Incentive Pay Helps Retain College Fundraisers, Survey Says

Two-thirds of college and university fundraising programs that offer incentive compensation say it’s helping them retain key employees, according to a new survey of advancement leaders at 63 institutions.

Only 22 percent said their incentive-pay program has had no effect on retention.

The survey by consulting firm Marts & Lundy compared institutions that have a formal pay structure to reward fundraisers for meeting certain benchmarks with those that don’t offer such incentives.

Incentive compensation was defined by the researchers as a program that provides specific monetary rewards for meeting a set of predefined performance expectations, which may or may not include dollar goals. Eleven of the 63 respondents had such programs.

Fifty-one institutions had metrics-based programs for evaluating fundraisers but did not offer incentive pay. (One respondent did neither.) Among these groups, 25 percent said their system for evaluating fundraiser performance helped improve retention — but 36 percent of such respondents said retention was not a goal.

Advancement leaders and gift officers were the most likely fundraising professionals to be covered by incentives or other quantitative performance-evaluation programs.

The Chronicle’s most recent survey of fundraiser compensation found that fundraisers working for universities and major medical facilities dominated the list of top earners, in part because those institutions have embraced bonuses or incentive pay more than other nonprofits. Still, some charities outside of health care and higher education have adopted the practice.

Among the findings in the new report:

• Sixty-seven percent of respondents whose groups give incentive pay said it improved employee performance; 57 percent said it led to higher overall revenue; 57 percent said it led to larger gifts; and 25 percent said it improved employee recruitment.
• Ninety percent of respondents that offer incentive compensation believe that if the practice becomes more common it would have a positive impact on the industry. But 10 percent said incentive pay had a negative effect on their organization’s culture, in some cases fostering unhealthy competition among fundraisers.
• Eighty-two percent of respondents at institutions that measured fundraiser performance without offering incentive pay said a system like theirs had a positive impact on organizational culture. Forty-seven percent of such respondents said more widespread incentive-pay practices would be bad for the industry. Some feared incentive pay would undermine the spirit of altruism in their work.
• Half of institutions without incentive compensation nevertheless said they offered ad hoc bonuses for fundraisers based on things like supervisor recommendations, exceptional work, and taking on special projects.

Incentive Compensation’s Impact: What Nonprofit Employers Say

Note: Data is from a survey of fundraising departments at 63 higher-education institutions.

Source: Marts & Lundy