We are frequently asked to take Fundraising jobs on a commission-only basis. There are few, if any, reputable fundraisers prepared to do so.
The following is a discussion on the principles and reasons behind our stance.
A Reader writes :
> I must say
that I truly do not understand the reluctance to look at
> percentage deals
and I really wish someone could explain this to me. I
> am completely
mystified by this attitude.
You are not alone. However, let me try to explain.
The high-minded side of the debate argues that a commission deal effectively gives an open cheque to the fundraiser; there have been campaigns which have raised huge sums of money for relatively little effort, because the cause in question sells itself. The reward is not related to the challenge.
Most of us are not interested in getting rich. It is one of those little oddities of life that, while we have a great deal in common with the average sales force, fundraisers as a group are not motivated by high salaries or big bonuses - we work for causes, and the cause is our motivation.
In fact, thinking about it, if money WAS our motivation, we'd be selling Maseratis or double glazing, where the profits are higher!
> Our situation
is that currently we have no funds available to gamble on
> a campaign.
To my mind any capable and honest company that is confident
> of producing
results should certainly be confident enough to work on a
> commission basis.
I am personally always very happy to work on
> commission basis
in my own professional and business dealings and I find
> that it is always
the best way to work and inevitably it produces the
> most efficient,
productive and cost effective results for all involved.
>
This brings us to the question of the organisation's priorities, and to the difference between investing and gambling.
In the first place, there is no such thing as a fundraising certainty (and I would strongly suggest that you avoid anyone who says otherwise!). In the same way as there is no such thing as a certain investment, there are shades of risk, and part of the consultant's skill lies in matching the fundraising programme to the level of acceptable risk. To keep with the Stock Market analogy, there are blue-chip fundraising schemes that will bring in almost guaranteed, if unspectacular returns in direct proportion to the investment. There are also schemes which MAY bring huge rewards, out of all proportion to the investment, but they require courage, skill and a fair bit of luck.
Gambling is the extreme version of investment : a roll of the dice could bring very big rewards, but the ratio of risk to security is disproportionate (even on an honest table, if such a thing exists!)
So, the question is, if you have funds available, are you prepared to invest a proportion of those funds to increase your income at a later date?
You are, in effect, asking me to put my time, money and effort into a programme to which the charity has no commitment. Fundraising is a team game - I could not effectively raise funds for you in isolation.
So it is important that the organisation is also committed to the programme, and agreed fees in return for agreed levels of activity (carefully monitored by the charity, of course) are the best way of ensuring that commitment.
> I strongly
feel that to invest in a campaign that may not produce the
> desired results
is only to guarantee an income for the consultants. The
> charity is being
asked to take a gamble and I find this reprehensible. I
> believe far
too strongly in my Charity to gamble with
> its funds.
A payment based on a percentage of funds raised seems like
> the only intelligent,
fair and business minded solution.
I refer you back to the difference between gambling and investment - you need to be committed to the programme, too. At present, I am working on half-a-dozen campaigns (not all, admittedly, purely fundraising), and I believe in each of the client groups I'm working with. Together, we discuss the options and select a fundraising programme they are happy with, and we talk through how it will be implemented. We discuss how much I will do, and how much the Charity has to put into it. Sometimes, all I have to do is monitor their progress and give advice and support through the programme; in other cases, I write all the letters, set up the meetings with funders, script the presentations, and wheel out the charity's big guns to "make the ask".
It may be that you should be thinking about an in-house fundraiser.
This can be a very cost-effective solution if you want long-term income growth. You might then wish to think about hiring in someone to train the fundraiser, and train the organisation in managing a fundraiser, but if you set the salary and expenditure budget at the right level you could attract an experienced fundraiser who would have all the expertise you need. As a rough guide, by the end of year 3 an in-house fundraiser should be bringing in at least 5 times their costs, and they will continue to develop the income for the organisation.
Proportions vary according to the type of campaign, of course. A legacy fundraiser might raise 10 or 20 times their costs, but would take 7 years to get up to speed! Whereas a Trust or Corporate fundraiser might be in profit part-way through their second year.
> If a company
were confident enough in it's expertise to legally guarantee a minimum
> return then
of course we would very gladly invest 20% or much more of
> the target figure
- even if this involved borrowing. Is this the case?
The only way I know to get a legally-guaranteed return is Government Stocks! This has nothing to do with the Fundraiser's expertise, and more to do with the realities of the market-place. Even Alan Sugar has made mistakes!
> Surely you
must realise that what you are suggesting in your email as a
> more "reputable"
approach is exactly the same as a percentage of funds
> raised deal
except that it is based on targets (ie by your figures
> around 80% of
funds raised will go to the charity with around 20% of the
> previously estimated
figure paid as "campaign costs" - whether or not
> this target
figure is ever actually achieved). The only guarantee here
> is that the
charity will lose out if the campaign fails in achieving the
> estimated target.
This certainly does not seem to be a "reputable" way
> of doing things.
