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Professional Fundraisers Call on Congress To Ban Percentage-Based Fundraising

December 18, 2007

AFP PRESS RELEASE 

(Dec. 18, 2007) In the wake of a recent Congressional hearing which found that many veterans’ charities are spending excessive amounts on fundraising, the Association of Fundraising Professionals (AFP) has reiterated its call to Congress to prohibit the unethical practice of percentage-based fundraising.

Percentage-based fundraising, whereby a fundraiser receives a set percentage of every dollar raised, is considered unethical by AFP and other fundraising organizations. The AFP Code of Ethics specifically bans the practice, and AFP has developed a position paper outlining why the practice is unethical.

“If you examine the charities that have extremely high fundraising costs, including several of the groups highlighted during the hearing, you’ll almost always find that these organizations pay their fundraising firms on a percentage basis,” says Paulette V. Maehara, CFRE, CAE, president and CEO. “The one single reform proposal that would make the most difference in stopping fraud and strengthening public trust in the charitable sector would be for Congress to ban percentage-based fundraising.”

On Thursday, Dec. 13, the House Oversight and Government Reform Committee held a hearing that examined the fundraising and spending habits of charities that serve veterans. Several groups were found to have very high fundraising costs (87 percent of higher), resulting in very little money going to charitable programs.

Charities that pay for-profit fundraising firms through percentage-based fundraising often say that they do not have the resources to raise funds on their own and are receiving funds they otherwise would not normally receive.  However, percentage-based fundraising is considered unethical because through its use:

  • charitable mission becomes secondary to personal gain
  • donor trust can be unalterably damaged
  • there is incentive for self-dealing to prevail over donors' best interests
  • the very philanthropic values on which the voluntary sector is based are undermined.

Maehara also refutes the notion that percentage-based fundraising is the only alternative for organizations. “There are many ways you can structure a contract with a fundraising firm using a set fee or salary without percentage-based fundraising,” said Maehara. “I’m happy to talk with any charity that wishes to do so.”

But Maehara also stressed that the fundraising firms that use percentage-based fundraising also have a responsibility to change their practices. AFP recently amended its code of ethics to include business organizations as members so that fundraising firms can abide by the association’s ethical standards, such as the prohibition on percentage-based fundraising.

“These are causes that are near and dear to the hearts of all Americans, but the public’s generosity is being abused,” said Maehara. “Congress needs to act to ban percentage-based fundraising so that the public can rest assured that charities and their fundraising firms are putting the needs of donors first.”

Copies of AFP’s Code of Ethics and its position paper on percentage-based fundraising are available on request.

For more information, contact Michael Nilsen, director, public affairs, at mnilsen@afpnet.org or (425) 890-6628.

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