Why You Shouldn't Pay a Grant Writer on Commission

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Nonprofit Grant Writing
Why You Shouldn’t Pay a Grant Writer on Commission

Jackie Jones

May 13, 2011

Successful grant writing is a skill which can be learned and developed over time. Many non-profits believe they can save money by having the administrator or CEO write grants for the organization. This short-sighted thinking removes individuals away from work in which they are experienced and places them in positions where they may not be effective.

This essay seeks to provide ethical insight for nonprofits to consider when looking for a grant writer. Issues discussed will include the ethics of percentage based compensation. Some terms defined for the purpose of this paper: * Percentage based compensation for contributions is defined as any compensation that is based on a percentage (sometimes referred to as a commission) of contributions raised. * A finder’s fee is a fee paid for bringing a donor to a not-for-profit organization for the purpose of charitable solicitation. * A bonus is a form of compensation based on performance (but not on a percentage of contributions raised) that is paid as an incentive to performance in addition to a salary or fee.

Why You Shouldn’t Pay a Grant Writer on Commission

Non-profit and charitable organizations play an essential role in the economic and collective well-being of our local communities, our nation and the world. Nonprofits are designed to meet a societal need the government is not meeting or is not meeting well. They provide a structure for people to contribute their time, resources and expertise for a greater good. In short, non-profit corporations are for people, to help them achieve some common purpose.

The term non-profit does not mean the company isn't financially feasible. Non-profit organizations are a specifically defined type of corporation registered with the Internal Revenue Service (IRS). Unlike individuals and business for-profit, when an organization is registered as a non-profit, the entity doesn't pay taxes on its income. Non-profit’s can accept donations from individuals and corporations who can then deduct their contributions from their taxable income. Other benefits for non-profits include lower property taxes and reduced postage expenses on certain size mailings.

The most common form of non-profit is the 501(c)(3), a tax-exempt organization recognized by the IRS. The 501(c)(3) applies to "charitable" organizations. These are the nonprofits we most commonly contribute to, volunteer for, and hear about such as the Red Cross, American Cancer Society, and United Way. The IRS states for an organization applying for recognition of exemption as a charitable organization, it must show that it is organized and operated for purposes that are beneficial to the public interest (IRS.gov, Pub. 557). Some examples of this type of organization are those developed for the following services or programs: * “Relief of the poor, the distressed, or the underprivileged” * “Advancement of religion”

* “Advancement of education or science”
* “Erection or maintenance of public buildings, monuments, or works” * “Lessening the burdens of government”
* “Lessening of neighborhood tensions”
* “Elimination of prejudice and discrimination”
* “Defense of human and civil rights secured by law, and” * “Combating community deterioration and juvenile delinquency” (IRS.Gov, Pub 557).
Between 1999 and 2009, the National Center for Charitable Statistics (NCSS) reported a 31.5 percent increase in the number of non-profit organizations totaling to 1,581,111 in the United States. Thousands more are developed each year. These non-profit organizations are crucial to the economy and the quality of life in our communities. The following table is provided by NCSS (NCSS). Number of Non-profit Organizations in the United States, 1999 - 2009  | 1999| 2009|  |

 | Number
of Orgs.| Percent
of All Orgs.| Number
of Orgs....
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