The Goldie Company

Parley: July 2013 - Should you use fundraising consultants?

An organization struggling to find adequate funds, and already overburdened with other work, is likely to consider hiring a consultant to help with the fundraising. This can solve problems — or make them worse.

Good fundraising consultants will help the organization develop greater strengths to continue fundraising after the consultant is gone.

Bad consultants will make you dependent on them for future fundraising, advocating only the techniques you can't do on your own.

Good consultants will tell you honestly how much work is expected of you, and what the potential problems will be.

Bad consultants will promise that you will have little work and no risks. They can only do this by charging exorbitant fees.

When to Hire a Consultant

  • When you don't know what to do 
  • When you do know what to do but the board or staff won't listen to you 
  • When you know what you want the consultant to do 
  • Before the situation becomes desperate 
  • Before the plans and printed material are finalized

How Do You Pick a Consultant?

Before you begin shopping around, prepare your criteria so that you can evaluate and compare. Answer as many of these questions as you can, and add others:

  • What do you see as your main problems/strengths?
  • What would you like the consultant to do?

1) Show you how to raise money?
   a) how much?
   b) When is it needed?
   c) For what purpose?
2) Train volunteers and staff?
   a) in what areas?
   b) how many people?
   c) when needed?
3) Handle a publicity campaign?
4) Review printed materials?
5) Develop a fundraising strategy?

  • How much can you spend?

1) on consultant's fees?
2) on campaign expenses?

Phone and discuss your general criteria with the consultant:

  • Ask if they've worked for any similar organizations. Which ones?
  • Ask if they've worked on any similar problems.
  • Ask for written material they may have on themselves.
  • Narrow down the list.
  • Prepare a brief orientation kit to explain what you want. Send it to a short list of consultants. It should contain:
    • mission statement
    • annual report
    • any brochures on your work
    • list of board members and what they do for you, and for a living
    • scope of the work you want the consultant to do
  • Prepare interview questions that will help you compare the consultants' understanding of how to deal with your most difficult problems:
    • Does the consultant understand your special situation?
    • Who will do the work, a senior consultant or a less experienced junior?
    • How much will the consultant charge?
    • On what basis do they charge (% / hourly / fixed fee)?

Should you ask consultants for detailed proposals?

By all means, do ask for comments on your particular situation. Don't expect a lengthy proposal detailing how the consultant would solve your problem. This can involve a great deal of work. Don't try to use the selection process and the proposal as a way to get free advice on how to solve your problems without hiring the consultant.

Check the consultant's references

Contact people who might know about the consultant, and ask about his/her faults as well as abilities. Discuss anything that might make your situation special. Contact people such as:

  • previous clients
  • your contacts

You need a contract

Ask the consultant to develop a contract outlining your joint expectations. Be sure this protects you, not just the consultant. Have a lawyer look it over.

Your contract should include at least:

  • explanation of who does what, each party's duties and responsibilities.
  • the prices for each service to be performed by the firm.
  • a statement of how either party can terminate the contract.

The organization should have the following controls:

  • approval of how your group's name will be used
  • timetables to be adhered to
  • prior review and approval of all materials, etc.
  • assurance all programs meet legal requirements of the country, province, etc.
  • ownership of newly acquired donors (the consultant should not keep the names and addresses, and should not use your list for another client without your permission).
  • provisions to resolve client-firm disputes, if any, perhaps through a pre-selected independent arbitrator.
  • prior knowledge and approval of costs (above a set limit) before work is ordered.
  • definition of all expenses that will be reimbursed.

Should you pay a percentage commission?

The Association of Fundraising Professionals (AFP), the professional organization for both staff and consultants, has a Code of Ethics which prohibits commissions for fundraising. It suggests that you should instead pay on an hourly basis, or a fixed fee for a specific piece of work.

This is done to protect nonprofits from the handful of shady itinerant `bucket shop' operators who prey on desperate groups unfamiliar with good practice.

These organizations may offer to produce and promote a complete show for you. They usually hire low-paid telephone solicitors to sell tickets to your donors, to their own list of people who have bought tickets in the past, and to the public. Often donors are asked to become sponsors so that disabled children can be brought to see the show. Using the same techniques, ads in a program are sold to local businesses. They may offer to do a direct mail campaign, too.

Companies of this sort promise to pay all the expenses and take all the risks. In return, the company receives a percentage of the income as its commission. Administrative expenses are often added, in addition to commissions.

A commission may seem attractive, at first, because it reduces the risk to the group. If the consultant doesn't raise money, the consultant doesn't get paid.

Perhaps the most important factor against commissions is that many donors become irate at the idea that a consultant will get a percentage of what they might give. They may refuse to give at all.

Commissions also reward any techniques that get donations during the term of the contract. These may not improve the non-profit's long-term strengths. In a commission structure, there is no payment made to cultivate the donors who may not be able to give much now, but could contribute generously in the future. There is no incentive to train the group's own personnel in effective fundraising techniques.

Consultants in this situation may only pick organizations that they can exploit for the maximum dollar return. Those that may be more controversial, or have ethical standards that would limit certain techniques of fundraising are avoided.

What a consultant can and can't do

A consultant cannot make policy decisions, or determine strategy. The board must do that, taking the consultant's recommendations into account. Ultimately, the board is responsible for the campaign, and must be able to reject the consultant's advice. The board must have a sense of ownership for any campaign to work.

Most face-to-face fundraising with individuals and groups expected to give large amounts should be done by volunteers, not a consultant. (It should not be done by a staff person either, although a consultant or staff person can accompany a volunteer as a backup resource.) Ideally, a consultant should be invisible to all donors except the board, serving as a guide, trainer or creative source only.

Consultants and paid help cannot substitute for legions of volunteers on labour-intensive work.

A consultant can recommend strategies and structures to allow work to be done efficiently.

A consultant cannot reveal your secrets to others, or tell you the inner workings of other groups' plans. A consultant can share the lessons gained from intimate knowledge of many different campaigns.