Making the Most of Your FSP Investment

Percentage-based fee
I include this so I don’t leave someone wondering, but the bottom line is that percentage-based pricing is considered unethical by the Association of Fundraising Professionals. It is not illegal. But since it can cause a person to, in the worst case, exploit a potential donor, it is considered unethical. For example, if I know I will earn 5 percent for every dollar I earn going door to door for your NPO, I may not be as honest as I should be, and I may try to take advantage of someone to get a larger donation (so I get a larger paycheck). If you want to learn more about this subject, you can read the AFP’s position paper here.

The bottom line is that your FSP cannot afford to work for your NPO without making a profit; somehow, someway, it is being compensated. None of the ways described above (except percentage-based) is wrong; they are just different means to accomplish the same end. You need to choose FSPs with pricing models that make sense to you and you feel best represent the interests of your NPO.

This subject can sometimes be an uncomfortable one for NPOs to discuss with their FSPs, or when you do discuss it you can end up more confused than enlightened, so let’s shine a light on it together.

Following are a few more thoughts to help you manage FSPs for the greatest benefit to your nonprofit.

1. The lowest cost may not be in the best interest of your nonprofit. There are two things to keep in mind. First, part of what an FSP is selling is experience. Someone with less experience may charge less. So, in addition to looking at price, you also have to determine the depth of experience you need.