Tag Archives: UBS

Tsunami

[Note: This post was published as an op-ed in the Chronicle of Philanthropy on October 28, 2014.]

Each fall the Chronicle of Philanthropy publishes its “Philanthropy 400,” a list of the nonprofit organizations that raised the most money in the previous year. Last week’s publication of the 2014 Philanthropy 400 created a stir by sadly confirming what many of us have feared for the last several years: an inexorable takeover of the charitable sector by Wall Street.

Three of the top 10 fundraising organizations on the list are donor-advised funds (DAFs) affiliated with financial firms: Fidelity (No. 2), Schwab (No. 4), and Vanguard (No.10). A fourth organization in the top 10, the Silicon Valley Community Foundation, is also primarily a sponsor of donor-advised funds. Money is flowing into advised funds, rather than to nonprofits that provide actual services. This accelerating trend of warehousing philanthropic dollars is a deeply troubling trend for American philanthropy. Continue reading

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Sins of Commission

A central principle of nonprofit development is that individuals should not get paid on a commission basis.

According to the Association of Fundraising Professionals, paying nonprofit fundraisers commissions is unethical because the self-interest of the staff member can distort the solicitation process. A gift needs to be right for both the donor and the organization, and it needs to be driven by a genuine charitable impulse.

When the fundraiser’s compensation is directly related to realizing the gift, all sorts of bad things can happen. The conversation between solicitor and donor can turn coercive and misleading. Donors may be pressured to make the gift before they are ready. The solicitor may encourage gifts that are not in the best interest of the organization. Moreover, even if such a compensation scheme were ethical, it would rarely be fair, since the gift that arrives in 2014 is probably as much the result of earlier cultivation by the organization as the efforts of the current staff member who happens to make the ask or open the envelope. Continue reading

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