As a fundraising consultant, the issue of commission-based fundraisers comes up for me all the time. There is an urgent and ongoing need for fundraising, but too little money in the budget to hire someone full time. That requires salary and payroll taxes and all the collateral expenses, and management, of an employee.
It would seem logical, then, to bring in someone to do this work and pay them a percentage of what they raise. Their desire for a good income would inspire them to raise as much as possible and that would work out great for your organization.
Why is it, then, that professional development staff react so poorly when this is brought up?
Because it is a fundamentally bad idea, fraught with all sorts of problems that are a lot tougher to fix than avoid.
It’s a Matter of Standards
The Giving Institute and the Association of Fundraising Professionals have standards of practice that specially prohibit commission- based fundraising.
- According to The Association of Fundraising Professional’s Code of Ethical Principles and Standards, “Members shall not accept compensation or enter into a contract that is based on a percentage of contributions; nor shall members accept finder’s fees or contingent fees.” In this context, a finder’s fee is defined as “a fee paid for bringing a donor or a contribution to a not-for-profit organization”.
- The Giving Institute’s Professional Code states: “Member firms charge clients based upon the professional services provided. Their fees are never based upon charitable gifts raised or a percentage of contributions.”
There are 3 basic ideas that support this attitude:
- Donations are voluntary actions for a public benefit; in other words, the gift ought to be a choice made by the donor without undue pressure.
- Seeking and accepting donations should not personally benefit the staff, contractors, or representatives of a nonprofit; ideally the funds are being raised to support the mission of the organization, overall and for the long term.
- A donor’s trust and attitude towards the nonprofit can be irrevocably hurt by undue pressure and/or the awareness that a commission will be paid from his/her gift. I believe most donors would prefer that all of their gift go to the organization, rather than losing a percentage to the fundraiser.
The drive for commissions may cause commissioned fundraiser to prioritize their own income over the organization’s mission, the long-term interests of the organization or the donor’s best interests. When the annual list of America’s worst charities comes out each year, look to the ‘professional’ fundraising tactics they use and the bad taste they leave with everyone as their commissions often approach 90%! These big machines are the poster children for what is wrong with this type of fundraising.
This approach can redirect the priorities of the staff energies with a greater focus on immediate income rather than the longer term strategy and goals of a strong development department. Ideally your development strategy addresses the strength and longevity of your organization and encompasses several types of gifts, some of which need to established over time such as major or planned gifts. These gifts can’t be often be realized in the short term but are crucial to the long term financial health of your organization.
Ok, Now What Do We Do?
Master the basics yourself.
The basics: you must feel comfortable asking for an annual gift, hosting the annual event, or sitting down down with a donor and asking them for $500 (or $5,000—whatever the amount a “major gift” is for your nonprofit).
You should know how to do all of this and are out there doing it ( with all that spare time you have). If your event is unsuccessful, the campaign fell flat or you are afraid to ask someone for a gift, you are not ready, nor is your organization.
Don’t borrow failure, learn to do what you need to do. Practice. Practice some more.
Consider a consultant to set up a donor database.
Professional fundraising requires good data and reliable information.
Fundraising isn’t about this dollar, it’s about the next dollar; that means your development plan has to include and consider going back to your donor and creating a sustainable program over time. It also means having the information about that donor to go back next year. You can’t get the next dollar if you don’t know where this dollar came from.
There are many donor databases are free or are relatively inexpensive and setting one up can be a massive benefit for your nonprofit. Simply cataloging all the information about your donors in one place is huge all by itself.
Contracting with an expert will help you a lot here and often times the support from the database can teach you a lot about how to collect and sort donor information.
A full time development director is expensive ( if they are good they need to be paid competitively and if they are bad, you will pay for that in the long run) so perhaps consider hiring from a lower level.
A part-time data entry position or a grant writer or a donor relations coordinator (careful of titles here, you are not ready to have a director yet) may be a way to address this problem.These jobs are basic functions of fundraising that can be done while allowing the staff to spend more time on the big picture, strategy and campaigns, in accordance with the goals you have set.
Focus on ONE job: fundraising
Resist the urge to give additional duties such as social media or helping out at the office if you plan to hire a strictly fundraising position. If you are at the stage where your fundraising needs that much attention, don’t distract with other less important tasks. This is an important step that you will be taking, be sure you get the most out of this position is the area you hired them for.
What Do You Want?
One of my favorite sayings is “ If you don’t know where you are going, it doesn’t matter how you get there.”
Know what you want and where you are going: grants, memberships, events, what are your targets and how are you planning to get there? What type of new hire will work best with your plans? What guidance and direction will you provide for your fundraising staff? Be clear for yourself, your board and for your new hire on what you want, need and expect.
Create clear targets and plans of how much, how and when.
A Rose By Any Other Name:
Fundraising, resource development, advancement, whatever you want to call it, generating income is the most critical part of your day. Take advantage of the opportunities that strong fundraising can provide to your organization and the recipients of your work.
Be proud of the work you do and the work you are prepared to do to support your mission. Think long term, sustainable and dynamic, rather than ‘just need to get some dollars in quick”; it will pay off.
Need some help figuring out the best way to move forward? Just ask….310 828 6979
image credit: https://rorytrotter.files.wordpress.com/2013/03/incentive-pay-jpg.