Nonprofit Accounting Basics

Unconditional Promises to Give

Note: Articles published before January 1, 2017 may be out of date. We are in the process of updating this content.


What is an unconditional promise to give (pledge)?

FASB116 stipulates that "unconditional promises to give" are to be recorded at the time the NFP receives notification of the promise. This notification must be in written form, oral promises should not be recorded. FASB defines a condition as a "future and uncertain event" that must occur for the promise to give to become binding.

In many cases, the only notification an NFP receives is when they receive the contribution. In this case it is clear that the entire contribution must be recorded at that time.

However, in other cases the NFP will receive notification of a contribution prior to the actual receipt of the funds. In this case the NFP must determine if they have received an "unconditional promise to give", if so the revenue must be recorded.

Some factors that indicate an unconditional promise to give has been received are:

  • The donor has made payments under the promise
  • The promise contains a fixed payment schedule
  • The award uses words such as - promise, binding, agree...
  • The amount of the promise is determinable
  • The donor has the financial ability to fulfill the promise
  • A condition that is not truly uncertain - such as the NFP continuing operations
  • Examples of true conditions are:
    • Raising matching funds or receipt of other awards
    • Receipt of funds is based on a certain outcome
    • Amount of award is based on the amount expended