Beware of Fundraisers Who Seek a Commission

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If you are in the market for a professional fundraiser or solicitor, you’re not alone.  Most nonprofit organizations have employees or contracts with professional fundraisers or solicitors.  When deciding on the appropriate compensation for these services, always keep in mind that the Standards for Excellence® code prohibits percentage-based fundraising.  The code states, that “fundraising personnel, including both employees and independent consultants, should not be compensated based on a percentage of the amount raised or other commission formula.”  The Association of Fundraising Professionals Code of Ethics also advises against the practice. 

Although not illegal, there are more than a few good reasons to pay fundraisers based on the job and not on the amount raised. 

Paying by the job can save you money.  According to Association of Fundraising Professionals, there is a correlation between charities that have extremely high fundraising costs and those who pay their fundraising firms on a percentage basis.  Also, donors might also become disillusioned to learn that 30%, of their donation, for example, will be given to a professional solicitor.

Commissions can lead to a “money over mission” attitude.  The practice is also considered unethical because mission tends to takes a back seat to personal gain in these situations, as it creates an incentive for self-dealing. 

Fundraising should be a team effort.  In the article, Why Good Fundraisers Are Never Paid on Commission , fundraising expert, Kim Klein tells us that the most important reason that commission-based fundraising is a bad idea is that successful fundraising requires coordination between the board, staff, and other volunteers rather than having one person in charge of an entire campaign.

The bottom line is that we encourage all nonprofit organizations to refrain from paying professional solicitors based on the percentage raised or other commission formulas.  It is just the ethical thing to do.


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3 Responses to “Beware of Fundraisers Who Seek a Commission”

  1. Melissa Sines Says:

    Hi Jack – thanks for your comment. Although it may seem like it’s kind of the same thing, it’s different for all of the reasons listed in the blog, but most importantly because the professional society for fundraisers strongly advises against it and goes as far as to call it an unethical practice. For more information on why, see here: http://www.afpnet.org/Ethics/EthicsArticleDetail.cfm?itemnumber=734

    Basically:

    “The Association of Fundraising Professionals (AFP) believes that individuals serving a charity for compensation must accept the principle that charitable purpose, not self-gain, is paramount. If this principle is violated and percentage-based compensation is accepted:

    –charitable mission can become secondary to self-gain;
    –donor trust can be unalterably damaged;
    –there is incentive for self-dealing to prevail over donors’ best interests.
    –In addition, percentage-based compensation, however administered, can produce reward without merit.”

  2. Jack Benson Says:

    With commission based fundraising, the benefits to a Not-For-Profit can enormous. Especially for a NFP with limited resources. Lawyers have embraced this practice it for years, taking 30-40 percent on contingency — AND IS CONSIDERED ETHICAL. Like lawyers, if the fundraiser doesn’t produce, they get nothing. If they both only make a phone call to produce big results, it’s a windfall. Other times, it may take more work than the contingency/commission covers. But over time, it balances out.

    What’s the difference?

  3. Fundraising Companies | School Fundraiser Ideas Says:

    […] Beware of Fundraisers Who Seek a Commission « Standards for … […]

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