Recently, a group of fundraisers held an event. Part of the program was a brief presentation on Ethics where the audience cheered when the proper ethical scenario was presented and booed loudly when an unethical scenario was. The one that got the loudest boos (thankfully) was the scenario around commission-based fundraising.
Unfortunately, professional fundraisers are increasingly hearing these dreaded words “we are hoping you might consider, instead of payment, taking a per cent of what you raise.”
A good fundraiser answers with a clear and concise, “I am sorry, I cannot as that is not ethical.”
The Association of Fundraising Professionals, the global professional association for fundraisers with more than 200 chapters worldwide, has a Code of Ethics which each member must adhere to. Being paid on a percentage basis is contrary to our ethical practice and organizations and/or members who pay fundraisers either staff or consultants on a percentage basis are in violation of this Code. While paying in this way might be presented as a “manageable” way to handle these costs, especially to small non-profits, it is unethical. Fundraisers cannot:
AFP has presented a position paper to outline why this is such an important standard for the nonprofit industry. It states “With commission-based fundraising: 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.”
A fundraiser’s primary purpose is to be aligned with and advance the mission and work of the nonprofit and to perform a public service. In the commission-based model of compensation, the focus of the work on the mission and the organization that the fundraiser is serving is at risk of being diverted. Personal financial gain can become the motivating factor and that no longer aligns to the mission to the spirit of philanthropy. The position paper states, “Because commerce is profit-oriented, employee compensation in the form of commission or other percentage of income related to output and productivity is appropriate. Workers seek and accept commercial employment in return for personal profit. The motivating factor in charitable behavior is social benefit. What may be proper motivation in commerce is inappropriate in the not-for-profit sector.”
The donor’s choice to make a charitable gift is based on trust and their timelines have to be respected. In most cases, a major gift may take 18-24 months to close. This cannot be managed responsibly by a fundraiser if they are concerned about their own financial outcome.
Fundraising is based on asking the right donor, at the right time, for the right gift by the right person. None of these fundamentals occur when there is commission-based fundraising. It encourages fundraisers to make asks quickly, potentially resulting in more declines and less funds raised. It also puts the charity at risk as it can damage a long standing relationship with a donor or prevent the development of a more meaningful donor relationship. Best fundraising practice shows that the right approach is building the long-term relationships necessary to facilitate the donor to what they would like to achieve philanthropically.
It increases internal and external conflicts. The fundraisers and volunteers are not working on the same goal for the donor or the organization.
Manitoba leads the country in generosity. We have the most individual donors per capita and our philanthropy is known to be visionary and inspiring. With this standing brings a level of responsibility. We need to lead the nation also in our ethical standards as organizations, volunteers and professional fundraisers. It is important that each organizational board member, leader and fundraiser reviews the Code of Ethics and the Donor Bill of Rights and ensure their standards are captured in all your fundraising activities.
For more information, please visit the Association of Fundraising Professional’s
Code of Ethics
Donor Bill of Rights
Position paper on percentage-based compensation