Fundraisers on Commission: Get What You Pay For

commission fundraisingBy Gila Weinberg

The classic nonprofit fundraising catch-22: you need a professional fundraiser to bring in support for your important work, but you don’t have the funds to offer a competitive salary for said fundraiser; after all, you don’t even have money for your core projects – how can you justify a full time senior salary?

One seemingly elegant solution to this conundrum is the fundraising on commission model.  Simply put, the fundraiser is expected to raise his or her own salary. The logic behind this approach runs as follows: since this person promises to bring in X amount of support annually, s/he can deduct a percentage or a monthly salary from whatever comes in.  The nonprofit does not take any financial risk, and both sides stand to gain from the relationship, right?

Not quite.

This approach demonstrates a lack of understanding of the fundraising process, both in terms of the fundraising professional and in terms of the donors themselves.

Fundraising is about relationships. As some fundraisers like to say, fundraising is really friend-raising. A good fundraiser develops sincere, respectful and involved relationships with donors and foundations.

These relationships can take time to grow, and they should not be rushed. Sometimes a fundraiser will spend years cultivating a relationship with a donor before the potential donor decides to become a supporter, or to transition to a higher level of support.

If the fundraiser is under constant pressure to bring in funds fast in order to support his/her own family, these relationships are going to suffer; in a long term view, this is not good business for the nonprofit employer.

Fundraising is a process. Fundraising takes time. A fundraiser who applies for grant support from a foundation can often wait close to a year until funds are received, if at all. Even individual donors often require a long process to ensure that their recipients will be responsible stewards for their funding, and that the project is the right match for their philanthropic goals.

A fundraiser generally needs a year just to set the right processes in motion, activate dormant relationships, and begin to develop new ones.  In this case, the fundraiser is expected to work for a year with little or no compensation, which is a sure recipe for tension, dissatisfaction, and mistakes made under financial pressure.

Donors want to know where their money is going. Foundations and individual donors request detailed budgets that make the intended use of their support crystal clear. Most donors will not accept a budget that shows a significant percentage of their support going to pay the fundraisers’ salary. And leaving ethics aside for a moment, if you decide to keep that element of the budget off your reports to the donor, you are in for a major breakdown in trust if they find out. For this reason, among others, commission-based fundraising is strongly discouraged by the Israel Association of Professional Fundraisers (IAPF) in their code of ethics by and the Association of Fundraising Professionals (U.S.) in theirs.

Professionals expect to be compensated for their work. A good fundraiser will do his or her work faithfully and professionally, and will expect market standard compensation for it. This is the way the world works in every other field.

For a fundraiser to accept a commission – only contract, s/he must either be desperate for a job or unable to justify a salary. In either case, it is not in the organization’s best interest to bring in a person with questionable professional skills and/or no relevant experience, just to save the cost of a fundraiser’s salary.

How to escape the catch-22

If you direct a small nonprofit, you’re probably thinking: Great, now I have no solution for my problem. I need a fundraiser and I can’t afford one.

So here are some alternatives to the commission-based model:

Start small: If you can’t afford the cost of a senior director of development, perhaps you can begin professionalizing your fundraising by hiring a less senior professional, such as a grant writer or a donor relations coordinator. Such a person could develop some areas of fundraising, begin bringing in additional support and / or maintain existing donor relationships so that they remain engaged with the organization.

You may find that this person could slowly grow into a more senior position, especially if you offer them some professional training paid for by the organization. In this way you can groom a young professional while slowly growing the cost alongside a (hopefully) growing income.

Consider your in-house options:  Sometimes the treasure you seek already exists at home. Take a fresh look around your office. Perhaps you already have someone on your team who has the potential to enter the fundraising arena.

You may want to consider a change in that person’s balance of responsibilities, making space for them to try their hand at donor relations, grant writing or fundraising events, while giving them some outsourced professional support as they find their feet.

Eventually, this person may become your full time director of development, but it can be a position that develops over time, in parallel with the real time successes that they are able to accomplish in the fundraising field.

Outsourcing as a temporary measure: In the long term, a dedicated in-house fundraiser is the way to go. However if you can’t afford that yet, you may want to consider working with a consultant to develop a fundraising strategy, and perhaps outsource some elements of the fundraising tasks such as grant and report writing, and arrangement of fundraising visits overseas. In this model, the director of the organization would be the central fundraiser vis-à-vis the donors, but would utilize outsourced professionals for the support s/he needs to get the job done.

Bottom line: fundraising is a profession; a good fundraiser deserves – and will demand – appropriate compensation for his or her work. Trying to avoid paying a professional what they deserve is not good business sense, in any field. But a little creative thinking can go a long way in helping you find a viable fundraising solution that will honor your donors, your fundraiser, and your budget.

Gila Weinberg is CEO of Mikum Consulting, where she helps nonprofit organizations find great employees, and helps great people figure out their next career moves.

An earlier version of this article was published on The Times of Israel.