Payment by commission is defined as a professional fundraiser receiving, as remuneration for their services, a percentage or ‘cut’ of the funds they raise. In order to cover likely costs of salary and other expenses, a commission-based fundraiser would typically require 15% of the funds raised from their campaigns. Therefore, if a commission-based fundraiser secured a gift of £500,000 for their charity, they would expect payment of £75,000; if they raised £0, they would not expect to receive any payment.
As a ubiquitous tool in commerce and an established practice in many other sectors, why don’t all fundraisers take a slice of the funds they raise? Surely it is a win-win: charities give away a slice of money they couldn’t have raised anyway, and fundraisers are incentivized to aim high?
Although commission-based fundraising (CBF) is practiced in the UK, within the sector it is broadly considered to be unethical and a sign of bad practice.
Why?
- Money over mission –CBF encourages the pursuit of short-term success and personal gain at the expense of the charitable mission. 1,2
- Trust –CBF could undermine the trust of donors.1 This commercial approach is a disincentive to giving, does not properly reflect the value of the service provided, and encourages opportunistic and damaging fundraising practice.
- Team effort –fundraising involves a multitude of people working together. It would be challenging to correctly assign credit for revenue to a specific individual at the expense of another. 1
- Resentment –including both commission and non-commission-based roles within the same non-profit organisation could generate bitterness among individuals. 1
- Disproportional –the amount of work needed to secure a donation is often not directly associated with the amount received: CBF could poorly reflect the expertise and effort provided by the fundraiser.1
- Practicality –there are guidelines that make it almost impossible to conduct a successful major gifts campaign based on the practice of CBF. 4,5
- Legality – if a fundraiser were to be paid by commission, they may find themselves in breach of the Charities Act 2011. 4,5
- Accreditation – the practice of CBF is a barrier to membership of nearly all Fundraising Professional Bodies in both the UK and USA.
Sources:
[1] WeConservePA – Commission-Based Compensation for Fundraising
[2] Standards for Excellence Institute – Beware of Fundraisers Who Seek a Commission
[3] The Association of Fundraising Consultants – Code of Practice
[4] Cabinet Office – Charitable Fundraising: Guidance on Part 2 of the Charities Act 1992
[5] Fundraising Regulator – Professional fundraisers, commercial participators and partners
Written by Nicole Gray Conchar – Apple Fundraising Consultants