Hi There!

Received a call last Friday from a lady representing a veteran's
charity.  At the very beginning of her pitch she said, "I am a
commission-based representative raising money for the ******** Aid
Society."

It sounded like a noble cause.  But I was surprised they work on commission.
I'm not inherently against this practice---I was simply surprised.

Apparently, commission-based fundraising is common practice in the
United Kingdom.  But is it permissable in the USA?

A 5-star answer would be 3-5 paragraphs on this subject.

All comments greatly appreciated !
ron


P.S.   I recently helped with a fundraising effort in the Bay Area of
California.  Although we met our goal (on the final day!), it was only
due to the last-minute help of two big donors.  That's why I'm
interested in this topic.  Thanks.

Hi, Ron! 

I am not an attorney (nor do I play one on television), but everything
I've found online indicates that commission-based fundraising is legal
in the United States. Some people believe it to be unethical, and some
charity-related organizations have taken a stand against it. There
have been discussions of banning or limiting commission-based
fundraising.

I've gathered some info for you on the subject:

"One of the most important steps Congress can take in increasing
public confidence in charities is to outlaw percentage-based
compensation, AFP President and CEO Paulette V. Maehara, CFRE, CAE,
told U.S. Senate Finance Chairman Charles Grassley (R-Iowa) and key
committee staff members at a July 22 roundtable on charity
regulation."

Association of Fundraising Professionals: PROHIBIT PERCENTAGE-BASED COMPENSATION
http://www.afpnet.org/tier3_cd.cfm?folder_id=2466&content_item_id=17406

"Professional fund raising organizations emphatically state
percentage-based compensation is not a legal issue but an ethical one.

'Percentage-based compensation for fund raising is not illegal,'
stated McGinly of AHP. 'But what we're trying to say here is it's
unethical from the standpoint that the interest of the donor is
greatly diminished. I have seen telemarketers take 95 percent of the
money they raise. We don't believe the donors are served when you have
that kind of percentage going to the fund raiser. When you do fund
raising on that basis you have a telemarketing firm or an individual
that may do things that could jeopardize your organization and the
organization's good name because their incentive is to raise more to
earn more. The donor is lost in that scenario and the organization is
put at risk.'

Betty Vermillion, State Coordinator of Charities and Telemarketing for
the Office of the Arizona Secretary of State, agrees percentage-based
compensation should not be considered a legal issue but a moral one.
'There is nothing in state or federal law that specifies a certain
percentage has to go to the charity. As long as a fund raiser or
telemarketing firm does it in an open and above-board manner, it's
fine. It could become unethical if the fund raiser doesn't disclose
the percentage being received, or keeps related costs hidden. In that
case they may have something to hide."

Bill J. Harrison, CFRE: Is Percentage-Based Compensation Unethical?
http://www.billjharrison.com/articles/percentage.html

"Several states have made unsuccessful attempts. Two early efforts
wound up in the U. S. Supreme Court. Both Schaumburg v. Citizens for a
Better Environment (1980) and Secretary of State of Maryland v. Joseph
H. Munson Co. (1984) sought to protect citizens and charities from
fraud and abuse by establishing an acceptable percentage of revenue
that fundraisers could retain. Both were overturned on the grounds
that using a percentage-based 'litmus test' infringes on the rights of
charities to seek contributions and stifles free speech."

Washington Monthly: The Tow-Away Tax Break 
http://www.washingtonmonthly.com/features/2001/0206.cabot.html

"...previous cases in which the Court invalidated state laws that
restricted the percentage of donations that could be devoted to
fundraising costs or that required fundraisers to affirmatively
disclose the percentage devoted to fundraising costs. In past cases,
the Court has held that these types of regulations created an
impermissible burden on charities' constitutionally protected speech.
The Court found that percentage-based restrictions are an overly broad
way of preventing fraud because this type of regulation fails to allow
for the many legitimate factors that cause fundraising costs to vary
from organization to organization... the Court held that the
invalidity of percentage-based regulation does not preclude
enforcement of anti-fraud laws against fundraisers "as long as the
emphasis [of the prosecution] is on what the fundraisers misleadingly
convey, and not on percentage limitations on solicitors' fees per-se."
In other words, fundraisers cannot be held liable simply because their
fees are too high,but fundraisers commit fraud if they lead potential
donors to believe that the portion of their donations going to charity
is greater than it actually is."

Nonprofit Navigator: Supreme Court Sounds Warning to Fundraisers Who Fib 
http://www.harmoncurran.com/navigator/may2003.html

My Google search strategy:

Google Web Search: "commission based fundraising" OR "commission based
fund raising"
://www.google.com/search?hl=en&q=%22commission+based+fundraising%22+OR+%22commission+based+fund+raising%22

Google Web Search: charity OR charities commission OR percentage
://www.google.com/search?hl=en&q=fundraising+OR+%22fund-raising%22+charity+OR+charities+commission+OR+percentage

I hope this helps!

Best,
Pink

PinkFreud,

Simply outstanding!

Thank you, as always...
ron

Ron,

Many thanks for the kind words. You're one of my favorite customers.
If cloning were legal, I'd like to have more customers just like you.
:-)

~Pink

Pink,

As Judy Collins and Babs once sang...

Isn't it rich, are we a pair? 
Me here at last on the ground, 
You in mid-air. 
Send in the clones. 

Isn't it bliss, don't you approve? 
One who keeps tearing around 
One who can't move 
Where are the clones? 
Send in the clones. 

Just when I'd stopped opening doors, 
Finally knowing the one that I wanted was yours. 
Making my entrance again with my usual flair, 
Sure of my lines; 
No one is there. 

Don't you love farce? 
My fault I fear, 
I thought that you'd want what I want, 
Sorry my dear 
But where are the clones 
There ought to be clones 
Quick send in the clones. 


Warmly,
ron

Ron,

A friend of mine swears that when she first heard "Send in the
Clowns," she thought one of the lines said "Don't you love farts?"

Needless to say, this gave her a different perpective on the lyrics.

Oops. 

In my comment above, for "perpective," please read "perspective."

heh  heh  heh

Life is fun!   Why is everyone else so grumpy?

See ya...ron

>> Life is fun!   Why is everyone else so grumpy?

I once asked my mother why she was such a grouch. She told me that
she'd been quite cheerful before she had me to take care of. Way to
go, Ma. Blame it on the kid. ;-)

:-)