Fundraising Consultants: A Guide for Nonprofit Organizations
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About this ebook
Fundraising Consultants
Lowering net costs, realizing more money, and securing larger donations are just a few of the advantages to hiring a professional fundraising consultant. But how can you know you're picking the right consultant for your organization?
Filled with invaluable information to help you identify, select, retain, and work with development/fundraising consultants, Fundraising Consultants includes practical advice, tips, guidelines, possible outcomes of consulting, exemplary stories, and other useful information for nonprofit organizations of any size considering the use of development/fundraising consultants.
Author Eugene Scanlana leading fundraising consultantoffers step-by-step guidance and resources to help you in your decision to use consultants, and then shows you how to go about getting the right one for the job. Its numerous case studies and practical toolsincluding sample invitation letters to consultants, sample requests for proposal, sample consulting budgets, samples of reports, and recommendationsequip you to implement the concepts introduced in the book.
Part of the AFP/Wiley Fund Development Series, this guide covers everything you need to know to make critical decisions for selecting and working with fundraising consultants and explores:
- The request for proposal
- Where to find the best consultant
- Using the Internet and other sources in your search
- The proposal for services
- Pre- and post-proposal interviews
- Selecting the right consultant
- Drawing up a contract
- Working with your consultant
Brimming with ideas, concepts, and information that will help you and your organization through the consultant selection and working process, Fund-raising Consultants reveals what your nonprofit should look for when considering hiring a consultant or firm.
Intended as a guide for any nonprofit organization considering hiring a consultantto help the organization see if it is ready to raise money, to assist it in raising money, and/or accomplish the goals a good fundraising consultant can help the organization achieve Fundraising Consultants is your insider guide to using fundraising consultants effectively.
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Fundraising Consultants - E. A. Scanlan
Introduction
BUSBOY’S HOLIDAY
It was my first day on the job as vice president of Alford & Associates, a relatively new small fundraising consulting firm based in Chicago. Jimmie Alford, the founder, had a long history of work with the Boys and Girls Clubs of Chicago, including most recently serving as the chief development officer for the citywide organization. I was joining the firm as the third professional staff member after spending about four years as a program officer and fiscal manager at The Chicago Community Trust, Chicago’s large community foundation.
Making the move from a large, established (and prestigious) organization to a small, one-year-old consulting firm was seen by some colleagues as strange at best. And, after meeting other fundraisers, it became obvious that their ideal move would have been the other way. But for me the challenge was to continue helping nonprofit organizations with something more than just money—and maybe help them also acquire more funding.
The big question in my mind was Do I have what it takes to be a fundraiser—and especially to serve as a fundraising consultant?
Here I was working for a highly skilled professional fundraiser, and now was vice president of a consulting firm, but I had never raised a dime! Did I have any skills that could be applied to this new job?
I arrived at the office on my first day. Actually, it was also the first day for the office itself—Jimmie had just signed a lease and purchased the office equipment after working out of his home for a year. I was nervous about starting a new job and my possibly questionable skills to do it; Jimmie was nervous about committing to the expenses of a long-term lease, the newly purchased office equipment, and, although he did not mention it, the cost of his new employee—me. Nancy, the other vice president, had a way of cheering us up and calming us both down.
Jimmie told us that we had a corporate lunch meeting with a client that day; the purpose of the lunch was to acquaint several companies’ senior staff members with the organization as part of cultivation for a planned major fundraising effort. We needed to arrive early to ensure that the caterer had everything set up for the lunch meeting, and to keep the organization’s board chair on track with his roles there. We left the office about 11:00 A.M., arrived at the client’s office at about 11:15, and walked into the area where the lunch was to be held.
Right away it was obvious something was wrong. The tables and chairs for the lunch were folded and stacked against the wall, there were boxes containing the utensils and the tablecloths, and the caterer was nowhere to be found. Nancy and Jimmie were very upset. I, however, at least knew I had one skill that was useful for this consulting business—I had worked two summers as a busboy in a very busy seafood restaurant in New Jersey. I knew how to set tables up—and fast! I quickly proceeded to set up the 10 tables while Jimmie tracked down the caterer and Nancy helped me. The caterer arrived back with the appetizers and the deserts, and then left again, just as the guests were arriving, to get the lunch food. The appetizers and desserts were almost totally consumed, and the main course arrived about 12:45 P.M. The program part of the lunch went off smoothly, although slightly delayed. As we were leaving, I said to Jimmie and Nancy, I was wondering if I could do this consulting thing; now I know I have at least one usable skill, even if it’s busing tables!