The only guarantee is for the fundraisers who are
> cynically obtaining
professional fees for services that may not result
> in a profitable
outcome for the charity.
Nothing cynical about it. We make our living providing services to charities : if our services are not cost-effective, we don't last long in this business. However, it is a business. I have a mortgage to pay and children to feed. I personally have no reserves to use to finance your fundraising programme. You are asking me to put my family's security at risk, without any commitment on your part. You could leave me high and dry, having expended my resources, with no means of re-imbursement.
More to the point (and I speak from bitter experience, here) I have no guarantee that you will credit all the income to my appeal programme. You could "hide" money in your accounts, and leave me with little redress, short of expensive audits or legal action.
A case in point : I "warmed up" a potential donor, who contacted the charity directly and made a significant donation. The charity denied that I had any role in securing that donation, and did not pay me for the campaign.
(Confession time : while I have never worked on commission, I did, in my early days, take on work "at risk" - ie allowing the charity to pay me when the money came in. They NEVER did!)
The 80/20 split is a rough guide only, but there is a clear
difference between a commission-only relationship and a fee-based relationship
: I would argue that the latter is much more of a relationship between equals.
>
> My question
is: WHY are there no "reputable" fundraisers working on a
> simple commission
basis when this is so obviously the basis that any
> responsible
charity would prefer? There is a huge market here waiting to
> be tapped. Surely
this can be done in a legitimate and honourable manner
> so that all
involved benefit. If it is true that there are few who offer
> this service
this makes me wonder about the expertise of those who do
> not.
I hope I have explained this reasonably thoroughly.
Another angle I have not referred to is the unscrupulous fundraiser, who can fiddle figures to increase his income.
I should have made it clear that all money comes directly to the Charity - money going through intermediary bank accounts or those of the fundraiser should be treated with extreme caution.
> Having said
all that if you are able to recommend a business minded,
> professional
and capable company or individual who is confident enough
> in their abilities
to agree to charge "campaign costs" or fees that will
> be paid by us
only if and when specific targets are met, then we would
> be very interested
in taking this further. We are not prepared to gamble
> charity money
however. Regarding your last question about our precise
> needs: our simple
requirement is that we need as much money raised as
> possible, preferably
but certainly not essentially in connection with
> music, so that
we can concentrate on spending it on children in SE Asia
> and South America
where we have ongoing projects that desperately need
> funds. How this
is achieved is at the discretion of the consultants and
> fundraisers
involved - anyone can see that our organisation's image,
> branding and
concept lend themselves to a impressive variety of exciting possibilties.
If you are not prepared to INVEST the charity's money, then I don't think you are ready for a professionalised fundraising programme.
This is not a snide comment : many charities work extremely well on the energy and commitment of enthusiastic volunteers, and the introduction of a professional fundraiser can be disastrous! It can lead to all the volunteers standing back to "leave it to the professional", or raise up jealousies and bickering among the team.
Let me outline a potential process for you : it may help.
1 Select a Consultant - talk to other charities, check out the various lists of consultants, select a number to contact. Outline what you want to achieve (Raising "as much money as possible" is a little vague - do you have target projects in mind?). Ask them what they would offer the charity, in terms of their expertise, their experience with comparable charities, their fee structure. Select 2 or 3 to interview, and choose the one you feel most comfortable with.
2 Develop a Fundraising Strategy - this is why you need the consultant. They will talk through what you do already, and come up with suggestions for improving your current performance, as well as perhaps suggesting new and different forms of fundraising. Be prepared to be told that you are already doing well! The strategy will include certain resource implications, one of which might be the employment of a fundraiser, whether in-house or freelance. If there is a future role for a consultant, this will be quantified in the report.
Ongoing roles for consultants should be minimal - they are relatively expensive. At the most, a couple of days per month for the first few months of an in-house fundraiser's training might be advisable.
3 Implement the strategy - you can, of course, reject the consultant's advice, but if the process has been carried out correctly, you won't! I have never had a strategy rejected, because I consult with the client, and will acknowledge their strengths and weaknesses in my work. I believe that most other reputable professionals do the same.
I would have to say that employing professional fundraisers is a risky business; ICFM membership confers a degree of respectability (at least we haven't been dishonest!) but it is a new profession, and there are no recognised benchmarks. Many of us are reluctant to answer the obvious "How much have you raised" question, because direct fundraising is only part of our work. Also, if I devise a strategy and leave the client to get on with it, I may never find out how successful it was.
Two tips for getting a good fundraiser : personal recommendation from trustees of other charities (though the man who raises millions for private school development funds may not be the best for your campaign!) and personal chemistry - the one you get on best with at interview, or whose approach suits you best. Incidentally, if you're speaking to any of the big agencies, make sure you speak to the person who will physically work on your campaign!
I think this may be the longest e-mail reply I have ever written - I hope you find it helpful, and, whatever happens, I wish you well in your endeavours.
Come back if you need more.