“Charitable donations are not sales, and fundraisers are not salespeople.”So declares compensation consultant Ann Bares, the managing partner of Altura Consulting Group, in relation to commissions for fundraisers. She is right. It’s like comparing apples with oranges. Both are fruits but aren’t the same.
I wrote about this phenomenon previously. In my book “Learn From My Experiences” (www.normangildin.com), refer to the chapter called “The Ethical Fundraiser,” where I say that “Commissions extracted by fundraisers based on a percentage of the amount they raise are an inappropriate and unethical form of compensation. As a donor, I don’t want to find out that a sizable chunk of my donation went to the fundraiser.” I couldn’t have said it better myself. Oh, wait, that was me.
Fair remuneration is an issue that I get asked about from time to time by not-for-profits. This essay makes a strong case against commissions because there is still a sizable contingent of organizations that cling to this idea like wet clothes just out of a washing machine cling to your skin. They view it as an acceptable way of doing business but that’s definitely not the case in my view. However,according to an online post by Tony Poderis, founder of Raise-Funds.com, “The practice is increasing.”
During my life in Teaneck, or when visiting other communities, such as the Five Towns on Long Island or Riverdale, New York, I would often witness vans daily transporting what appeared to be “poor” people to local synagogues and private homes to solicit congregants or homeowners. It was an unspoken credo that there were “higher-ups” who demanded a commission from these folks. Drivers also insisted on a percentage of the collections as recompense for the drive. We are told that the solicitors also were known to keep a percentage of their collections before turning over the remaining balance to the charities that sent them and subsequently also paid them for their services. Dipping into the till twice.
The practice is still prevalent in many Jewish communities. Since most of these individuals do not feel ethically obligated to refrain from such behavior, the conduct continues unabated. In some communities, such as Bergen County, rabbinic authorities have implemented procedures to validate solicitors, but these measures don’t address the commission problem. There also are insufficient controls in place by local groups to prevent unfair treatment of subordinates by superiors.
The case against commissions for career fundraisers is strong. Two national trade associations make the point clear:
The National Council of Nonprofits succinctly states on its website:
“It is NOT appropriate for a nonprofit to compensate a fundraising professional based on a percentage of the money raised.”
The Association of Fundraising Professionals (AFP) likewise says in its Code of Professional 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… [and members shall also] not pay finder’s fees, commissions or percentage compensation based on contributions.”
Many state trade associations take similar positions. This requirement should not surprise fundraisers. Despite this, I am troubled that when I point out these standards to some colleagues, they scoff and then cite this or that organization that defies ethical concerns. In addition, they opine about customs in other countries. I remind them they live in the United States of America. Alas, it is what it is.
Kim Klein, a co-founder of the “Grassroots Fundraising Journal,” wrote a May 11, 2020, story “Why Good Fundraisers are Never Paid on Commission” which offers compelling arguments including:
- Nonprofit organizations do not compensate anyone else on commission.
- A commission tends to distort salaries… [a] fundraiser would be making $140,000 a year, quite a bit more than the executive director, who earned $55,000.
- This person would not bring his contacts with him to ask for money. He would be working with the organization’s donors… many big gifts take cultivation and several visits. He may be willing to settle for a small pledge to get it faster rather than take the time a larger gift would require….
- One person should not be in charge of raising money for an entire campaign…When he left, the group would be… richer, to be sure, but no wiser about fundraising. The role of a fundraiser is to get the board and other volunteers to help raise the funds.
- [As a final point,] the person coordinating the fundraising should believe in the cause and be a part of the team of people putting the campaign together.
The nonprofit organization should pay fundraisers fair and square through an agreed-upon meritorious salary, hourly or per diem charges, project allowances, retainers, and/or bonuses for high-level achievement, above all, if this is the normal operating procedure. Although commission-based payments are technically legal, they are not regarded as ethical or good practice.
Remember what Potter Stewart, a former Associate Justice on the Supreme Court, said: “Ethics is knowing the difference between what you have a right to do and what is right to do.”
Norman B. Gildin is the author of the popular book on nonprofit fundraising “Learn From My Experiences.” He is the President of Strategic Fundraising Group, whose singular mission is to assist nonprofits in raising critical funds for their organization. His website is www.normangildin.com.