ABOUT THIS BOOK
This book is about using fundraising consultants. It is intended as a guide for any nonprofit organization considering working with a consultant, either an individual or a firm, to help the organization see if it is ready to raise money, to assist it in raising money, and/or accomplish a lot of other things a good fundraising consultant can help the organization achieve. This book is also intended as an insider’s
guide to using fundraising consultants. It is written from my perspective as a consultant (and sometimes busboy) to the nonprofit sector for over 24 years. And, yes, I was on the other side
as a real
fundraiser for several years after I left the Community Trust and after my initial time with Alford & Associates, and had relocated to Washington, D.C.
In this book you will read about ideas, concepts, and information that will help you and your organization make critical decisions for selecting and working with fundraising consultants, as well as working with consultants serving nonprofit organizations in other ways. You will also get my opinions about consultants, the process, and some possible roadblocks to successful consulting relationships. Consulting, like so much of what happens in the nonprofit or third sector, is still an art and not a science. Like good fundraising, it is often about relationships as well as skills and knowledge. Good consulting is also about honesty and ethics, and understanding that each organization has its own culture and uniqueness, and that a one size fits all
approach is no more successful in the consulting business than it is in the fundraising business. At least that is what I believe.
Also in this book I will include stories about my own consulting experiences, and the experiences of others, including both consultants and organizations. I believe that stories are a very important part of the learning process. Stories, if properly used, can help bring down to earth many principles, concepts, and ideas while at the same time using the lessons learned
to help others stay on the right path. Besides, stories can break up the long list of bullets, steps, goals, and objectives that can make the reader forget we’re talking about people and relationships, not mathematical formulas or physics equations.
This book grew not only out of my own experiences and many conversations with colleagues in the consulting business, but also specifically out of a then-National Society of Fund Raising Executives (NSFRE, now the Association of Fundraising Professionals, or AFP) workshop I did in 1994 for the local NSFRE chapter in Washington, D.C. The session was entitled Consultants: The Good, the Bad, and the So-So
and focused on two major areas: When you should consider using a consultant
and When you should not consider using a consultant.
As I recently read over my outline for the session, I realized there is not much I need to change in my key points under each of those two topics. Because of several additional years of consulting experience since I put together the session, I may have a deeper understanding of what lies behind my points, but the points themselves remain important.
There is also another audience for this book: the person considering becoming a nonprofit consultant or the person new to the consulting field. While not intended as a how to
book for consultants, this book can serve as a useful guide for better understanding what nonprofits look for or should look for when considering hiring a consultant or firm. It can also help one understand at least some of the critical factors in the hiring process and in the working relationship with a consultant or firm, as well as some of the success factors and pitfalls of using consultants.
GROWTH OF THE CONSULTING FIELD
The number of fundraising and nonprofit consultants and consulting firms is growing rapidly. Some of the larger consulting firms that have traditionally worked only with the corporate sector are moving aggressively into nonprofit consulting, including fundraising. The other extreme is the people who are consultants
until they find a new position within an organization. In between are many individuals, small firms, and some larger firms that are fundraising and nonprofit consultants. Some are innovative and creative, while others follow more traditional approaches.
Overall, the nonprofit consulting field, like the nonprofit sector, is characterized by its diversity, numbers, and approaches. In the Washington, D.C., area alone there are probably hundreds of individual consultants; small (one- to three-people) firms; a few larger firms, including branch or regional offices of national firms; and virtual
firms, where consultants come together to work on particular projects when more than one person is needed or special skills are required. Despite the competition among firms for business, many consultants have collegial relationships and often get together formally or informally to share experiences, get ideas, and bemoan the occasional problem client. Consultants are frequently active board members in professional organizations, such as AFP, and are often speakers at conferences and workshops. Many are willing to share their expertise through presentations, publications, and the informal exchanges and networking that happen around meetings and conferences. In short, fundraising consultants are much like their development and other nonprofit colleagues. They are part of a complex, growing, and changing sector that is as varied as snowflakes.
A VARIETY OF CONSULTANTS AND STYLES
Fundraising and other nonprofit consultants may help organizations move forward, may only cause confusion, and may even hinder an organization’s progress. They can become part of the family
and true partners, remain helpful outsiders, or just be seen as people who create fear and dread. I’ve seen all of these things happen when nonprofits use consultants, and, at times, have myself been a part of each of these types of relationships.
