FAQs

Percentage compensation

Q. What is the AFP Standard of Professional Practice regarding percentage compensation?

A. Standard No. 16 states: “Members shall not accept compensation that is based on a percentage of charitable contributions; nor shall they accept finder’s fees.” In this context, a finder's fee is defined as a fee paid for bringing a donor or a charitable contribution to a not-for-profit organization.

Q. What does this standard mean?

A. It means that an AFP member or any other person subscribing to the AFP Code of Ethical Principles may not accept any compensation that is based on a percentage of charitable funds raised. For the purpose of this standard, charitable funds are those defined by and subject to government regulations, or as reported on government reporting forms as contributions, gifts, grants, or similar amounts received.

Q. What are examples of acceptable compensation and examples of compensation that is not acceptable?

A. Acceptable forms of compensation include:

• A salary or fee based on expertise, experience, or the time requirements of the position.
• A commission for work other than charitable fundraising.
• A graduated fee based on reaching specified milestones in a fundraising campaign (provided the fee is not a percentage of the charitable funds raised).

Examples of unacceptable compensation practices include: 

• Accepting percentage-based compensation because an organization lacks sufficient budget.
• Disguising compensation as salary, fee, or bonus when it is, in truth, a percentage of funds raised.
• Accepting a compensation package in which a part is salary or fee and the balance is to be made up of a percentage of the funds to be raised.

Q. What is the purpose of this standard?

A. There are two primary principles underlying this standard:

1. Charitable giving is a voluntary action for the public benefit.
2. The seeking or acceptance of charitable gifts should not provide personal inurement to anyone.

The purpose of this standard is to ensure that fundraising professionals are compensated for their experience, expertise, and the work they actually perform on behalf of the charitable organizations that employ their services, and not for work performed by others, or for funds obtained without effort by the fundraiser, or for funds obtained outside of the mission of their organization. This standard recognizes that fundraising is a continuing practice in which present funds received may be the result of efforts of others in previous years, and current fundraising activities may result in funds only in the future. Similarly, persons give to causes in which they believe, and sometimes gifts arrive unexpectedly, without solicitation.

Finder's fees

Q. What constitutes a finder's fee under the AFP code?

A. A finder's fee is a fee paid for bringing a donor or a charitable contribution to a not-for-profit organization.

Q. What do the AFP Standards of Professional Practice say regarding finder's fees?

A. Standard No. 16 states that members shall not accept finder's fees. Standard No. 18 states that members shall not pay finder's fees and shall take care to discourage their organizations from making such payments.

Q. Is it acceptable under the Code to pay a finder's fee to an attorney or financial advisor for referring a potential donor to a not-for-profit organization?

A. No. That would be a violation of Standard No. 18.

Q. Is it acceptable under the Code to pay a finder's fee to someone for referring a potential sponsor or cause-related marketing contractor to a not-for-profit organization?

A. Yes, because revenues from sponsorships and cause-related marketing are not charitable contributions. Such fees are generally described as referral fees in business-to-business transactions.

Conflict of interest

Q. What constitutes a conflict of interest?

A. A conflict of interest exists whenever an AFP member or someone in the member’s immediate family has a formal relationship with an actual or prospective donor or a material interest in a firm that is an actual or potential vendor to the member’s organization.

Q. When is a fundraiser in conflict with his or her organization or donor?

A. A fundraiser is in conflict with his or her organization or donor when an actual or potential conflict of interest exists and the member does not disclose that conflict to his or her organization.

Q. Why does AFP restrict a development officer from serving as an executor of an estate or receiving compensation from an estate in which the organization employing the officer is a beneficiary?

A. Because it is impossible to avoid the appearance of a possible conflict of interest in such a situation. An AFP member may not receive compensation from the estate of a donor to any organization for which the member has worked, for services performed as a financial advisor, executor or other officer to the donor’s estate. AFP members are not forbidden to receive funds from the estate of a friend or relative who has made minor contributions to the AFP member’s organization if the relationship was not the result of the member's employment in any not-for-profit organization. In such case, notification to the employing organization is still advised.

Incentive compensation

Q. What is considered to be incentive compensation?

A. Incentive compensation is compensation (such as a bonus) that is based on the accomplishment of mutually agreed-upon, pre-established overall goals related to a fundraiser’s responsibilities within his or her organization. In accord with Standard No. 17, incentive compensation must meet all of the following conditions to be acceptable:

• The member's organization must have a policy and practice that awards performance-based compensation.
• The policy must have the approval of the organization's governing body.
• The policy and practice must include, but not be limited to, the member's area of responsibility, e.g., be a norm within the organization.
• The criteria must be restricted to mutually agreed-upon, pre-established overall goals.
• The criteria for determining the eligibility for and amount of such compensation must exclude any consideration of a percentage of charitable contributions as defined by, and subject to, government regulations, or as reported on government reporting forms as "contributions, gifts, grants, and similar amounts received." This should be interpreted as an absolute prohibition of any reference to, or use of, a percentage of charitable contributions to determine compensation, either in effect or actuality.

Q. How is incentive compensation different from percentage compensation?

A. Incentive compensation is based on the achievement of mutually agreed-upon, pre-existing goals related to the fundraiser’s responsibilities (and must meet all of the conditions described above), whereas percentage compensation is compensation that is computed purely as a percentage of charitable contributions obtained.

