The commissioned salesman is the world’s oldest profession…well, maybe not the oldest…some other professions lay claim to that title…but it certainly is the most obvious and logical - If you earn a little more for every sale you make, you will be motivated to make more sales.

The For-Profit world has utilized the commission salesman successfully since Egyptian farmers started selling produce around 3100 B.C. Doesn’t it make sense that development professionals, the nonprofit equivalent of salespersons, who essentially sell the mission of an organization, would also respond well to incentives?

This is the question asked by recent research out of the University of Pennsylvania’s Wharton School.

• Could a model that works so well in the for-profit industry work in the nonprofit sector?
• If nonprofits paid their development professionals commissions, would they be more effective fundraisers?

THE ONGOING DEBATE

The nonprofit sector has been debating these questions for many years. In fact, The Association of Fundraising Professionals released a position paper not long ago that argued against paying themselves commissions. In the paper entitled, Percentage Based Compensation, they state that if commissions are offered:

• Charitable mission can become secondary to self-gain
• Donor trust can become unalterably damaged
• There is incentive for self-dealing to prevail over donors’ best interests

• Does a development staff person receive commissions based on the total amount pledged?
• What if a pledge is made over several years?
• What if a pledge falls through?
• What about “in-kind” gifts like real property? How would a commission be monetized?

THE WHARTON EXPERIMENT

The Wharton researchers conducted their experiment by agreeing to pay some fundraisers commissions for a round of fundraising but not others, and never telling the potential donors which of the fundraisers were incentivized. After the experiment, both participants and donors were asked to complete a survey that would “gauge their feelings on the sincerity of the persuaders’ pitch.”

RESULTS

• In all the experiments, donors gave less when being persuaded by incentivized participants.
• Although the donors did not know participants were being incentivized, they perceived as less sincere the participants who received incentives.
• The people who were incentivized communicated less effectively.