Potential clients sometimes ask if I can work on a commission basis: if the application is successful, I will get a percentage of the award. At first, it sounds like a win for everyone because the nonprofit does not spend any money on an unsuccessful application, while the grant professional has the potential to earn a far higher rate. What is 10 percent of a million dollars? Let me get my calculator.
This proposition may be tempting, but the grant professional must first understand whether commission-based grant writing is a win-win or a violation of bedrock ethical principles in our profession. Industry standards indicate the latter.
Four Good Reasons Not to Use Commissions
Commission- or percentage-based proposal development is considered a grave ethical lapse by the fundraising community. In their book Prepare for the GPC Exam, Annarino, et al. provide four good reasons not to do it:
- Most funders do not allow commissions.
- It encourages organizations to apply for grants for which they may not be ready.
- It encourages grant writers to prepare applications beyond their level of professional expertise.
- The commission does not reflect the amount of work in proposal development.
Foundations and government entities expect their funds to go to costs incurred in program delivery. Funding requests may include indirect costs, if allowed, such as rent or accounting systems. They may not, however, include prior fundraising costs. This is the first and foremost reason commission-based grant writing does not meet professional standards.
Commissions also encourage nonprofits to reach beyond what they can accomplish. If the agency cannot afford to pay a grant professional, it probably cannot afford the fundraising, operating, and financial systems necessary to deliver and report on the project outcomes! The converse is also true; commissions encourage inexperienced grant writers to take a gamble on an application they are not prepared or qualified to write.
Still not convinced?
Does commission-based fundraising still seem like it might be a good idea? Could it be that grant writers are just fuddy-duddies, unwilling to encourage innovation and take risks? On the contrary, we love innovation but not on ethically shaky grounds. Our colleagues at Association of Fundraising Professionals (AFP) agree. AFP states percentage-based compensation can lead to putting self-interest over the organization’s good, violating the self-inurement principle.
“By law, compensation based on skill, effort and time expended, remunerated by salary or fee, does not constitute personal inurement. Conversely, AFP believes that a commission or percentage based compensation or a finder’s fee breaches the no-inurement principle and is, therefore, a violation of its Standards for six specific reasons.”
You can read the six reasons here, but know that winding down the road towards self-inurement (or even the potential for such self-dealing or appearance of impropriety) leads to a loss of mission focus and an irreparable loss of donor trust.
On the positive side, we have the opportunity every day as grant professionals to help organizations move toward strategic, sustainable, and ethical operations. If someone has a great but small organization, the grant writer will help develop a capacity building grant. If the organization is not ready yet, organizational readiness materials can help lay the groundwork for future success. In my consulting role, I provide not only grant writing (proposal development) services, but also tools to map growth in organizational capacity and leadership for strategic planning. Taking the time and making an effort to produce sustainable results will pay off in the end!