HOW MUCH OF YOUR CONTRIBUTION TO A NONPROFIT GOES TOWARDS “COMMISSIONS”?

The Oxford English Dictionary defines the word "commission" as “(a) payment to an agent proportional to the amount involved in a transaction, a percentage on the amount involved” while Microsoft Encarta English Dictionary defines it as “… a fee paid to an agent for providing a service, especially a percentage of the total amount of business transacted”. This of all the other definitions is particularly pertinent to the issue that this article is aimed to address. The primary line of thought is targeted at the issue of nonprofit organizations use of agencies in order to raise funds. Large nonprofit organizations like OXFAM, UNESCO, Christian Aid, Save the Children, Amnesty International and a host of other multimillion dollar nonprofit organizations outsource a huge chunk of their fundraising work to agencies. The agents promise the nonprofit organizations a steady stream of income, which would also be recurrent as the donors they get are ideally and for the most part “long term supporters”. Such agents are often for profit organizations (although often with a passion for good causes) and get paid a decent sum of money for their labors.

• Is there a problem with such an arrangement?

• Is it not a widely accepted saying that you have to spend money to make money?

• Might it be better if those agencies were registered nonprofit organizations?

• Is it possible by law for agencies that pay bonuses and share profits to evolve into nonprofit organization?

• Why don’t the nonprofits employ their own fund raisers?

For anyone who has been in the fund raising industry, as an agent to raise funds for a nonprofit organization, you have come across people questioning the ethics of the arrangement with the nonprofit organization too often. So many people and often supporters of good causes believe that there is something fundamentally wrong with a nonprofit employing an agency. When viewed from a different angle however, why are complaints not so vociferous when the same profits spend huge amounts on advertisement campaigns in the media or in getting media consultants? Does the need to advocate and change perceptions outweigh the money spent?

Now in regard to the saying that you have to spend money to make money, most of the major nonprofit organizations claim that they spend about ten percent of their income/annual budget on raising the funds they need to do the good work they do. OXFAM UK for instance, claims in one of their supporter pamphlets that for every £1 they get, only 10p is reinvested to generate the income to continue their work (see the pamphlet below).

Children International US spends only 13 percent of their annual expenditure on “securing financial support”. Yet is it really necessary that they spend that much? Could they spend less? Their for profit counterparts often spend way above that, but then again why should we compare, they are not in the business of tugging on the strings of our hearts to fund quests for ideals.

An interesting idea popped up in the JCCC office, being a relatively new nonprofit organization, “securing financial support” is really high on our agenda. How about we set up a department as efficient as the great Fund Raising Agencies of the World, that would promise us great returns on our investments but as another nonprofit wing of JCCC. Is this idea plausible? If Amnesty International UK can manage to have their own branded credit cards for their supporters, what stops JCCC from setting up a highly effective nonprofit agency, to cater to a huge bulk of its financial needs, ensuring that we have a steady supply of long term supporters?

What stops Fund Raising Agencies that are so passionate about good causes from becoming nonprofit organization them selves, and give all of their “profits” towards the good causes they work with? Such an action might make “chuggers” or “charity muggers” as they are called in the UK by some, less hated by some of those that get really worked up by their efforts to make a positive difference while earning "decent" salaries and performance related bonuses. However, is such an idea even anchored to reality; can an organization have such a great drive to make money for a nonprofit organization with only passion and little or no incentive of profit?

How about just keeping it simple, what is so wrong with nonprofits just raising the money from their fund raising departments? If nonprofits just employed the individuals with great amounts of passion, can’t they raise the money required to fund their work effectively?

Wonderful it might have been, if this article could answer more questions than provide answers. These questions might be the dialectic approach towards answering the questions around fund raising agencies and the financial sustenance of nonprofit organizations.