The Trouble With Percentage Commissions

Paying a fundraiser a commission is a controversial issue. Many professional organizations ban the practice outright in their Codes of Ethics. Here in Israel, while such is also the practice among professional fundraisers, every week advertisements appear for commission based positions in parts of our fundraising community.

From Prospecting, we bring you a recent post on the subject. We think this is a relevant and important issue in our international Jewish community. Therefore the complete post follows…

When Susan Herr ran a struggling charity, she was sometimes tempted to reward her fund raisers financially for their success, not just for their effort.

“My (desperate) thinking: I’ve got no money to hire someone and if this gal can bring in some funds, why not give her a big chunk of money I don’t think I can access anyway?,” she writes on the Philanthropomedia blog.

But Ms. Herr says that, in hindsight, she’s glad that most ethics codes prohibit fund raisers from being paid based on a percentage of the money they bring in. She encourages readers to take a look at an essay by Paulette V. Maehara, the president of the Association of Fundraising Professionals, on what she calls “the percentage problem.”

In a background paper on the issue, the association cites several reasons why percentage-based pay is a poor idea:

  • The mission and long-term interests of the charity could become secondary to the fund raiser’s personal interests.
  • Donors may be turned off by knowledge that the fund raiser will receive a commission on their gift.
  • Fund raisers will be more focused on their own interests, and not enough on those of donors.

A poll released at the association’s annual meeting last month found that accepting commission payments is the most common ethical concern veteran nonprofit officials have witnessed.