On the 4th of December, Fundraising Centre, an organisation promoting charity innovation and development in Jing’an District, Shanghai held the 6th Charity Fundraiser Conference. Based on the topic, “how to design a rational salary system and incentive mechanisms for charity fundraisers,” the conference invited experts from human resources, finance and charity law to engage in the discussion.
For charities mainly depending on donations to carry out their programmes, fundraising activities are key for survival. Hiring individuals with good fundraising qualities to join the team, remain on board and work productively are issues at the heart further debates of fundraisers’ salaries and the performance appraisal linked with the amount of funds raised.
In China, who are the charity fundraisers? According to the China Public Welfare Fundraising Ethical Code of Conduct (2019), there are four main types of fundraisers: programme managers or officers who also have the responsibility to raise fund; full-time staff and volunteers of an organisation’s fundraising team; companies and consulting firms that provide support for charity fundraising; and staff who manage the online fundraising platforms in internet companies. Although this category is defined by law and regulations, not all the charitable organisations have staff specifically in charge of fundraising activities. Specifically speaking, not all charitable organisations need staff to take care of fundraising.
“I think it is necessary for organisations to set up fundraising officers or managers if the annual fund reaches 10 million RMB (1.526 million USD)”, said Hu Jinpeng, founder of Jun He Xin Fiscal Law Service Centre as well as an experienced accountant.
“To judge if an organisation needs to hire more fundraising staff, first they have to make clear what kind of fundraising staff they need, because each type has their own schedule of work. In the early stage of an organisation, normally it is the founder who is in charge of raising fund, and the amount of the fund is usually quite large. Once the organisation has gained some reputation within the sector and started thinking of organisating public fundraising events, they will need to have a special team or department mainly for fundraising”, commented Ye Ying, a legal analyst from the Fundraising Centre.
Yet Vincent Law, a member of the Certified Fund Raising Executive, stressed that every staff in charities need to pay attention to fundraising. “Fundraising should be a concept that everybody in the charity sector bears in mind. It is a job that everyone should get involved instead of only the fundraising staff.”
Both commercial firms and charitable organisations need to raise fund for their business, and thus staff to manage fundraising.. However, can fundraising staff from charitable organisations get commissions – financial rewards based on a percentage of the amount of money they have raised, as their commercial counterparts do?
The current law and regulations in China do not allow charity fundraisers to get commission. The Notice on Issues Concerning Foundations and Other Social Organisations Prohibiting Brokerage for Public Welfare Donations issued by the Ministry of Civil Affairs in 2009 made it clear that no brokerage should be drawn from accepted public welfare donations to return to the donors, individuals or organisations that help raise donations. The Charity Law, passed in 2016 stipulates that no organisation or individual may privately divide, misappropriate, withhold or embezzle charitable properties.
Lin Wenqi, Director of For NGO Legal Research and Service Centre (Shanghai), said, “if you give employees a certain percentage of commissions, return to donors, or pay brokerage to people who help raise funds based on the amount of fund they raise, all these behaviours may constitute private distribution, embezzlement and misappropriation.” She recommended charitable organisations scientifically design performance-based salary systems, rather than give commissions to fundraising staff as a reward for their work.
The second reason experts participated in the conference opposed the idea of commission is that fundraising staff taking commissions may harm the long-term interests of the charitable organisation. Lin Wenqi, for example, said such practices encouraged putting short-term personal interests ahead of the long-term goals of a charity, which is likely to destroy the charity’s reputation within the sector.
Vincent Law agreed with Lin Wenqi and illustrated that, different from business fundraising activities that benefits people who raise funds, the beneficiaries of charity fundraising are those in need. While business fundraising is transactional, charity fundraising is fundamentally revolutionary – because it aims at changing the status quo. However, taking commissions from charity fundraising would certainly change this principle, Law stressed.
Last but the least, the contribution of fundraising staff to the amount of donations an organisation eventually receives cannot be easily measured by a certain percentage of commissions. If setting different percentages of commission a fundraiser can take is based on how much that fundraiser has contributed to fundraising, it will be highly difficult to put the standard into practice.
Liu Xiaoxue, co-founder of the Moderate Organisation, used an example to explain the point to the other participants of the conference. A foundation gets a call phone from a company saying that they want to donate 1 million RMB to the foundation. After getting the news, the Secretary General has arranged three negotiations with the company and in the end, confirmed that the donation will be invested in an important programme of the foundation. From getting the news to eventually getting the fund from the company, Liu Xiaoxue told the audience, there are several key factors getting involved in the process. First, the reputation of the foundation has attracted the company to give their donation. Second, the Secretary General has made great effort in the negotiation. Third, the fundraising team and the programme team will continue to play an important role to manage the fund after all the negotiations have finished ensuring it is used according to the plan.
“In this case, how can we measure the contributions of each individual or each team? That is why the method of taking commissions according to the amount of funds being raised is unlikely to be fair,” Liu remarked. “This method will inevitably ignore the value of other departments, teams and individuals during the process of getting the fund, which impedes the sustainable development of the organisation.”
Yet, one cannot deny salary is a very important way to attract, inspire and keep the talented in any sector. If charitable organisations cannot provide commissions to their fundraising staff, how can they design their salary systems to achieve the aims mentioned above? Facing this question, Liu Xiaoxue stressed for setting salary systems and incentive mechanisms, organisations need to look beyond commissions. The purpose of salary and the incentive mechanisms is to make employees act in line with the organisation’s principles, goals and plans. For most organisations, fundraising is only one of their goals. Only using commissions to encourage employees to raise more funds will surely harm the organization, Liu argued.
The functions of salary systems are to attract people to join the organisation, encourage employees to be willing to work and work more productively, guide employees to work in accordance with the ogranisation’s development plan, values and principles and finally, to make the entire organisation more efficient. Therefore, setting up salary systems should consider many factors at the same time and bear in mind with a long-term vision, says Liu Xiaoxue.
Lin Wenqi said nonprofit organisations should be encouraged to link performance with the overall execution of the fundraising plan. Apart from the amount of funds raised, other factors should matter: how many donors have been developed? How many donors have been maintained? What is the overall fundraising management within the organisation? And is the content of fundraising in line with the overall organisation goals?
Liu Xiaoxue, on the other hand, considered staff’s salary and commissions can be linked with the goal setting and progress rate. Specifically, she mentioned that performance indicators can include outcome indicators (the amount of money staff has to raise), process indicators (the number of donor visits and communications), effect indicators (the number of repeated donations, the amount of donations recommended by the fundraisers, the amount of effective communications made by the fundraisers) and associated indicators.
The relationship between an individual’s fundraising contribution and the overall goals of his or her team as well as the entire organisation can be measured through performance appraisal indicators already existing in the team and the organisation. The commission can be determined according to the degree of achievement of the organization’s goals, while corresponding elements are verified according to the performance of the team and the individual. This way compensation is balanced between personal contribution and institutional goals.