Associations rely on a wide range of revenue streams. For most, individual donations represent only a small portion of their revenue. Only recently have associations begun fundraising among members, and often this activity has been limited to an annual appeal on the dues form.

Some associations, particularly trade associations with the 501(c)(6) designation, have started 501(c)(3) foundations so that donations are tax deductible. But association executives who lack familiarity with the Association of Fundraising Professionals (AFP) Code of Ethics may unwittingly participate in unethical activities, which in turn can adversely affect the amounts raised.

As Mark L. Hefter noted in “Ethics: Everybody’s Business” in the Fall 2017 issue of AFP’s  Advancing Philanthropy magazine, “Ethical fundraising is . . . good for an organization’s bottom line. Countless surveys and research reports show a strong and direct correlation between donor confidence and the levels of support. The more ethically you behave, the more support you are likely to raise.”

A professional fundraiser, especially one who holds the CFRE (Certified Fund Raising Executive) designation, will know and bound by the AFP ethics code and will likely produce results. But hiring a certified fundraiser can be costly, and it is not uncommon for organizations with little fundraising expertise to fall into ethical traps, particularly regarding fundraiser compensation.   

Hiring on Commission

One common ethical trap is to hire a fundraiser on commission. In this arrangement, the fundraiser receives a percentage of what he or she raises; if nothing is raised, then the association pays nothing or pays a low base salary. Although this approach may seem to make perfect sense, it violates one of the basic tenets of the AFP Code of Ethics.  

Fundraisers working on commission do have an incentive to raise more money, but the incentive does not always serve the association’s best interests. To enhance his or her compensation, a fundraiser paid on commission may accept large gifts with strings attached or pledges that cannot be fulfilled. The organization may have trouble following through on the conditions that the donor places on the large gift or may be unable to collect the payment. Meanwhile, the face value of the gift is recorded, the fundraiser receives his or her commission, and the association is left holding the bag. 

Fees, Bonuses, and Gifts

According to the AFP code, certified fundraisers are not allowed to accept finders’ fees or contingent fees. Likewise, they should not accept bonuses unless bonuses are regularly given to employees and are not based on a percentage of the funds raised. Again, this ensures that donors are not cajoled into giving large donations or made promises that cannot be kept because a fundraiser wanted to earn more money.

If an association employs a salaried fundraiser, that person should not accept gifts from donors, and the organization should state upfront that it will not tolerate such behavior. The nature of fundraising work often leads to close relationships between fundraisers and large donors. Some of these donors may start viewing the fundraiser as a close friend and may want to honor the “friend” with monetary gifts and other favors. In extreme cases, a donor may even consider putting the fundraiser in his or her will. A certified fundraiser knows that these gifts violate the AFP Code of Ethics and that a violation could result in the loss of his or her CFRE designation.

When associations enter the fundraising arena, avoiding ethical pitfalls is important for future fundraising success. The best path is to hire a fundraiser who is familiar with the AFP code of ethics and has experience in the field.