The Fund Raiser

Jamming the Revolving Door

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By Mark J. Drozdowski

Among the trademark characteristics of the fund-raising profession, one stands out as particularly dubious: rapid turnover. A recent cover story in The Chronicle of Philanthropy, in fact, bemoans the "revolving door" development office.

The article, which focuses broadly on nonprofit organizations, not just on colleges, cites a mid-1990s study by Indiana University's Center on Philanthropy, which found that female fund raisers change jobs every three years. For men, that figure is four and a half years.

For colleges and universities, this revolving door poses serious short- and long-term consequences. Candidate searches take considerable time and can cost an institution thousands of dollars if a consulting firm manages the process. During a search, the vacant position equals lost opportunity -- a particularly dire situation for small-shop development offices. Even after the position is filled, it will take the new hire at least three to six months to become familiar with the institution's programs and donors and begin to connect them. What's more, capital campaigns typically last five to seven years, suggesting that fund-raising staffs can change dramatically during a campaign and potentially upset its momentum.

Over time, continued turnover can jeopardize relationships that the development office and others have worked hard to establish. In many instances, these associations exist on a personal level between fund raisers and donors, especially alumni. When a fund raiser leaves the institution, relationships can dissolve. If this happens too frequently, donors will see new faces every few years, question their own commitment to building friendships with development staff members, and perhaps lose faith in their alma mater's advancement efforts.

To stem this tide of rapid turnover, colleges must create incentives for fund raisers to stay in one place longer. In the spirit of Jonathan Swift, let me offer a modest proposal to address the revolving-door phenomenon: Fund raisers should receive commissions, based on longevity, for gifts and grants they bring in.

A college could set up a sliding scale for compensation of fund raisers. In the first two years of employment, a fund raiser would make a base salary and a commission of 1 percent on all private gifts he or she has secured. For years three through five at that same institution, the commission rate would increase to 2 percent. After five years, it would be bumped up to 3 percent, eventually topping out at 5 percent after 10 years.

I'll quickly do the math. At 1 percent, a fund raiser would earn $10,000 for every $1-million brought in. At a maximum of 5 percent, that figure would rise to $50,000 for every $1-million. Some institutions may even opt to lower base salaries while commission percentages rise, as is common in the for-profit sales culture.

Under this approach, fund raisers would see clear benefits to staying at one institution. As I said, philanthropic relationships evolve over time, often taking many years before major gifts are realized. The longer a fund raiser works for one place, the more fruitful relationships he or she can cultivate. During that same period, an individual will come to understand fully and better represent the institution to donors. As sophistication grows and relationships build, money will flow -- and at an increasing rate of performance-based compensation.

Naturally, purists will argue that such an arrangement violates the very bedrock upon which this profession rests. The Association of Fundraising Professionals, in its "Code of Ethical Principles and Standards of Professional Practice," states that members "shall not accept compensation that is based on a percentage of charitable contributions." That sentiment represents the prevailing opinion, I understand. Over the years, I've heard many people in the field offer passionate criticisms of such a scheme. Let's consider their objections.

Basing a fund raiser's compensation on commission, they say, places an individual's self-interest above the college's. A college, or so goes the argument, exists to benefit society, not for the personal gain of professionals in its employ. Nonprofit status, they remind us, doesn't mean that colleges cannot make profits; they simply do not distribute them among stakeholders.

Further, opponents might suggest that a commission format would create an unhealthy atmosphere in the development office, fostering competition to claim ownership of donors and their gifts. What happens, for example, when one person uncovers a prospect, another makes the initial contact, a third writes a proposal and a fourth makes the final ask? How might that commission be awarded or divided? Wouldn't this erode collegiality and ultimately undermine the entire process?

And, purists ask, What about donors themselves? Might they be upset to learn that a fund raiser was skimming a percentage off their contributions? If so, then gift totals certainly could suffer. Still others argue that, given commission-based compensation, a fund raiser could pressure donors -- especially elderly ones -- into making sizable gifts when finances would suggest a more prudent course of action.

Finally, opponents note that development professionals driven by commission would focus only on the amount of dollars raised, not on the inherent benefits to the institution. In other words, they would raise money for programs and activities not necessarily in concert with the university's academic priorities.

These objections, in toto, do raise important concerns, so let's take them one at a time. First, the code of ethics for fund-raising professionals does allow "performance-based compensation," such as bonuses, provided that they are not based on the percentage of dollars raised. In this sense, bonuses do not reward longevity, only fund-raising success. Yet the line between approving performance-based compensation in the form of bonuses and allowing for a percentage-based scheme is a thin one indeed.

To be sure, many people associated with university development already work on commission or other forms of related compensation. Some grant writers expect a percentage of gifts they help land. Further, lawyers and investment advisers who establish trusts and other deferred gift plans on a college's behalf often receive finder's fees.

Arguing that a fund raiser's loyalties should lie with the institution and not his own gain is an admirable sentiment, but misguided. As I suggested in an earlier column, many fund raisers work at colleges they have no prior affinity for (i.e. they're not graduates), so loyalty is often associated with a paycheck. A 1998 article in The Chronicle of Higher Education on development-office turnover noted that fund raisers "are more interested in making higher salaries, having better titles, or building impressive résumés than in committing themselves to an institution for the long haul." Why not simply acknowledge that loyalties can be bought and create incentives to reflect it?

As for development-office politics, let's safely say they already exist. Territoriality among schools and units on a campus is legendary. Sure, competition for commissions might exacerbate tensions a bit, but such aggression would ultimately translate into more money for the institution. Competition, after all, fuels capitalism and the race for wealth. Why not employ the same strategy in our universities? And if development officers bring in money unrelated to institutional goals just to increase their own compensation, does the academy really suffer? These days, capital campaigns are so broadly construed that just about everything is deemed a priority anyway.

In the final analysis, I believe donors would applaud a commission-based system. If they're supporting the institution through philanthropy, don't they want to see it prosper? I'm sure they'd willingly sacrifice 1 to 5 percent of their gifts if, as a result, their alma mater brought in millions more because of that arrangement. Certainly if donors work in the private sector they would understand and support a profit-based formula. They must know, too, that institutionally related foundations in public universities charge an overhead fee for some gifts. What's the problem with a fund raiser sharing the wealth?

Universities, in sum, must explore creative ways to keep fund raisers on staff. Turnover costs money and damages long-term "friend raising." With such a fluid and competitive job market for development professionals, it's easier to increase one's salary by moving away instead of moving up.

The demand for fund raisers still significantly outpaces supply. As I write this, the Career Network lists 91 available development jobs, by far the highest number among the "business/administrative affairs" options. How are universities going to keep fund raisers down on the farm after they've seen the market? A sliding scale of commission-based compensation just might effectively mitigate the revolving-door syndrome.

If I sound thoroughly convinced, let me just say, I'm not. Much as I believe there could be strong advantages to a sliding scale of compensation, I do fear it would sabotage the profession by further associating us solely with the bottom line in an academic culture disdainful of such motives.

Can we instead find a less drastic solution to the turnover conundrum? I'm open to suggestions.