What? Non-Profit Rainmakers Can't Get Paid For Making It Rain??

Definition of Rainmaker - An employee who creates a significant amount of new business to a company.  Example of a rainmaker - A Sales Rep...

Most rainmakers get paid in the business world.  Most, but not all, especially if you follow ethical codes in specific industries.

Ann Bares at Compensation Force is smart.  So I need to take her word on matters related to compensation I have little to no experience with.  Like compensating professional fundraisers... who happen to be rainmakers...

Here's one that blew me away a few days ago from Ann - Fundraising Professionals are Prohibited from Receiving Pay Based on Contributions.  Here's a clip from Ann's post:

"I continue to bump into people who design - or oversee the design of - compensation plans in non-profits and who are not aware of this potential issue, so I thought the topic worth a post.

The Association of Fundraising Professionals, as part of its Code of Ethical Principles and Standards, specifically prohibits its members from accepting compensation that is based directly on fundraising contributions.

Specifically, the code states:

(21) Members shall not accept compensation or enter into a contract that is based on a percentage of contributions..."

Ann goes on to say in her post that contribution-based incentive plans, many of them commission-like in their structure, continue to proliferate in fundraising and related fields.  She even points to some IRS Code (Intermediate Sanctions regulations - IRS 4958) which prohibits any revenue-sharing arrangements as cases of private inurement.

I know why the commission-like plans continue to proliferate.  It's because people, like me, enter the non-profit world and say, "Time to run this like a business.  First step, let's get some revenue booked to the top line", which in the non-profit world, isn't sales, it's fundraising.   So people like me put together a commission plan so the fundraisers make it rain.  To us, fundraising IS sales.

In my tender moments, I guess I can agree that you can't have fundraisers bringing home scalps like the guys from Boiler Room selling junk stocks.   Motivated by dollars.  Maybe by the prospect of a new Lexis in the garage.

But to most people with corporate experience, that sure feels like the right thing to do....

Comments

[Ann Bares]

Kris:

Thanks for sharing your thoughts - and reaction - to this post and topic. Unfortunately this, and other IRS regulations concerning pay in non-profits, prevent a lot of organizations from giving pay-for-performance a fair shake. My read on it - these rules do not outlaw pay for performance. You just have to be a bit more careful and thoughtful about how you structure the plans. And, really, that wouldn't be a bad lesson for some for-profits to learn as well. Oh the horror stories I could share about commission plans gone awry...