Commissions for Fundraisers

Dear Kim:

Is it ethical to pay grant writers on commission?  Or on a flat fee plus a bonus for success with a grant? I have been told different things by different people.

~Sorting Assorted Opinions
Dear Assorted:

I will give a brief answer here, and suggest that you go here and read an article I wrote called “Why Good Fundraisers are Never Paid on Commission.” You can also check out the Association of Fundraising Professionals’ Code of Ethics on this topic.

To pay any fundraiser on a commission is considered unethical for a number of reasons, the top four of which are:

1) No one else in the organization is paid this way, so it leads to a very uneven salary structure*;

2) The temptation to exaggerate or even lie about the good works of the organization when writing to a funder (which is always present), is much more in play when someone knows that their rent or dinner is on the line;

3) The Association of Fundraising Professionals expressly forbids this practice and has for decades.  This means that people in the profession do not work this way, and that people who do work on commission are usually very inexperienced and don’t know that this practice is frowned on, or are dishonest.

4) Whether a proposal is funded or not involves many more variables than whether the proposal was well written or not.  Many poorly conceived and badly written proposals are funded and many well written proposals are not.  The organization’s relationship with the funder, the reputation of the organization overall, the amount of money the funder has to give in any given grant cycle, are all just as important as the quality of the writing.  In fact, many people (including me) would say that the writing is the least important element in being awarded a grant.

The second part of your question about paying a flat fee to write a proposal, and then giving a bonus if the grant comes through is not unethical, if the flat fee is fair.  Bonuses have to be given with clear rationales, and given across the board to all staff to avoid resentment.  At the end of the day, people should be paid fairly for their work, and they should want to do the very best they can because they care about the organization.
~Kim Klein
*The one exception to this rule where fundraisers are commonly paid on commission is in the case of canvasses – either phone or door-to-door.  People who do canvassing as a full-time job are often paid a fairly low hourly wage, have income targets they have to reach to keep their jobs, and are paid a percentage of the income they bring in each day (or evening).