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A firm stand against commission fundraising

Leaders of charitable organisations frequently assume that fundraising firms work on a commission basis, and some do. However, in our opinion, no ethical firm which provides bona fide fundraising services or counsel will base fees on a percentage of funds raised.

A look at this issue from any point of view shows that it clearly is not in the best interest of nonprofit organisations or the people who support their work.

From the donor’s point of view
The practice of paying a commission makes donors question the motivation of those who are asking for their support. There will also be a question in donors’ minds regarding how much of their gifts actually goes to the charitable cause.

People want to know that their gifts are being used to accomplish the mission and goals the nonprofit organisation has promised to pursue. If donors sense that a large portion of their gifts are being held out to pay commissions to solicitors, consultants, or even development of staff members, rather than going directly toward the cause, their desire to give will be justifiably diminished.

From the staff’s point of view
Nurturing a donor who eventually offers a major gift is a long-term process involving many staff members and volunteers at various levels. Who can say exactly which person or function is actually responsible for bringing in a gift and which should therefore receive a reward? The only fair method of compensation is that of ‘an honest day’s wage for an honest day’s work,’ regardless of the Rand amounts of gifts generated.

From the board’s point of view
Leaders of a charitable organisation might believe that offering commissions on funds raised will motivate consultants, staff and solicitors to work harder and produce better results.

This arrangement may also look safe in that the organisation will not have to pay a commission if gifts are not forthcoming. A closer look, however, reveals that the process of fundraising is far too complex for such a simplified compensation structure.

Not only does generating major gifts require a long-term effort, but in the case of capital campaigns and deferred gifts, years  will pass before pledges are actually paid.

The complexity of record-keeping to track commissions owed on these gifts would result in chaos for the organisation.

It would also set the stage for mistrust and misunderstanding between the organisation and those to whom it owes commissions. Another tough question might be raised along the lines of, ‘Who’s job is it anyway?’ If a consultant were being paid a commission on funds raised and were directing a gift solicitation effort to be carried out by volunteer board members, there could be some feeling of resentment on the part of the volunteers in that they are being asked to do the actual work of soliciting gifts while the consultant gets paid for the results.

From the consulting firm’s point of view the majority of fundraising consulting work falls outside the actual solicitation of gifts. It involves organising donor records, conducting research, training volunteers, managing public image programmes, preparing materials, recruiting and working with development staff, nurturing constituents, attracting key volunteers, and of course, planning and managing annual funds, capital campaigns and special events.

A consulting firm is likely to become involved in many of these activities during its tenure of service to an organisation.
It is impossible to measure the value of these services in terms of immediate and direct gifts generated. Therefore, the only fair method of compensating the consulting firm is to agree in advance on a structured fee.

So, why all the discussion?
With all the obvious pitfalls of commission fundraising, you might ask why an organisation would consider entering into such an arrangement in the first place.
The fact is that the question of whether individuals and consulting firms work on a commission basis is constantly raised by leaders of nonprofit organisations during interviews with prospective fundraising consultants and development staff members.

For these reasons, the topic is being addressed here in order to restate our position and that of virtually all our professional colleagues. It is our belief, borne out by experience, that those organisations who make the commitment to pay appropriate fees and wages for services rendered will receive a full measure of commitment in return.

This mutual commitment to one common goal comes as close as possible to perfection, as it generally results in long-term fundraising success.

Reprinted with permission of Staley/Robeson/Ryan/ St Lawrence, Inc.

This article first appeared in Fundraising Forum: Issue 16, April 1991.