Payment of Fundraisers

 

Introduction

Payment mechanisms

Considerations when choosing the appropriate payment mechanism

Working with volunteers

 

Introduction

Costs are inevitably involved in fundraising, and this includes paying fundraisers. There are a variety of different payment mechanisms which may be applicable to employing different types of fundraisers in different situations. It’s important to establish a payment structure that strikes a balance between sufficiently rewarding the work of a fundraiser, and enabling the fundraising organisation to raise as much money as possible for its cause based on that investment

All funds must be used reasonably and prudently in the best interests of the organisation. That involves ensuring that the remuneration of fundraisers is proportionate to the benefit that is reasonably expected

Fundraisers might be employees of the fundraising organisation, volunteers, consultants or employees of an agency. It is advisable for fundraising organisations to ensure that they are clear about the status of their fundraisers and take advice as appropriate.

 

Payment mechanisms

A variety of mechanisms can be used when paying fundraisers. The most commonly used ones and some of their characteristics are listed below:

Salary

  • Both fundraising organisation and fundraiser know the rate in advance, keeping it accountable and transparent
  • May encourage staff retention
  • Returns aren’t guaranteed
  • Fundraising organisation needs to invest in strong line management skills to ensure sustained good performance from salaried fundraisers

 

Fee payment (e.g. per hour/day/project)

  • Fundraiser rewarded for actual work undertaken
  • Employer knows exact costs involved
  • Employer pays regardless of outcome
  • Valuable mechanism when outcome cannot be easily attributable to one person

 

Performance related pay/payment by results

  • Fundraising organisation only pays when money comes in
  • Incentive for fundraiser to meet or exceed targets
  • May lead to undue pressure on donors
  • Hard to predict how much may be paid
  • Some fundraisers or other charity staff may perceive the scheme to be unfair where input from more than one party has influenced the donation
  • May militate against integrated working where this is necessary for the optimum result
  • May result in excess or insufficient remuneration to the fundraiser

 

Commission

  • Fundraising organisation only pays when money comes in
  • Incentive for fundraiser to meet or exceed targets
  • May lead to undue pressure on donors
  • Hard to predict how much may be paid
  • Some fundraisers or other charity staff may perceive the scheme to be unfair where input from more than one party has influenced the donation
  • May militate against integrated working where this is necessary for the optimum result
  • May result in excess or insufficient remuneration to the fundraiser
  • May encourage a short-term focus
  • Does not reflect time spent working
  • Difficulty in establishing which fundraiser is responsible for which funds

 

 

Considerations when choosing the appropriate payment mechanism
  • Fundraising organisations ought to consider the full anticipated costs and income of the fundraising activity when establishing a payment method and level, to ensure the activity remains financially viable
  • It is advisable for the choice of payment method to be supported by a sound business plan
  • Practices and controls MUST be in place to ensure that payment methods do not leave the fundraiser or organisation out of pocket.
  • It is important for the payment method not to leave the fundraising organisation vulnerable. For example, through excessive payment or damage to its reputation
  • Fundraising organisations should consider innovative ways to motivate, remunerate and reward their staff. For example, consider staged payment systems, rewards in kind, etc

 

Before you implement a specific payment mechanism, give consideration to the following questions:

  • What is in the best interests of beneficiaries?
  • What are the risks to the fundraising organisation of a particular payment method?
  • What safeguards are needed to ensure any party receives appropriate remuneration for their work, for example, even where the anticipated funds are not raised or considerably higher levels of funds are raised?
  • Does the form of remuneration encourage behaviours that are consistent with the organisation’s fundraising objectives, for example, through team working or focused individual effort, to produce the best value?
  • Can the payment method be clearly explained in a solicitation statement?
  • Would stakeholders, including the public, consider the payment method to be fair?
  • How does the form of payment impact upon the donor?

 

Excessive remuneration

An excessive payment is one that is considerably more than an ordinary, well informed person would consider reasonable. It is essential that fundraising costs are not excessive. Fundraising organisations should be aware that excessive remuneration and high pressure techniques will lead to a breakdown in trust and confidence in both the organisation and sector more widely, and ought to take steps to minimise this risk. To establish a reasonable payment structure, it is advisable for fundraising organisations to consider:

  • The reputation and track record of the fundraiser
  • The nature and extent of the work to be done, including the overall objective of the campaign
  • The risk taken by the fundraiser
  • The state of the market

 

Where appropriate, it is a good idea for maximum caps or reducing sliding scales to be used to avoid excessive remuneration. Maximum caps and reducing sliding scales will be influenced by a variety of individual factors including the size of the organisation and the time span involved.

Public trust and confidence

Public trust and confidence are essential in ensuring successful and sustainable fundraising. Members of the public may hold strong views about how, and indeed whether, fundraisers are remunerated which may in turn influence their decision to donate. It is important for fundraising organisations to consider public trust and confidence, balancing public perceptions with a good business plan.

Commission

Organisations ought not to use commission payments, particularly commission-only payments, unless the following conditions are met:

  • Other sources of fundraising investment have been explored and exhausted
  • Payments are subject to approval by the fundraising organisation’s trustees, or senior executives when power has been delegated
  • Safeguards are in place to ensure excessive remuneration is not permitted

 

 

Working with volunteers

It is advisable for volunteers to have their expenses reimbursed and it is good practice that this happens regularly to ensure volunteers are not left out of pocket. Volunteers should only have their out-of-pocket expenses reimbursed and, and not be paid a flat rate amount as this may trigger minimum wage legislation. Where possible, it is a good idea for receipts to be received before expenses are paid. In some cases, it may be appropriate to reimburse expenses in advance, with the subsequent provision of receipts where possible. This may be appropriate for example where larger sums are to be paid and it is unreasonable to expect the volunteer to pay them, or the volunteer’s financial circumstances make it difficult for them to incur expenses in advance. Training that is not related to the activity, use of the fundraising organisation’s other facilities, or payment in excess of out of pocket expenses may lead to a contract of employment being entered into inadvertently.  

Trustees as paid fundraisers

In England and Wales

Trustees must not be paid for fundraising on behalf of the charity unless the following criteria are met:

Either:

  • The charity’s constitution specifically provides for the type of payment proposed

          Or:

  • The charity’s constitution does not expressly prohibit the type of payment proposed
  • The charity complies with the provisions of section 73A of the Charities Act 1993 (see below)
  • The payment is not for being a trustee or under a contract of employment

 

In Scotland

In Scotland, the remuneration of charity trustees is strictly prohibited unless strict conditions are met. These are:

  • The maximum amount of the payment is set out in a written agreement
  • The maximum amount is reasonable in the circumstances
  • The charity trustees are satisfied that it is in the interests of the charity for the services to be provided by the charity trustee for that amount (which must be set out in the agreement)
  • Immediately after the agreement is entered into, only a minority of the charity trustees receive remuneration
  • The charity’s constitution or governing document does not expressly prohibit it

 

These provisions also apply to payments to those persons considered by the 2005 Act to be connected to trustees, including business associates and family.