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In-house commission-based fundraising

Posted on 16 June 2010 at 1:44 pm
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  • Posted in: Law
  • 16 June 2010 at 1:44 pm #3451

    I’m posting this on behalf of a registered user of the site who would prefer not to post it in their name.

    Howard Lake
    UK Fundraising

    I would like to have the views of forum members about in-house commission-based fundraising, and whether it is ethically and morally justified, and legal.

    I work for a small local charity which has been in existence for nearly 30 years, and which has survived a few economic downturns over this period. Because of the present economic condition, our new CEO has decided to pay two of our existing salaried fundraisers a 1% commission of the value of funds they are able to secure from applications made to Trusts, and other funding bodies. This we are told is in addition to their normal salary and is being implemented so as to act as an incentive to the two fundraisers to increase our funding revenue.

    I feel very angry about this move especially since the two people in question have been successful in bringing in funds, and that as a charity we may be going down the road of the banks in their approach to rewarding selected staff with bonuses or in this case commission.

    No mention has been made as to whether the commission is to be taken off the top of the funds received, or whether it will be paid out of our general office funds. I wonder how the Trusts and others that we apply to for funding would view such an arrangement.

    Although this scheme was put to the Trustees direct by the CEO (and approved by them), the staff were not consulted at all.

    23 June 2010 at 8:43 am #11219

    I do hope that the fundraisers in question are advising every trust that they apply to that part of their grant will go towards bonuses/commission for them. It will be interesting to see how successful they are then!

    I certainly don’t think it’s morally right and unless they make the above statement, I’m not sure that it’s legal. The Institute of Fundraising’s Policy team will, I am sure, be happy to advise.

    10 July 2010 at 9:13 am #11223

    This is a thorny old problem, but a new wrinkle to it, as far as I recall.

    There has been quite a lot of discussion around “incentivising” fundraisers, and frequent allusion to various forms of payment by results, the bluntest of which is commission-based payment.

    Dan Pellotta’s argument at the IoF Convention this week was around not being embarrassed about being paid a reasonable salary for raising funds for important causes (and he was using US Medical Charity CEOs as examples, with salaries that made my hair curl!!!)

    One of the issues here is that, in all my years in the field, I don’t think I’ve met a fundraiser who was motivated by money, beyond earning a reasonable living – a bonus for hitting the target would not, in general, be a motivator.

    I wonder where the new CEO comes from – maybe (s)he doesn’t yet understand the sector (s)he’s joined. Certainly, to implement the scheme without prior consultation is foolish, and I would say consultation should extend beyond the fundraising team.

    However, I don’t think there’s a legal problem – it’s a while since I checked, but I don’t think in-house fundraisers have to make the same kind of statement as Professional Fundraisers (meaning people hired from outside to conduct the appeal), and as commissions go 1% doesn’t sound too much.

    They key problem for me, aside from the questionable motivational benefit, is the arbitrariness of commission payments : that excellent woman who took Gt Ormond St to the fundraising stratosphere would be one of the UK’s riches women by now, had she been on commission. By contrast, the guy who devoted his life to keeping his local community association on the road, raising modest amounts for revenue year-on-year, would still just be scraping by.

    And if it rains on your big event, or if Krakatoa blows its top the day your mailout hits the doormat of Britain, you are, to coin a phrase, stuffed!



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