Paying Fundraisers.

Economic dualism for nonprofit employees

Charity or business? Rare is the workday of a nonprofit manager where this question does not appear in one form or another.

Fundraisers, in particular, are confronted by this dilemma. A recent article, Fundraising In The Balance: An analysis of job performance, appraisals and rewards, in the International Journal of Nonprofit and Voluntary Sector Marketing, begins by noting that "Fundraisers have long worked under the notion that performance and evaluation should be separate from and unrelated to compensation."

But, continues Matthew Beem, the author of that article: "As competition increases for effective and experienced development professionals, an increasing number of practitioners are finding themselves in new compensation arrangements that reward them fully or in part for their performance."

Beem offers a well-documented historical perspective on the emergence of the development profession. At the tender age of 32, he has already authored several important articles on the compensation of fundraisers, is nearing his doctorate, and has risen rapidly through a series of fundraising positions at the University of Missouri at Kansas City. He now serves executive vice president of Hartsook and Associates, a national fundraising consulting firm. "Until the 1960s," he observed, "virtually all fundraisers were paid solely for service." But by 1991, with the publication of Henry Rosso's Achieving Excellence in Fund Raising, it was clear that fundraisers were beginning to anticipate receiving both "non-cash" and "incentive-based" rewards for their work.

The publication of standards for the compensation of fundraisers by the Association of Fundraising Professionals (AFP) in 1992 began to draw limits around the issue, but hardly settled the matter.

The AFP code of ethics forbids such practices as the acceptance of finder's fees or compensation based on a percentage of charitable contributions. It, nonetheless, does permit members "to accept performance-based compensation, such as bonuses, provided such bonuses are in accord with prevailing practices within the members' own organizations, and are not based on a percentage of charitable contributions."

In a interview with The NonProfit Times, Beem explained that the rise of merit-linked compensation for fundraisers can be seen as part of a long historical trend away from solely viewing nonprofits in term of "institutional" traditions and characteristics. Organizational scholars increasingly look at life from the point of view of "resource dependency" theory, he asserted, a perspective that focuses on "who controls what" and why resources tend to drive decisions in the life of an organization.

But there is a big problem in looking at nonprofit organizations solely from the point of view of resource dependency: The nonprofit baby gets thrown Out with the bathwater. If a nonprofit operates solely to expand control over its environment, what assures that it will not become like any other organization, including for-profits, driven by the same goals of expanding its autonomy, financial capacity, and area of control?

It's the question Dennis Young asked in his classic 1983 book, If Not for Profit, for What? Young answered his question clearly and resoundingly: What nonprofit organizations represented was best reflected by what its leaders and practitioners did -- work within the voluntary tradition and its institutions as believers, conservers, poets, searchers, and professionals.

The best answer to the "either-or" question of "resource dependency" versus "institutional character" may take the form of a "both-and" response. Beem noted that organizational scholars have begun to notice that even businesses often pay attention to institutional concerns -- their history and traditions, their claims to caring and quality -- while simultaneously trying to position themselves strategically to advance their resource base.

For nonprofits as well, it is clear that while the "bottom line" cannot be ignored, neither can the mission of the organization be slighted or ignored. Both institutional and resources considerations must be seen as primary by nonprofit leaders, managers, and practitioners.

What does this mean for fundraisers, who often inform Beem and other researchers that some form of merit pay seems both appropriate and desirable? Clearly the role of the fundraiser is burgeoning in this age of commodification, where, as economic writer Robert Kuttner has put it, nearly everything is for sale. But fundraisers need to concern themselves with maintaining their own positions within nonprofits, and not becoming perceived by colleagues as a peculiarly separate class of nonprofit employee.

Professional fundraisers who present themselves as candidates for top executive positions within nonprofit organizations, for example, can expect to be tested to assure that they both understand and embody the mission of the institution they present themselves to lead. If they are accustomed to competing for the kind of salary bonuses some nonprofits uniquely award to selected members of their development staff, they may find themselves viewed more as a "hired gun" than as a member of a team.

Rita Bornstein, a fundraiser now serving as president of Florida's Rollins College, finds an occasional moment in her busy schedule to reflect on the experience of moving from development to top administration. In a recent interview with The NonProfit Times, she observed: "I do not believe in bonuses or other perks for good performance. I believe in paying well, reinforcing excellent work, supporting professional development, and, when possible, promoting from within. I know my expectations are high, but I am also willing to take direction. I am pleased to say I have an outstanding advancement vice president who sits as an equal partner of my senior team. Her staff is also excellent, and many of them are home grown. We are concluding a $100 million campaign this October. So far we have $140 million."

Missouri's Beem synthesized his present work by presenting the concept of "economic dualism" as best characterizing the tension around fundraiser compensation within nonprofit organizations. Yes, it is appropriate to take into consideration monetary reward, both within their present institution and in terms of potential opportunities with other employers. But yes, it is also necessary to represent that institution as a full member, committed to its traditions, participating as a member of its organizational team, and knowledgeable about its mission and the functioning of its program.

In actuality, of course, the position of the fundraiser is not all that different from that of many other employees of a nonprofit.

With the exception of those volunteers whose commitment is essentially selfless -- those not in it, at least to some degree, for experience, networking, or family duty -- few of us who work with or for nonprofits can deny that we are economic dualists. If you are a top administrator of a significant organization, the compensation can place you quite nicely in the economic comfort zone. Ditto for a professor at one of those "mixed sector" institutions like the one I work for--part state university, part nonprofit, part tuition-dependent business.

German scholar Rudolph Bauer has referred to nonprofit organizations as partly voluntary, partly political, and partly business; To their clients they often seem to be voluntary; to their boards they seem highly political; and to their employees they take on a form not at all unlike that of a business.

Jon Van Til's newest book, Growing Civil Society, is published by Indiana University Press, and is available there and from the usual dot-com bookstores.