Q. What does it mean to be within the prevailing practice of an organization?

A. This means that the practice of awarding bonuses or other incentive compensation for achieving mutually agreed-upon, pre-existing objectives related to one’s responsibilities must apply to all or most executive positions within the organization and not simply to members of the development staff alone.

Donor information

Q. A development officer is asked to provide donor names and contribution information to the Board Chair, Development Chair, and CEO of the officer’s organization. Is it a violation of the AFP Code to provide the information?

A. No, if the development officer determines that the persons have a need to know, cautions them that the information is confidential and not to be shared with others, and has not received directions to the contrary from the donor.

Use of funds

Q. My institution wants to use a restricted fund for purposes other than the purposes for which the donations were solicited. Is this ethical, and how do I handle it?

A. No, it is a violation of the AFP Code to use monies from a restricted fund for a purpose other than the purpose for which they were solicited. You should advise your institution that such a use would violate the principle of honoring donor intent and would be a violation of the AFP Code of Ethical Principles. You should strongly urge your institution not to follow such a practice.

AFP enforcement process

Q. When can the AFP enforcement process be triggered?

A. The enforcement process can be triggered at any time that the AFP Ethics Committee receives a signed complaint on the AFP Complaint Form alleging that a violation of the AFP Code has occurred.

Q. Can a non-member of AFP with a CFRE or ACFRE credential be charged with a violation of the Code?

A. Yes, because all persons who hold an AFP-sanctioned credential must sign an enforced Code of Ethics. If a certificated person has signed the AFP Code, that person has sworn to uphold the AFP Code as a condition of receiving the credential.

Q. What is the enforcement process?

A. Anyone may submit an ethics query or file a complaint alleging violation of the AFP Code of Ethical Principles by an AFP member or person holding an AFP-sanctioned credential, whether or not the person lodging the query or complaint is a member of AFP. Inquiries about actions of members are held strictly confidential and may be made only to the Office of the President and CEO.

Before filing a complaint or submitting an ethics query, you may call and have a conversation to see if you wish to proceed. An ethics query is a means for inquiring whether a practice warrants filing a complaint alleging a violation of the AFP Code, and for requesting assistance from the Ethics Committee to resolve an issue or practice of concern without invoking the formal Code enforcement process. The goal is to bring about improvement in professional practice without having to resort to enforcement proceedings.

An ethics query may be lodged via a confidential letter or memorandum to the Office of the AFP President and CEO identifying the person against whom the ethics query is lodged and describing the incident or practice that is of concern. A complaint is a formal allegation of violation of the AFP Code of Ethical Principles. The filing of a complaint initiates the AFP Code enforcement procedure. In filings, AFP requires complaining parties to agree that, upon request of the AFP Ethics Committee, the complainant will give personal testimony in the presence of the person against whom the complaint is lodged.

Once a complaint is filed, it is reviewed by the AFP Ethics Committee. If the Committee finds that the complaint alleges a violation of the Code of Ethical Principles and is supported by sufficient documentation, the Committee Chair sends written notification of the complaint to the person against whom the complaint is lodged, requesting the member to respond in writing to the complaint. If the person against whom the complaint is lodged responds to the complaint, the Ethics Committee reviews the information presented in the response.

If the Committee determines that there are grounds to support a charge of violation of the Code and that efforts to persuade the person to cease and desist have failed, the Committee may decide to hold a hearing to (1) determine whether a violation of the Code of Ethical Principles has occurred and (2) decide what disciplinary action, if any, is appropriate. Penalties for violation of the Code can include:

• A letter of reprimand.
• A letter of censure and prohibition against holding national office in AFP. 
• Suspension of membership in AFP for a stated period.
• Permanent expulsion from AFP membership, including withdrawal of any AFP-sanctioned credential.

All communications and records regarding questions of ethical misconduct are held strictly confidential in the Office of the President and CEO.

Q. What is the chapter’s role in enforcement?

A. The chapter does not have a role in the enforcement of specific cases. The chapter’s role with respect to fundraising ethics is to inform and educate members, their organizations, and the public about the provisions of the AFP Code and enforcement process, and to advise persons who wish to make a query or complaint about a specific situation to direct their communications about the matter to the President and CEO by telephone, fax, mail, or email.

Q. Where can I find the enforcement process and complaint form?

A. You can find a description of the enforcement process and an AFP Complaint Form on the AFP website or you may obtain a copy by contacting the AFP President and CEO by telephone, fax, mail, or email.

Q. Who may file a complaint?

A. Anyone may file a complaint alleging a violation of the AFP Code by an AFP member or a person holding an AFP-sanctioned credential. The complaint must be written on an AFP Complaint Form and signed by an individual.

Q. How long does a complaint take to process and work through the AFP Ethics Committee process?

A. The length of time can vary, depending on the nature of the complaint, the completeness of submitted documentation supporting the complaint, the number of persons involved in the complaint, the promptness of responses to Ethics Committee communications by the complainant(s) and the person against whom the complaint is lodged, whether a hearing must be held, and other factors. A complaint that does not require a hearing can usually be processed within six months. A complaint that requires a hearing can require from six months to a year or more to process. To be considered, a complaint must be filed with the AFP President and CEO within one year after the acts in the alleged violation have occurred.