Should nonprofit news operations pay development officers on commission?

Written by Michael on January 19th, 2012

marianne woodruffThere’s a fine line between philanthropy and sales.

But why?

Several times at tonight’s terrific kickoff of Portland’s new Online News Association chapter, guest speaker Mark Briggs quoted a variation on the line: "nonprofit isn’t a business model; it’s a tax status."

If that’s not a cliché yet, let’s hope it will be soon. It’s certainly true.

Nonprofit news companies are just businesses with a little extra flexibility over here and a little less over there. But as Oregon Public Broadcasting’s Toni Tabora-Roberts said after Briggs’ talk, the country’s most successful models of nonprofit local news – NPR, PBS and their affiliates – consider it unethical to compensate their "development" staff based on the size of the sponsorships they bring in.

I know bupkis about fundraising, let alone public broadcasting. But I know an assumption worth questioning when I see one.

Let’s grab this argument by both horns.

Of course! Nonprofits should treat fundraisers like salespeople and pay commissions when they land sponsorships

The argument:

Humans respond to incentives. The faster news economics change, the more important it will become for news organizations to reward entrepreneurial thinking and results. Paying on commission gives development officers clear incentives to invest time in new ventures, and helps organizations know when to pull the plug on bad ideas. It reminds everyone to be bold and fail fast. It gives managers the ability to tweak incentive structures in ways that encourage fundraising around a promising new idea.

Refusing to pay on commission for a job that basically comes down to advertising sales is a relic from the vanished era of scale. No journalism startup, nonprofit or otherwise, would dream of putting all its salespeople on flat salaries. By doing so, public broadcasters are riding the brakes of innovation.

No way! Public broadcasters know this game better than anybody, and they’ve got good reasons to not pay on commission

The argument:

Public radio sponsorships aren’t just ads. Sure, exposure is part of the package a sponsor is buying for their money. But a development officer is also selling warm fuzzies: The feeling of having supported a good cause. A sponsor can then share those warm fuzzies among its own executives, employees or customers.

Most nonprofit funders are ignorant of whether their money is being spent well. Almost all their information comes from their contact in the recipient organization: the development officer. Therefore a funder can’t get warm fuzzies without a close, trusting relationship with a development officer who they’re confident isn’t just out for a quick buck.

I’m already constructing the next round of arguments in my head, but that’s how the basics look to me.

(Creative Commons pledge drive photo by Indiana Public Media.)


5 Comments so far ↓

  1. Great to start this discussion with you, Michael!

    I’m very interested in innovative thinking and models for funding journalism and new media enterprises. You’re right that non-profits general frown upon commission based “sales” as fundraising. I think that even applying commissions to fundraising is still using a very traditional sales model for raising funds.

    A couple of ideas I’ve been intrigued by and pondering…

    - Kickstarter and the like. I love the idea of this type of micro-funding that’s based on personal connections, personal interests and community connections. Also, the “fundraisers” (the content creators) have to come up with creative incentives and recognition for the backers. I think it’s a great form of engagement and good practice for “selling” in a way that’s appropriate to the content.

    - Earned income by providing related service or appropriate products. Again good practice for creative selling related specifically to the content and expertise you are providing. Con: Can be a lot of work that is not direct content creation. Pro: can be very mission-oriented (summer camps, consulting services, podcast development etc.)

  2. Michael says:

    Good points, Toni! Of course, just because commissions are a traditional compensation structure doesn’t make them dumb.

    Kickstarter also seems like a great fundraising platform with a whole separate set of ethical questions, but definitely something that all sorts of organizations should be figuring out how to use without compromising their product.

    Super-interesting earned-income ideas, too.

    Also, my friend Matt added this on Facebook:

    “Here’s something for you: humans *do* respond to incentives, but monetary incentives are vastly less powerful and motivating (for most people) than the behavioral economics literature suggests.

    “People that are motivated primarily by money probably aren’t the best people for your field, if your field isn’t principally about the money (e.g. banking).

    “It turns out many people want to cooperate, and many more respond better to a belief that they are doing meaningful work… like fundraising for a local nonprofit. Yochai Benkler has a very nice summary of the newer, empirically sound, findings here:

  3. I’m seriously considering this approach for Oregon ArtsWatch, though the commission v. salary issue is difficult to figure out. For a lot of places (I’m thinking of alt.weeklies I’ve worked for or know about), it’s a little of both > base + commission. Running a sales “force” (even if it’s just one person!) isn’t easy, though, especially for micro-startups, which is why I’m still just “considering.”

  4. Michael says:

    For what it’s worth, here’s the structure I currently use with our contractor: he gets $2 for every subscription he moves in our target zones and another $5 for every paid subscription he moves anywhere.

    Meanwhile, he’s going door-to-door building a database of possible advertisers and contacts. These are permanently flagged as leads that came from him, and he gets 10% of their revenue indefinitely.

    For deals he handles himself all the way to closing (we haven’t had any of these yet) he’ll get 30% of new contracts and 20% of renewals.

    No base salary. It’s less than 10 hours a week for him, often less than 5.

    That’s just how we’re doing it at the moment! Also he’s a good guy who believes in the project.

  5. Michael says:

    More from Matt: compensation levels aren’t closely tied to performance quality above a basic level.

    Doesn’t directly speak to commission pay, which I think of as a system for prioritizing tasks rather than paying for performance, but definitely relevant.

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