February 28, 2017

Should Fundraisers Receive Performance-based Pay?

No.

But since you clicked on the article, you were probably looking for a more in-depth answer. In truth, I have been asked this question several times over the course of my career. Sometimes, it was a board member looking to bring a business sector approach to the nonprofit he was advising. On other occasions, the question was raised by individuals looking at fundraising as a potential career change.

Whether your organization is working with a fundraising consultant or a paid fundraiser on your staff, there is one guideline that should always be adhered to: there should never be a performance bonus awarded for achieving or exceeding fundraising goals. While there is no law prohibiting performance-based bonuses, the Association of Fundraising Professionals and other professional associations have adopted strict ethical guidelines specifically addressing this issue.

A fundraiser first and foremost needs to represent the organization, and the mission and interests of the organization. Any performance-based pay undermines that relationship. Rather than working for the betterment of the organization, the fundraiser now works for their self-interest. This can potentially have devastating consequences for the long-term relationship between the organization and their supporters. A fundraiser working toward performance bonuses is easily tempted to push harder for a major commitment from the donor than the donor might otherwise be comfortable with. This could turn goodwill toward the mission of the organization into a serious case of buyer’s remorse, or worse compromise the donor’s financial well-being and the long-term prospects of the organization’s fundraising program.

The only exception to this rule is if the organization has standard practices for performance-based increases in place that apply to all staff. Example: at the end of the fiscal year, the board of directors approves a 1% salary increase for all employees. In addition, the board sets aside some funding so that a small handful of outstanding employees may receive an additional 1% merit increase for exceptional work in the prior fiscal year. Only under those conditions should fundraising staff ever be considered for a performance-based increase. Otherwise, there should never be bonuses or percentage payouts being made for raising a certain gift amount. There should never be an agreement in place granting fundraisers a percentage of any gift going to the organization. The same applies to outside consultants. Similarly, if a part-time fundraisers puts in the time to research and write a grant application, the fundraiser needs to be compensated at a previously agreed upon rate – not if and when the grant request gets funded.

While these types of performance bonuses or sales commissions are standard practice in the corporate sector, it is never permissible to implement them in the nonprofit sector. Board members with a corporate background may push the organization to adopt a performance-based pay model in lieu of a higher set salary for the fundraising staff. It is in the best interest of the organization and its relationship to its donors to categorically reject those ideas.

About Marc Huber

Marc Huber is a fundraising professional with over seventeen years of experience, including strategic messaging, board development, annual giving, capital campaigns, and volunteer consultation and training. He's also the author of The Fundraising Co-Pilot.

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