Fundraising on Commission
It might seem like a win-win scenario, but ethical issues mar the practice.
Mark Brown has worked in the fundraising world for over 20 years, often helping ministries seek out donors. Several years ago, he was offered the opportunity to raise $8 million for a political candidate, and he would be paid a 10% commission—$800,000.
Photo by kaboompics.com / Pexels / Creative Commons
But then he thought about the Christian donors he knew. “Had they known that, they would have been really upset with me,” he said to MinistryWatch. “I would have ruined my career.”
Brown turned the offer down, and continues working as a fundraiser today. He has fundraised and advised for Christian nonprofits and ministries, including Harvest Crusades, ChildFund International, and Cru.
Christian ministries face the perennial problem of how to raise funds. Sometimes a creative or inventive idea gives a big boost, either through a couple big donors or a burst of small donors. While brainstorming, the idea of fundraising on commission might come across the table. It sounds great: The ministry doesn’t pay the fundraiser anything out of its budget, and the fundraiser is incentivized to do a good job. It’s a win-win.
But Standard 21 of the Association of Fundraising Professionals’ Code of Ethical Standards says fundraisers should “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 short, this strategy has long been deemed inappropriate. It works against the trust required for ethical fundraising. Here’s why.
Fundraising on commission incentivizes dogged sales-like behavior, especially if a person’s livelihood is dependent on the income.
“Even a totally honest fundraiser working under these conditions would be tempted to distort information, seeing his rent check in the eyes of each prospect,” writes Kim Klein in an article for Nonprofit Quarterly. “[A fundraiser] may be willing to settle for a small gift in order to get it quickly rather than take the time a larger gift would require in proper cultivation.”
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When working on commission, a fundraiser is more likely to distort information — to the detriment of the donor — or take easy, money-making options instead of invested donor relationships — to the detriment of the nonprofit.
Donors may also question the fundraiser’s motives, dissolving trust between a potential donor and the nonprofit.
“What would the donors think if and when they found out that 20% of their gift, designated for a new building, went to this temporary staff person?” Kim Klein writes, “Donors know that it costs money to raise money, but few things make donors angrier than seeing that too large a part of their designated gift was used for expenses, and 20% going to one person’s salary fits that description.”
Brown, who works as a self-employed contractor, says he is transparent with donors about how he is paid. He follows the AFP Code of Ethical Standards, including its standard that fundraisers not accept payment as a percentage of contributions.
“Personally, I feel like my constituency, meaning my donors, would not be very happy with me,” Brown said. “If… somebody has given me a seven-figure gift for another nonprofit that I was representing, but they knew I got 10%? Or even 5%? They would never talk to me again.”
Additionally, this form of compensation is often not fair. In a car dealership or shoe store, typically a customer is engaged by an employee who helps them consider options and eventually convinces them to buy one. That salesperson is paid on commission because they are responsible for the sale.
The situation is different in the nonprofit landscape. In most cases, other nonprofit staff had already played a role in cultivating donor relationships. One fundraiser might have had the final conversation, but that shouldn’t grant them rights to the commission.
“I don’t do it,” Brown said, “and I don’t advise anybody else to do it.”
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