Organizations that need to raise money often think it makes sense to hire someone to raise the money for them and pay that individual a commission on the money they bring in. This is especially true of smaller nonprofits just getting started, where finding start-up funding is a challenge. As a consultant I am often asked why it’s not considered ethical for professional fundraisers to work in this manner.
These are some of the troublesome consequences if fundraising professionals rely on contingent fees:
- The charitable mission can become secondary to personal gain — and fundraising then becomes “just a sales job” and the charity, “a product”. Although making a donation is often compared to making an investment in the organization, there is a lot more emotion and trust on the part of the donor than in a sales transaction.
- Donor trust can be damaged by undue pressure to give and the uncomfortable awareness that the personal income of the fundraiser is at stake. As there is increased demand from donors for accountability by organizations, they are asking more questions about fundraising staff compensation. What donor will want to give more, so the staff person can earn more. Further, the credibility of the organization suffers.
- The fundraiser may be tempted to influence the nature, size and timing of a donor’s gift for immediate personal gain rather than the long-term benefit of the charity.
- This type of compensation ignores the role of volunteers and other staff members in the process. Raising funds effectively is a “team sport” and it is exceedingly difficult to credit one individual for a particular success.
- Conversely, it is often challenging to involve board members and other key volunteers and staff members in the fundraising program. Inappropriate delegation of the task to a “hired hand” just doesn’t work as well. Donors are far more favourably inclined towards those with a strong personal commitment to the organizational mission.
- A fundraiser who moves from one organization to another on this basis may feel no allegiance to a particular cause and there is a danger that the donor relationships will also move with that individual.
- It is unlikely that anyone else within an organization is paid on commission. Therefore there is a danger of distorted salaries. For example, the fundraiser earning substantially more than the Executive Director.
Hopefully this will provide enough compelling evidence to smaller nonprofits (and larger ones, too) as to why commission-based fundraising is frowned upon within the field. For those charities that are stymied about how to get started, here are a few suggestions on where to find start-up funds:
- Start close to home. Set a goal for how much is needed to get started and ask the Board to give it and/or raise it.
- Consider dipping into reserves or endowment funds as an investment in the future growth of the organization.
- Look for grants from sources such as United Way, community foundations, other foundations, or government entities.
- Seek a corporate partner that wants to help you long term and may provide some funding and lots of other “in kind” help.
- Identify a service organization to assist. Again they may offer person power as well as funds.
- Keep thinking outside the box. Perhaps an “angel” (not me) funder really is closer than you think.
If you still need more convincing about the topic of commission-based fundraising, follow these links to the Codes of Ethics of all of the major associations of fundraising professionals in the US and Canada.
Codes of Ethics
The Association of Fundraising Professionals (AFP) Code of Ethical Principles and Standards of Professional Practice. AFP is the largest membership organization of fundraising professionals in the world. This code of practice for professional fundraisers is a core element of the association’s mission. It has been in place since 1964 and was updated just two years ago. Each member of AFP signs the Code when renewing their annual membership.
The Association for Healthcare Philanthropy (AHP) Statement of Professional Standards and Conduct. This code is simpler and more to the point than the AFP statement.
The Donor Bill of Rights. The Donor Bill of Rights was created by several professional organizations and has been adopted by many others. In simple, untechnical language it explains what donors should realistically expect of a charitable organization.
The E-Donor Bill of Rights. An “E-Donor Bill of Rights” has been created to address concerns and challenges arising from Internet charitable giving. AFP is working with other philanthropic organizations as well as online service providers to ensure that online donors have greater confidence in the nonprofit organizations and causes they are asked to support.
The Canadian Centre for Philanthropy Ethical Fundraising and Financial Accountability Code. One of the only Canadian codes, it sets out principles and guidelines for charities to follow when engaging in fundraising activities. It also invites organizations to officially adopt the Code.
The Canadian Association of Gift Planners Standards of Ethical and Professional Practice. Very cleanly and clearly articulated, this code actually alludes to the fact that commission-based fundraising may even be illegal in some locations.
The Council for the Advancement and Support of Education (CASE) Statement of Ethics. Similar in style to the AHP code.
Judi Angel can be reached at judiangel@telus.net, by phone (604) 871-9400 or fax (604) 871-0555.
