Pay Me a Wage or a Salary, not a Percentage

A few years ago, I used to go to a monthly networking event in Portland, Oregon that was for people involved in “green” businesses and environmentally based nonprofits.  It was a good place to meet potential partners for my fundraising business.

I happened to meet a gentleman at one of these events who wanted to start a business that made a unique gardening system that he wanted to market to public housing developments and other urban dwellers that didn’t have the space for a traditional garden.  He wasn’t having much success finding investors for his idea, and I could understand his dilemma, as I had the same problem trying to get my business off the ground.  We chatted some more, exchanged business cards, and went on to meet other people at the event.

A week or two later, I received an email from him asking if I would consider writing a grant request for his project.  He found a state agency he thought might give him the funding to get his business off the ground.  I told him I would consider it, but we would have to negotiate fair compensation.  I estimated the hours of research and writing it would take, and then gave him an idea what it would cost for my services.  He thought about my offer, then gave me a counter offer of 25% of the grant money he would get.

I told him I could not accept that offer because I could not ethically accept those terms.  He could pay me an hourly wage, or he could pay me a set fee for my services, but I couldn’t accept a percentage of the money raised through grants.

I have seen similar offers over the years on job boards, Craig’s List, and even on Linked In.  I have also had requests from potential clients who wanted me to set up a fundraising event for them and offered to give me a percentage of the money raised.  Usually these offers were placed by someone who recently started their own nonprofit, and they knew very little about professional ethics of fundraising professionals.

Each time I received an offer or saw an ad, I would politely decline and send the organization or individual an email telling them they would not get the help of an ethical fundraiser because that kind of compensation is not allowed.  I would send them the link to the AFP Code of Ethical Principles and Standards where it states, “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. Business members must refrain from receiving compensation from third parties derived from products or services for a client without disclosing that third-party compensation to the client(for example, volume rebates from vendors to business members).”

I believe that individual fundraising practitioners, aka consultants, face this issue far more than employees of organization.  As a consultant in this current economy, it is sometimes difficult to turn down work when you have bills that need to be paid, and it is likely that those groups I had to turn down found someone to agree to their offers.  How it worked out for them, I don’t know, but I can say that I feel better about my choices professionally.

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About greatergoodfundraising

Richard Freedlund has been active in the nonprofit sector in a number of ways, both professionally and as a volunteer. He is the founder of Greater Good Fundraising, a business that helps schools and organizations raise money for their programs while accomplishing something positive for the community. After living in Oregon for 27 years, he has returned to his hometown of Rockford, Illinois and hopes to make his mark on the nonprofit sector there. He is the father of a talented jazz musician and the son of philanthropic parents that continue to support multiple causes. To contact Richard for consulting, fundraising, or speaking opportunities, email greatergoodfundraising@gmail.com or reach him on Twitter.com @ggfundraise
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12 Responses to Pay Me a Wage or a Salary, not a Percentage

  1. In a way, it’s nice that it really is such a clear line. It makes it very easy to say, “I can’t do that”.

  2. Pingback: Pay Me a Wage or a Salary, not a Percentage | derekllane

  3. Jeanne Donado says:

    The Grant Professionals Association (GPA) has the same principle in its Code of Ethics. For grant professionals not familiar with this organization, I encourage you to visit their website.

  4. Faye Williams says:

    Thanks for starting the dialogue on accepting a percentage for work performed. I have declined the percentage offer many times to the dismay of my clients who seem to think that I can “just do it” this one time. It is just not an ethical way to receive compensation.

  5. I have had my share of offers as well. I find the look on people’s faces when I turn down the offer very interesting. It’s like they are in shock that I would turn down the offer.

  6. Great post. Every couple of years, I get asked to endorse/promote a great new online business based around a shopping cart. The business sells products it doesn’t produce online, and promises to give a percentage of it’s sales revenue to charity. Sometime the business chooses a charity each week and sometimes a visitor can choose the charity they want to shop for.

    These businesses seem be created around a singular growth strategy, without any exit plan, and have a life-span of a couple of years, and then they fade out without having paid all the funds due to the charities.

    I’ve been watching these businesses come and go now for a dozen years. The business gets a lot of good press, lot’s of charities start promoting the business on their websites through banner ads and widgets and the company’s website seems to be doing a thriving business. Then one day the website starts too look a little broken, the company quits responding to emails, and eventually the website goes down.

    Every one of these companies I’ve ever looked into has some sort of percentage-based fundraising built into it, and yet many great charities still get involved. For me, this feels like it is in conflict with the AFP’s Code of Ethical Principles and Standards. To me, the charities involved are promoting the practice of percentage-base fundraising. As if taking the “tainted money? taint enough!” stance.

    It seems as though the charity is accepting money in exchange for placing the company’s banner ads on it’s website, and letting that company use the charity’s brand on it’s website to promote the sale of unrelated products. Has the charity basically hired a fundraising company that works on commission based on sales?

    I’m curious what you and your readers take on this is.

    • Kurt,

      Thank you for reading this and commenting. I appreciate it.

      I have actually written about similar arrangements in the past. Check out my post about reverse sponsorships, http://wp.me/p3Lk3H-A, where a privately run event pays a charity a fee or a small percentage of the money raised to use its name on advertising of the event. Another post about obvious conflict of interest is about nonprofits who joined a crusade against Herbalife after a billionaire hedge fund manager bet against the company and made 5 and 6 digit “donations” in his effort to win the billion dollar bet. http://wp.me/p3Lk3H-yx

  7. Roland says:

    I have different ethics.

  8. stephaniedu says:

    I know percentage-based fundraising is unethical according to AFP, but when a friend asked me why, I was stumped. She is new to fundraising and only wants to be paid based on her success. The only reason I could come up with is that being paid on commission puts other fundraising professionals at risk for competing with these individuals who are essentially offering to work for free. Is there another reason this is unethical?

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