The Fundraising Industry Responds to Congress’s Concerns
Stung by congressional criticism of practices that reflect poorly on its field, the Association of Fundraising Professionals is calling for legislation banning percentage-based fundraising, in which fundraisers receive a set percentage of every dollar successfully solicited. AFP’s Code of Ethics prohibits the practice and argues that nonprofits are mistaken if they think that consultants who engage in it are their only option:
Charities that pay for-profit fundraising firms through percentage-based fundraising often say that they do not have the resources to raise funds on their own and are receiving funds they otherwise would not normally receive. However, percentage-based fundraising is considered unethical because through its use:
- charitable mission becomes secondary to personal gain
- donor trust can be unalterably damaged
- there is incentive for self-dealing to prevail over donors’ best interests
- the very philanthropic values on which the voluntary sector is based are undermined.
[AFP president and CEO Paulette] Maehara also refutes the notion that percentage-based fundraising is the only alternative for organizations. “There are many ways you can structure a contract with a fundraising firm using a set fee or salary without percentage-based fundraising,” said Maehara. “I’m happy to talk with any charity that wishes to do so.”
The slightly libertarian streak in me would like to see the government get involved only as a last resort. That said, the industry’s move is a smart one. Dumping on veterans, which is what piqued Congress’s interest in the first place, is such a universally condemned misstep that ethical fundraisers had to act quickly to avoid being tarred with the same brush that is now deservedly smearing the industry’s more shady practitioners. | 501(c)
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POSTED IN: Ethics, Fundraising, Legal issues
3 opinions for The Fundraising Industry Responds to Congress’s Concerns
Nonprofiteer
Dec 21, 2007 at 12:59 am
I’m not even slightly libertarian but I don’t grasp why the Congress, or the AFP, finds percentage-based fundraising unethical. Certainly there are unethical practitioners, but no one has been able to explain to me why it’s not okay to retain a fundraiser on a contingency basis when it’s perfectly okay to retain a lawyer on such a basis. Please see the posting on the subject at http://nonprofiteer.typepad.com/the_nonprofiteer/2007/09/and-they-call-h.html
tdurso
Dec 21, 2007 at 7:02 am
Like I said in my response to your post, NP, I’m not sure the attorney compensation model is something we want to be emulating. (Can you say, “Padding of billable hours”?)
Nonprofiteer
Dec 21, 2007 at 1:42 pm
You’ve made my point for me! Lawyers who are compensated based on the results of their efforts (rather than on how long it takes to achieve them) don’t have any incentive to pad their hours. The point is, every single possible model of billing–by the hour, by the job, by the result– is subject to abuse; that, in and of itself, doesn’t demonstrate that a particular system constitutes abuse per se. (I’m trying to hide my own lawyer roots but they just seem to keep cropping up!)
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