Avoid Commission or Formula Based Compensation for Fundraisers

Earlier this month, we suggested that the challenging economic climate may provide the impetus for you to hire a fundraising consultant to handle a new development approach or project.  Perhaps you are trying to raise the resources to match a grant. Or, perhaps you are launching your first direct mail campaign.  At any rate, if you choose to engage a fundraising consultant to assist or lead the effort, during the pre-engagement phase, you should inquire not only if the individual is properly registered with applicable registration authorities, but you should also be sure that the individual does not expect to receive his/her compensation as a commission or percentage of the amount of funds raised.  In fact, the latter applies equally to consultants or staff fundraisers.

As the Standards for Excellence: An Ethics and Accountability Code for the Nonprofit Sector® states, “Fundraising personnel, including both employees and independent consultants, should not be compensated based on a percentage of the amount raised or other commission formula.”

There are a host of reasons to avoid this type of payment.  For instance, percentage-based compensation is considered unprofessional or amateur; may place pressure on donors for immediate needs; may be viewed as privately benefiting fundraisers rather than serving the public purposes of the nonprofit; and may short-change the organization or the consultant—just to name a few.

Did you know?  The Standards for Excellence® program’s educational resource packet, “Employment of Fundraising Personnel,” includes a detailed discussion on this subject. The packet is free and available to Standards for Excellence Institute® members.  It is available through the members only section of our website.  Hard copies are also available upon request.

Log in to access this educational resource packet. Not a member? Join now!

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About Amy Coates Madsen

Amy Coates Madsen serves as the Program Director of the Standards for Excellence Institute.
This entry was posted in Fundraising. Bookmark the permalink.

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