the time of the PAYMENT, not the pledge. There is no way to customize or mail a Payment receipt, though there is a lame copy that it can print.
One method for invoicing is to post one Pledge Invoice but be very descriptive in the memo field. Test how the memo prints on a statement. “Pledge $5000. Payments $1,000 per year. 1st due Dec 2012″
Then simply send these. Sometimes the donor will pay the whole thing. If you watch the date range, it will show the original pledge and all their payments/ck #s. Put the IRS verbiage on it too.
Our worse senerio is where we have to do two steps. Post a credit memo using an item code called “Pledge Payment” that points to a clearing account to reduce the pledge invoice AND then print a Sales “Donor” Receipt using the same code. This gets mailed as the tax receipt and is pulled to the deposit slip.
IF we could set up an item code that pointed to another AR account, we could post the long term pledge to income & LT Pledge AR, then post multiple invoices to ST AR per the payment plan but pointing to the LT AR acct, with actual dates. That would solve the invoicing annually problem, but not the payment tax receipt problem.
Everyone needs to be aware that the “Non-profit” version of QuickBooks is simply regular premier with some cosmetic changes and no special features. Our only choice are work-a-rounds or buying an 3rd party add on.
I absolutely agree, Sara! The nonprofit version just gives you some extra reports and that’s about it. Setting up your classes correctly is key and you can do that in any version of QuickBooks.
Here’s our blog post about how to print year-end donation acknowledgment statements. Maybe it’ll help:
http://www.theqbspecialists.com/quickbooks-help/2009/07/09/how-to-prepare-year-end-donation-acknowledgement-statements-in-quickbooks/