Commission (remuneration)

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The payment of commission as remuneration for services rendered or products sold is a common way to reward sales people. Payments often will be calculated on the basis of a percentage of the goods sold.

Offering monetary compensation in the form of commission alone, or commission in addition to salary rather than simply a fixed salary, is intended to create a strong incentive for employees to invest maximum effort into their work. Common industries where commission is used include car sales, property sales, insurance broking and many other sales jobs.

[edit] Charity Collector Commission

Controversially, many charity collectors now work on a commission basis. This concerns many who donate to charities or would like to, but want to be certain 100% of their benevolent donation reaches the worthy cause intact.

However, this concern only relates to charity collection by cash donation. Banking arrangements on paper where no cash exchanges hands are a direct contract between two distinct parties: the donor, and the charity whose bank account receives the donation direct. It is entirely impossible to intercept any part of a standing order or direct debit arranged between the charity and the donor who is making the donation.

In the UK for all registered charities who are registered with the audited and government-run UK Charities Commission, these commission monies to salespeople or collectors can only be an accounted-for part of the allocated fundraising budget. The commission structure is occasionally used if considered by the Trustees and Board of an NGO or charity to constitute a demonstrable, valid expenditure: that is, if it can be demonstrated to the Trustee's satisfaction that commission paying brings in higher revenue therefore more money for the charity's cause.

It must be noted that ongoing commission payments from the same ongoing donation, is also illegal under UK law. In addition, where standing orders or Direct Debit arrangements have been made, these are an agreement between charity's bank account and donor's bank account, which is a closed circuit.

Moreover, the UK tax system recognises charitable giving and for UK-registered taxpayers, the charity is entitled to claim from the government the tax that has already been paid in the earning of that donated money. If someone is donating £10 to a registered charity, and is a registered taxpayer, then they have had to earn £12.50 and pay tax of £2.50 to possess this £10. When such a donor gives £10 on an ongoing basis direct to the charity without cash exchanging hands, this previously taxed money is claimed back from the UK government, bringing the £10 donation back up to £12.50 every time. As such, it is the norm among charities and NGOs to allocate from this budget, any salesperson or collector incentives designed to further the fundraising aims and ultimate funding of benevolent goals by the charity.

All registered UK charities are legally required to list costs, full accounts, including the portion for fundraising costs, freely available to the public. Anything less would theoretically constitute embezzlement, if it were not fully accounted for as a fundraising cost within the charity's fundraising budget. Therefore commission incentives as part of a fundraising budget can normally be viewed on the charity's website or the official website of the UK Charities Commission.