Which timing statement about conditional pledges aligns with FASB guidance?

• A. Immediately upon the pledge.
• B. When the donor promises the funds.
• C. Not recognized until pledge conditions are substantially met.
• D. Recognized as a liability until conditions met.

Answer: (C)

Under FASB guidance, a conditional pledge is not treated as revenue or as a receivable at the time the promise is made. The donor’s obligation is contingent on future conditions, so the organization cannot recognize the contribution until those conditions are substantially met. This avoids inflating revenue with funds that may never become available. Once the condition is substantially met, the pledge becomes unconditional and is recognized as contribution revenue, with any donor-imposed restrictions reflected in the appropriate net asset category. Recognizing revenue immediately, or recognizing a liability at the pledge date, would misstate the certainty and timing of the contribution and misalign with the conditional nature of the promise.