Fundraisers - To Reward or Not to Reward…the Debate Continues

Once again last evening while perusing the web I stumbled upon arguments for and against percentage based fundraising. With as many times as professional groups such as the Association of Fundraising Professionals and the American Grant Writers Association have denounced the practice I would think it would be a dead issue, however the debate continues. Thus, I will add my thoughts on the topic.

Percentage based fundraising is closely coupled with percentage based grant writing. In both cases the nonprofit being served promises to pay the fundraiser or grant writer a “commission” on all donations or grant awards received. Many argue that this greatly reduces the chance that the organization will expend funds for which they will receive no return on their investment. This argument is understandable on the surface, but to get a clear idea of just why this practice has been condemned you must fully analyze the potential ramifications. Some simple examples should suffice.

Think about this. A grant writer is promised a 10% commission on any awards received from their proposal. The grant writer then spends 20 hours working diligently to prepare the proposal, hoping for success. The proposal is submitted to a small community foundation with a request for $25,000. Had the proposal been funded as written, the grant writer would then receive $2,500 for their 20 hours of work. Not bad. But what if the community foundation happens to have a donor advised fund that was established specifically for the purposes outlined in that proposal and that donor recommends a donation of $250,000?? The grant writer would then get $25,000 for the same 20 hours of work. That’s a bonanza for the writer, but is that really in the best interest of the organization’s constituents? In my opinion, the excess $22,500 should be used to feed the hungry, clothe the homeless, educate the children-whatever the organization’s mission may be.