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April 17, 2008

The Trouble With Percentage Payments

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.

What do you think?

— Caroline Preston

Thursday April 17, 2008 | Permalink

Comments

1. I’ve seen firsthand the difficulties with percentage payments. I worked for a small organization that hired someone to wear two hats: develop donors for educational programs, and solicit corporate sponsorships for events. He received a commission on the sponsorships, but none on the donations – they were “just part of his job.” Guess what he spent the majority of his time doing?

   — mike    Apr 18, 08:02 AM    #

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