I was recently Debbie Downer during a discussion of grantwriting on commission.  My position was that it is considered unethical by foundations, grantwriters, funders etc. for several reasons:

1. A funder is not going to be happy if they find that 5% or 10% of an award is going to go to the grantwriter, and not toward program-related expenses.
2. A flat percentage of a larger award would be considered “excessive” by any reasonable measure. For example, if the grantwriter receives 5% of  a $1.5 million award, that’s $75,000 that isn’t going to go back to the support the program that the grant is funding.
3. The work to write the application take’s place whether the award is made or not.
4. Commissions place the burden of risk entirely on the grantwriter.  Other professionals do not work “on spec”…such as the organization’s accountant or lawyer.
5. Actual grantwriting is a small percentage of time required to create  the whole package that encompasses a successful project. If the organization doesn’t have the money to pay their grantwriter, they won’t be able to convince a funder that they have their act together to pull off a successful project.

For further background, The NonProfit Times did a very nice article articulating these arguments.