Is a Pledge the Same as a Donation?
Is a Pledge the Same as a Donation?
You know the answer.
I’m typically not one to watch “reality TV” or salacious trials, but I overheard something recently that immediately caught my attention. Evidently, in 2016, Amber Heard received a $7MM divorce settlement that she immediately claimed was going to be given, in its entirety, to charity. Specifically, she claimed that the funds would be split between the ACLU and Children’s Hospital of Los Angeles (CHLA).
It wasn’t the intense back and forth between attorney Camille Vasquez and Amber Heard that stopped me in my tracks. Rather, it was the realization that somebody (in this case, Heard) had made a pledge to Children’s Hospital in 2016 that she had not paid. As the mom of a child who had life-saving surgery at CHLA, I tend to get all “mama-bear” if someone, by choice and for their own publicity purposes, reneges on a gift. A multi-million dollar gift pledged to a nonprofit institution makes a substantial difference in that institution’s work, and avoiding payment of that gift— with press releases and lots of fanfare — is, in my opinion, unconscionable.
It was the next thing I heard, though, that made me even more furious. When Attorney Vasquez grilled Ms. Heard to determine if these gifts had been paid, Heard said “I use pledge and donation synonymously with one another,” Heard replied. “They are the same thing.”
After Vasquez asked the question again, the actress said, “That’s how donations are paid.”
I know that some people think the rules of giving are different depending on if you’re a “major donor” or a smaller donor, but a pledge is NOT a donation, regardless of the amount of money being discussed. The comment “That’s how donations are paid” suggests that the “common people” don’t understand how charitable giving works. That’s condescending and untrue. In fact, over half of the population in the US gives to charity annually. Some of those donors pay immediately, and others pay over time. Either are terrific.
One can pledge a donation, but that pledge is — well — a promise to make the payment. It seems proper to assume that the pledge will be paid in the very near future. Sometimes the pledge is to convey that part of the gift will be paid immediately, but the balance will be paid over time (just like payment terms in the for-profit world.)
When a donor pledges a donation — and insists on press releases and fawning accolades related to the donation — the nonprofit has no reason to think that the money won’t come in. But pledge money isn’t cash, and most nonprofits will hold off on actually spending that money until the funds arrive. However, when that gift is in the public eye (in a major way), the NPO will be thinking about and discussing how that donation, when it comes in, will be turned into impact.
I have no idea what Amber Heard’s intention was with her gifts, but six years without payment doesn’t seem at all reasonable. I can only imagine the angst at these nonprofits when they hear that “the check’s in the mail” (or similar) for six years.
Our nonprofits and their fundraisers work far too hard to be treated in this way — as nothing more than a tool to get publicity. Heard isn’t the first person to “use” nonprofits this way, and, unfortunately, she’s likely not to be the last. But maybe we need to question allowing those press releases without the receipt of any funds.
In 2016, Heard made a public statement announcing her $7MM donations. In the statement, she said, “Over the years, I have seen firsthand how more funding for staffing, better equipment, and better medication can make the difference between life or death for a child.” Yes, Ms. Heard. How can you, in good conscience, talk about funding making the difference between life and death, and then not follow through on your promise?
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- Lisa
Pledges show up on a nonprofit's books as a receivable, inflating that nonprofit's income for that fiscal year. If it never gets paid -- way too common, unfortunately -- it quietly turns into a cancelled pledge, negatively affecting the year in which the nonprofit gives up. Unfortunately, this serves as a deterrent to giving up on any pledge; the company's bottom line might move into the red. So, as the former president and Amber Heard are rightfully pilloried for breaking their contracts with charities, the charities are disincentivized to reveal broken pledges on their watch. Besides -- and I have heard these words come out of a board chair's mouth -- "they might pledge again."
And who gets hurt? As always, the people the nonprofit serves. It's a crime all the way around.
(Without taking time to search the internets to find a direct quote), one remembers that a solution was offered to Ms Heard during the "heady" days of she and Depp's public divorce settlement: Per Ms Heard's then-altruistic public proclamation to earmark her entire settlement to ACLU & CHLA, Mr Depp offered to instead and therefore, send the entire $7MM settlement directly to the institutions himself. He was turned down.