With commission-based fundraising: charitable mission can become secondary to self-gain; donor trust can be unalterably damaged; there is incentive for self-dealing to prevail over donors’ best interests.
By Robert Evans
The tone of the potential donor’s email was skeptical and a little accusatory. Why, the individual wrote, should he or she support the congregation’s multi-million dollar capital campaign when a certain percentage of the funds raised will “pay” the fundraising consultant?
The questioning donor had a mistaken impression that his or her own synagogue would engage in the ethically problematic practice of commission-based fundraising. How, and why, would the member have gotten such an ill-formed impression?
The answer impacts impressions donors may have, especially based on previous practices dating back many decades.
Recognize that the charitable sector has worked hard to eradicate the practice of linking compensation to funds raised. Reputable organizations, including the Giving Institute and the Association of Fundraising Professionals (AFP), have advocated against the practice of commission-based fundraising in favor of a set, fee-based approach for a consultant or established salaries for in-house employees.
Moreover, in the seven years since eJewishPhilanthropy.com went live, the online platform has periodically featured posts pointing out the many issues presented by a commission-based approach, the most recent of which, by Gila Weinberg, CEO of Mikum Consulting, ran in May.
Why has commission-based fundraising been a recurring theme on ejewishphilanthropy.com? It is the same reason that the authors, editors, and redactors of Tanakh included so many references to the sin of idol worship. The practice refuses to die.
Commission-based fundraising still happens, more often than one might think. Some organizations are hiring fundraisers on the condition that they will be paid a percentage of funds raised and only when the dollars are received or establish compensation levels directly based on gifts received. So, it appears that there is still a need to explain why this approach doesn’t conform to accepted ethical practices and that it serves as a disincentive to donors to be generous.
Why is this practice wrong from a philosophical perspective? I’d suggest that all readers consult the AFP’s position paper on the topic, drafted originally in 1992 and revised in 2008.
It states that “With commission-based fundraising: charitable mission can become secondary to self-gain; donor trust can be unalterably damaged; there is incentive for self-dealing to prevail over donors’ best interests.”
The paper argues persuasively that the nonprofit world operates in a different fashion and purpose from a business. While fundraising professionals are expected to earn a living, their primary purpose must be aligned with the mission of the charity: to perform a public service. Having profit or financial gain as a primary motivating factor is fundamentally antithetical to the spirit of philanthropy.
The position paper states that, “Because commerce is profit-oriented, employee compensation in the form of commission or other percentage of income related to output and productivity is appropriate. Workers seek and accept commercial employment in return for personal profit. The motivating factor in charitable behavior is social benefit. What may be proper motivation in commerce is inappropriate in the not-for-profit sector.”
A donor’s decision to support a charity is based on trust, and fundraising based on commission erodes that trust. Overhead in fundraising is one issue that the nonprofit sector has faced for decades, as donors have demanded more accountability and that more of their dollars go directly to programs and services – and not to help raise more dollars or pay for heating the organization’s office. The charitable sector has made enormous strides in this regard, aided, or spurred on, by resources such as Charity Navigator. But the persistence of such unethical fundraising arrangements, coupled with stories in the press about unseemly behavior on the part of certain nonprofits, rightly feeds donor skepticism.
Why is this practice wrong from a practical perspective?
- It can take a development professional up to 18 months to build relationships; this can’t really be accomplished when the employee is worried about how he or she will put food on the table.
- It encourages fundraisers to grab low-hanging fruit rather than build the long-term relationships necessary to maximize a donor’s potential.
- When professional and volunteer and lay leaders are not working towards the same goal, it creates significant potential for conflict.
The Jewish world could use its own version of the AFP code of ethics. I reached out to the Union for Reform Judaism, United Synagogue of Conservative Judaism, Orthodox Union, Jewish Reconstructionist Movement and Jewish Federations of North America to find out if they had formal guidelines that address this and other issues. I heard back from three out of five of them and and none of those who responded had guidelines in place. Rabbi Judah Isaacs, director of community engagement at the OU, wrote that the organization “consults with synagogues on fundraising, sharing best practices among synagogues. We do not offer any formal guidelines.”
The major umbrella organizations are stretched thin and doing important work, helping their member agencies through an era of transition as they struggle to adapt to new spiritual, sociological, and communal realities. Still, I propose that the OU, URJ, USCJ and others could be doing more to take a leading role in promoting fundraising best practices. After all, resources are needed to meet our myriad challenges and donor resistance needs to be addressed.
How many potential donors have held back because of misperceptions about fundraising arrangements? If our umbrella groups took a more decisive stance, how far would it go to eradicate these donor misperceptions?
These questions are difficult to answer, but we do know that donor skepticism is hurting our already challenged collective efforts to support worthy capital, endowment, and other important projects. As a Jewish community, we must do whatever we can to more closely align our practices with our lofty missions. It is not a stretch to describe the trust displayed by a donor as sacred. Let us do all we can to uphold that sacred trust.
Robert Evans is President of the Evans Consulting Group, a firm that helps nonprofits meet and exceed their strategic and fundraising goals. He has more than 35 years of experience advising nonprofits on fundraising campaigns and strategic planning. A member of the Giving USA editorial review board and a board member of the Giving Institute, Mr. Evans is frequently quoted in media outlets such as The New York Times and is a regular contributor to eJewishPhilanthropy.com. He can be reached at firstname.lastname@example.org.