I've said it before; a number of recent conversations suggest to me that it's time to say it again.
I know there are many similarities that tempt us to treat these professionals - and to compensate them - in the same way. I know from experience that the first response of many performance-oriented nonprofit leaders, Board members and even their HR/compensation advisors is to put fundraisers on commission-like incentive plans.
Few seem to be aware that the Association of Fundraising Professionals, as part of its Code of Ethical Principles and Standards, specifically prohibits its members from accepting compensation that is based directly on fundraising contributions.
Specifically, the code states:
21. Members shall not accept compensation or enter into a contract that is based on a percentage of contributions; nor shall members accept finder’s fees or contingent fees.
This doesn't mean that incentives or performance-based pay plans are off the table. As the code further states:
22. Members may accept performance-based compensation, such as bonuses, provided such bonuses are in accord with prevailing practices within the members’ own organizations and are not based on a percentage of contributions.
Nevertheless, compensation plans for fundraisers which reward those professionals with a percentage of donations raised continue to proliferate. Even in the face of Intermediate Sanctions regulations that prohibit revenue-sharing arrangements in nonprofits as cases of private inurement.
Rather than putting development staff on commission, I advise my clients to tie any performance-based compensation to the successful execution of a broad and balanced fundraising plan, which includes goals and metrics beyond simply dollars raised. And to consider tying at least part of that compensation to the performance of the organization itself, which might include progress toward accomplishing its charitable mission.
Creative Commons image "Dollars" by Images_of_Money