Wont accept commission
A percentage of the take – why not?
By Lisa Wells FFINZ, Chair of the FINZ Ethics Commitee
For those who would regard Philanthropic Fundraising as a type of sales and marketing activity it would seem to make sense to remunerate fundraisers in relation to the “sales” they make. However, as ethical fundraisers all over the world know, fundraising is far more complex than that.
Let’s think about the psychology that motivates philanthropic behaviour.
Donors generally don’t give money to receive a tangible benefit, but to meet their own needs in being part of something bigger than themselves. The benefits are intangible and may well include identification with the Mission of the organisation, reciprocity, desire for continuance, pride of association, habit of service, as well as many other motivators.
The reason for a donation may be the result of any of these motivators and may be precipitated by the person asking, or it may be in spite of the person who is asking. The donation may be made because of the donor’s past history of giving, or the emotional pull of the cause, or even because the donor had dinner with the Chairman the night before. Essentially – the ‘ask’ may have little to do with the decision to give and the amount given.
I need to say that fundraising on a commission basis is not illegal. The FINZ Code of Ethics defines it as “unprofessional”. Codes of other fundraising institutes describe it less favourably as “unethical”. Ethics, then, concern what is right rather than what may appear to be right. Most of the items in our Code of Ethics are included because they provide a level of protection to the donor.
When an industry becomes a profession there is a need for those involved to put the interests of the client or the community ahead of the cause or themselves.
So, from the donor’s point of view, why would it be inadvisable to pay the asker a proportion of the gift?
When fundraising gets media attention the most often asked questions are “how much of the donated funds reaches the organisation?” and “how much goes to actual service provision?” When the asker invests the same amount of time and skill in each solicitation (for example by internet, telephone or direct mail) it is hard to argue and even harder for the public to understand just why the asker should deserve greater remuneration because one donor is more generous than another. In these cases, it is essentially luck rather than skill that is being rewarded.
I work most often in capital campaign and major gifts strategy management. One reason against commission fundraising is unique to capital campaigns. In a capital campaign it is necessary to secure the top gifts early. These gifts are sequential and standard setting and are often made by persons already known to the organisation. If the Campaign Manager was in line to receive a “cut” of the gift then the donor, with the best interests of the organisation in mind, may quite rightly decide to defer giving until the campaign is over.
Such a decision would ensure that the campaign would certainly be over before it began!
What would I say to the Board member who sees this approach as leading to “fundraising heaven”? I would tell him/her that commission fundraising is not conducive to long-term donor retention and relationship building, that fair remuneration is a far better motivator for best fundraising practice and that the donors simply don’t like it. Oh, and by the way I’d ask the Board member to sign off on a carefully developed, achievable (with a stretch)
fundraising plan so that we have no danger of jumping on ad hoc fundraising “opportunities” like this again!
James Mutch FFINZ says…
"No professional fundraising institute in the world condones relating fundraising fees to the amount raised. The ethical fundraiser’s recompense is properly a predetermined fee based principally on the levels of knowledge, skill, experience and time employed plus logistical factors such as travel where applicable.
Modern professional fundraising got started in the first decade of the 20th century. By 1920 it had been learned - the hard way - that relating fundraising fees to the amount raised resulted in ineffective fundraising and bad relationships. Theory did not tell the early practitioners this - experience did.
Below are some of the fruits of their experience. Common sense dictates that we not repeat their sad experiences:
- Donations do not result from the work of fundraisers alone. The fundraiser merely harvests the crop. It would not be there to harvest if others had not previously planted and cultivated it. Why should the fundraiser get all the kudos? Most substantial donors have had long standing relationships with the donee institution. These relationships have mostly been fostered and cultivated over the years by staff, trustees and volunteers. They understandably would feel resentful if an itinerant fundraiser was to receive pecuniary gain because of substantial gifts resulting largely from their good work in cultivating the donors over the years.
- Large and generous pledges made early and made known are a powerful dynamic in setting the standard of giving among other givers. Some potential standard setters would delay their pledges until after the fundraiser had been paid off to avoid paying the fundraiser a percentage. This would deprive the campaign of one its most powerful fundraising dynamics and result in a lot less money being raised.
- There is a consistency in the giving patterns in successful capital fundraising campaigns. The top gift is at least 10-15% of the amount raised; the top 10 gifts amount to 45-55% of the amount raised. These are not arbitrary rules that professional fundraisers have made up; rather, they are facts of life that they have discovered. They occur with remarkable consistency in all types and sizes of campaigns. Consequently, for the goal to be achieved, it is crucial that the professional fundraiser indicates the level of gifts required from the top donors. It requires tact, skill and experience to perform this necessary task effectively. It would render a delicate, difficult job virtually impossible if the fundraiser was getting a percentage of the gifts.
- Other things being equal, it would be easier, cheaper and take less time to raise a given sum for say distressed children than for drug addicts, for guide dog puppies than for unmarried pregnant teenagers. Fundraising institutes consider it to be unethical for fundraisers to “cash in” on the emotional pull of their client’s cause, which they would do if recompensed by a percentage of the amount raised. The emotional pull of the cause is not the property of the fundraiser.
- Astute fundraisers identify those prospective givers who will respond better if the Board Chair, CEO or other staff person participates in the solicitation process. They, understandably, resist participating if the fundraiser is getting a percentage. Most great fundraising campaigns are characterised by intense support and enthusiasm of the organisation’s trustees and staff. One of the fundraiser’s roles is to generate, and cultivate this enthusiastic support and project it to the wider constituency. The fundraiser’s best efforts to do this will be perceived as self-interest and resisted if the fee is related to the amount people give; and so the campaign is robbed of one of its most potent weapons.
- If a trustee or other stakeholder introduces a substantial donor to the campaign, who should get the percentage?
- In most capital fundraising campaigns the money is raised in pledges and given over a 3-5 year period. It would be impracticable for a professional to wait that long for his/her fee.
- Mostly when the fundraiser has completed the service period there are several gifts still in the pipeline. These include: people who have made a decision and informed the campaign committee of it but for a variety of reasons have not completed the paper work; corporate and trust gifts where the decisions cannot be ratified until their board meets; etc. If payment to the fundraiser was made in anticipation of these gifts there is scope for the fundraiser to inflate the figures, or through rationalisation to claim the benefit of any doubt. If payment is made only after all gifts come in, there is scope for the client to claim that the gift was entirely generated after the fundraiser departed. Either way there is scope for a lot of bad feeling and messy litigation.
Anecdotally, I recall a situation where skilful and timely intervention by the fundraiser, despite opposition from the CEO and the board chairman,brought in a gift of $1500 from a previously alienated prospect. A few months after the campaign ended, the same donor gave the organisation an additional $450,000! Should the fundraiser have got a percentage of that too?
In some campaigns, substantial amounts are contributed by central or local government, quangos, trusts and foundations. The presentations to these bodies are usually one-offs, specially tailored to that particular prospect. Not infrequently the presentations are a team effort entailing various inputs from the fundraiser, staff, board member and specialist. It would extend the wisdom of Solomon to determine how much of the commission each participant should get.
If a proportionate percentage was to be paid to those who prepared the presentation, it is likely that all or nearly all of it would be prepared by the most dominant of those people, to the detriment of the quality of the presentation. So, as well as acrimony among those who should have been more involved, the organisation is likely to receive less money by reason of an inferior presentation. The likelihood of these unfortunate occurrences is minimised if the fundraiser is paid a predetermined fee.”