October is Ethics Awareness Month (#EthicsMonth) sponsored by the Association of Fundraising Professionals (AFP). I confess, when I was at the AFP international conference last spring and first heard the announcement that an Ethics Awareness Month was one of the efforts AFP was getting behind to attempt to make the Association more relevant for professional fundraisers, I was skeptical. “Really?” I thought, “This is the best idea the association’s marketing people could come up with to make the association’s membership more valuable?”
But I have to say, the discussion on Twitter and on professional discussion boards has been so much better than what I had hoped. In the process, I’ve become really clear that this is something we all (fundraisers and non-fundraisers alike) need.
One of the most frequently asked questions I get as a fundraising consultant is “Would you consider working for a percentage of funds raised?” In response, I always have to explain that the AFP’s ethical code prohibits fundraisers from working on commission. This usually causes confusion (and sometimes embarrassment) on the part of the person who has raised the question.
We’re all used to sales people, realtors, bankers, and many others working on commission so Dan Palotta and many others have asked, why not fundraisers also? What’s so wrong with fundraisers working on commission?
Traditionally, fundraising professionals have argued that despite what many think, it’s not in an organization’s best long-term interest to pay fundraisers on commission. A commission-based pay structure creates temptations for fundraiser to take actions that result in the biggest possible gift now, even if the donor, through a different, more long-term approach, would likely make a larger gift later. But, with donor churn and fundraiser turn-over, arguments that emphasize the value of the development of long-term relationships over short-term pay-outs carry less weight in many people’s minds.
Perhaps more significantly in recent years, many in the fundraising profession have been quick to point out that commission-based pay doesn’t work so well in other professions. Arguably, a commission-based incentive structure drove Wells Fargo’s fake account scandal which ultimately cost the bank customers, credibility, and millions in fines. Others have argued that the commission-based pay structure of bankers and realtors led to our financial collapse in 2009.
Still others have argued that it isn’t just that commission-based pay leads to unethical actions. They point to Daniel Pink’s work on personal motivation and argue that incentives don’t work. Pink argues that people are not as simply or directly motivated by incentives as one might think. For rote tasks, Pink argues, incentives work, but for more challenging intellectual work, pay incentives actually work as a disincentive and depress results!
One of the most compelling reasons I believe incentive pay for fundraising professionals is ineffective, unfair to fundraising professionals, and not in the best interest of the organization (either in the short or long-term) is that it totally misunderstands the drivers of fundraising success or failure. As I outlined last week in “It’s Not About Your Development Professional,” there are many, many things that affect the success or failure of fundraising effortws—some of them have nothing to do with fundraising. Some are not even effected by a fundraising professional’s efforts.
People do give to an organization when a fundraiser asks and when a fundraiser asks in an authentic, compelling way, but the most beautiful, effective ask from the most sincere and persuasive fundraising professional will fall on deaf ears if there isn’t evidence that an organization is making a difference in the lives of the people the organization serves.
When I was an Executive Director at the Children’s Center for Hope & Healing in Gainesville, GA, I wrote fundraising objectives into the performance goals of every single person on staff. At first, this was tremendously popular with the therapists who provided counseling (NOT!). But it came to be understand and played a role in creating a culture of philanthropy. Fundraising is the responsibility of everyone within an organization. I believe that if people want to offer incentives for fundraising success, they need to offer them across the board to everyone—like companies that offer bonuses to all employees when their stock price rises.
Incentive-based pay for fundraising professionals is wrong, I believe, because it fundamentally misunderstands what fundraising is and is not. It isn’t the result of the efforts of one person (or one department). When it fails, it is an organizational failure. If you want fundraising to succeed, make your organization one that everyone wants to help. Then get someone who is good at asking to help people know that money is a great way to help. Until you do that, incentives or not, fundraising won’t succeed.