FWIW: in the 2010s I remember being surprised to learn that the Association of Fundraising Professionals opposed percentage-based compensation for full-time nonprofit fundraisers.
I don’t have a refined view on pros/cons of variable compensation structures like this in certain nonprofit contexts, but am sharing this primary document in case valuable as food for thought. Some excerpts are below.
AFP holds that percentage based compensation can encourage abuses, imperils the integrity of the voluntary sector, and undermines the very philanthropic values on which the voluntary sector is based. AFP stands firm with its Standards which prohibits members from working for percentage-based compensation or accepting finder’s fees...
Members shall: 21. 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. 22. be permitted to accept performance-based compensation, such as bonuses, only if such bonuses are in accord with prevailing practices within the members’ own organizations and are not based on a percentage of contributions. 23. neither offer nor accept payments or special considerations for the purpose of influencing the selection of products or services. 24. not pay finder’s fees, commissions or percentage compensation based on contributions.
Thanks, that’s interesting. I think some of their reasoning seems reflexive: in particular their first and third stated reasons only state possible downsides without weighing them against the comparable upsides of incentivising work that supports the charity’s outputs.
The rest doesn’t seem like it would apply to the model we’re thinking of, in which all staff would receive a percentage of all donations. Eg:
Percentage-based compensation can provide reward without merit. Contributions that
materialize at a given moment are often the culmination of the efforts of many people,
including volunteers, over long periods of time
This doesn’t seem to apply if it’s not just the fundraising staff (and to be clear, we don’t have anyone for whom fundraising is more than a tiny fraction of their role).
And
The fundraiser whose compensation is based on a percentage of charitable
contributions raised may influence donor choice so as to generate the greatest current result
rather than preserve the donor’s assets for the best long-term benefit to him or her, and to the
charity.
This doesn’t seem to apply if staff were getting a percentage of all donations.
Their fourth point—that nonprofits do better when they ‘actively involve’ volunteers is unsubstantiated and, IMO for most nonprofits, false. See eg these discussionsonthesubject.
On their last remaining reason:
Donor attitudes can be unalterably damaged in reaction to undue pressure and the awareness
that a commission will be paid to a fundraiser from his or her gift, thus compromising the
trust on which charity relies.
That’s part of what I hoped to find out by posting here. I would hope that specifically EA donors would be actively in favour of the idea if it seemed to improve incentives, though if the discussion around the question so far is representative it seems not...
Yeah, I was similarly uncertain about how much AFP’s policy serves to “defend the 20th century status quo of nonprofit operations” (which much of EA is challenging, for good reason) versus good-faith efforts to make the field operate well — putting aside fundraisers’ personal economic interests. The balance is a bit murky…
FWIW: in the 2010s I remember being surprised to learn that the Association of Fundraising Professionals opposed percentage-based compensation for full-time nonprofit fundraisers.
I don’t have a refined view on pros/cons of variable compensation structures like this in certain nonprofit contexts, but am sharing this primary document in case valuable as food for thought. Some excerpts are below.
Thanks, that’s interesting. I think some of their reasoning seems reflexive: in particular their first and third stated reasons only state possible downsides without weighing them against the comparable upsides of incentivising work that supports the charity’s outputs.
The rest doesn’t seem like it would apply to the model we’re thinking of, in which all staff would receive a percentage of all donations. Eg:
This doesn’t seem to apply if it’s not just the fundraising staff (and to be clear, we don’t have anyone for whom fundraising is more than a tiny fraction of their role).
And
This doesn’t seem to apply if staff were getting a percentage of all donations.
Their fourth point—that nonprofits do better when they ‘actively involve’ volunteers is unsubstantiated and, IMO for most nonprofits, false. See eg these discussions on the subject.
On their last remaining reason:
That’s part of what I hoped to find out by posting here. I would hope that specifically EA donors would be actively in favour of the idea if it seemed to improve incentives, though if the discussion around the question so far is representative it seems not...
Yeah, I was similarly uncertain about how much AFP’s policy serves to “defend the 20th century status quo of nonprofit operations” (which much of EA is challenging, for good reason) versus good-faith efforts to make the field operate well — putting aside fundraisers’ personal economic interests. The balance is a bit murky…
Do you think there are good arguments against this kind of compensation even within an EA context?