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Friday, December 9, 2011

Commission Does Not Pay: Compensation for Development Professionals

Why is compensation always such a hot button issue in the nonprofit world? On a regular basis, I hear questions (and complaints) about the following:

  • How are we supposed to pay for a fundraiser when we need someone to raise the money to pay for the fundraiser?
  • Can't you just take a percentage of the grant amount when it comes in?
  • Shouldn't you raise the money to pay for yourself?
Dutifully, I point to the Association of Fundraising Professionals (AFP) Code of Ethics and Standards of Professional Practice, to which all AFP members must agree to abide. Standard number 21 states:

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.

There is a white paper on why percentage based compensation is a bad idea for nonprofits, which boils down to two things:
  • Percentage based compensation puts the fundraiser's interests ahead of the organization's, and
  • Percentage based compensation, due to the length of time it may take for a gift to come to fruition, may produce reward without merit. 

I agree with these positions and do my best to comply with the Code of Ethics. I don't fundraise on commission. I don't write grant proposals for a percentage of the grant amount.

In the past, I have accepted bonuses and have done sales work on commission. And over time, I've come up with new reasons to add to why fundraisers should not be paid on commission.

Because working on commission stinks.

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