And what of the consultants themselves? They, too, are as varied as snowflakes. Some use a systematic, step-by-step approach to the consulting relationship, some operate under broad principles but are more flexible about how they proceed, and a few are unfortunately dogmatic, with a you do it this way
approach to everything. Some have years of solid experience in the nonprofit sector, including extensive fundraising experience, while others move into consulting after only a few years of work in the sector. There are also those who come out of the corporate world after years of experience, and seek to apply their understanding of essential business skills to the nonprofit sector and fundraising. There are also the former professional volunteers
who decide that, after years of helping organize fundraising events, heading up major campaigns, and serving on committees and boards of nonprofit organizations, they can establish a business to continue to help while receiving fees for their expertise.
In one interesting trend some of the larger fundraising consulting firms are seeking to grow their own
consultants by hiring younger people with a few years of nonprofit experience to become program associates
(or other titles) who initially help with internal preparation of reports, analyzing data, and other tasks, while at the same time tagging along with more senior-level consultants. The arrangement is much like the apprentice model of learning a profession, a system that was common for hundreds of years until higher education and graduate programs became more available.
SUCCESSFUL CONSULTING
As we shall see, much of the determination of how successful a consulting relationship will be can depend on many factors, including the real needs of the organization, the experience of the consultant(s), the fit
of the consultant with the culture of the organization, the level of involvement of the organization and its board in the consulting process, the methods used, expected versus actual outcomes, the achievability and realism of the recommendations, and other factors that will be presented in this book.
In short, when one person asked me to describe what the fundraising and nonprofit consulting process is like, I replied, It’s like moving an elephant. If you get it to take one step forward, maybe you have achieved something!
Of course, there are more dramatic examples of elephants moving forward (beware of leaping elephants), and organizations can take major jumps, if they want to, with or without the help of consultants.
BREAKING NEWS: LAWS TO GIVE YOU PAUSE
Did you know that many states have laws regulating fundraising consultants? Did you know that there are legal definitions in some states of what fundraising consultants are, what they can and can’t do, and their roles with your organization? Did you know that a consultant who asks for gifts, handles money, or is even part of an ask
or cultivation meeting may be considered a solicitor, and that a whole separate set of rules apply to that type of consultant (in some states)? Did you know that, depending on what they are doing, some fundraising consultants might have to register in several states?
This book is not intended as a legal guide, but any nonprofit should be sure it understands the applicable laws in the state or states where it operates, when it may be necessary for the fundraising consultant to register, the roles the consultant can and cannot play within your organization, what fees and possible bonding requirements might be involved, and many other factors that can cause both your organization and the consultant great difficulties if the laws are not followed. For example, some states require that any nonprofit agency contracting with a consultant submit a copy of the consulting contract to the state (often to the attorney general’s office), sometimes before work begins. Minimally, in states where it is required, the consultant needs to be registered.
A cautionary example: Registration of the consultant and a contract review can have some pitfalls for both the organization and the consultant. I once heard a story from a colleague who reached agreement with a nonprofit organization on a contract, had the contract duly submitted to the state, and received surprising news: the organization itself, while it had its tax-exempt IRS 501(c)(3) status, had never registered with the state. The results were fines both for the consultant (for contracting with an unregistered nonprofit) and for the organization (for not registering with the state).
Another example: Many years ago I contracted with a small national organization headquartered in Washington, D.C., to advise the executive director on foundation fundraising strategies. I was very impressed with the organization and made a small contribution to them. At one point the Board decided to have a reception at the home of one of the members in New York City. The reception was for members and spouses only, had no fundraising purpose, and was fairly informal. However, a program for the reception was printed and on the back listed recent contributors, including my consulting company. Shortly afterward, I received a notice from the New York attorney general’s office that I needed to register my firm in New York State, since I was conducting consulting business there. I argued by letter that I was not doing so, that my client and my firm were both based in D.C., and that I had done no fundraising in New York for or with the client. After several months of correspondence back and forth, and upon the advice of my attorney, I gave up and sent my registration fee of $900 to the New York attorney general’s office (and renewed the next year).
One more example: A consulting firm I was working with submitted a contract to the attorney general’s office in the state where both they and the client organization operated. The proposed contract indicated in one phrase that the consultant would assist the organization in meetings with potential foundation and corporate funders to determine their interests in a possible future request from the organization. The attorney general’s office said that this phrase needed to be removed from the final contract, as it opened the possibility of a solicitation (asking for a gift or grant) with the consultant in the room, thus putting him or her in the role of a solicitor.
How do you find out about the laws and regulations that might affect your working relationship with a fundraising consultant? First, check with your organization’s attorney. A caution is that sometimes attorneys for nonprofit organizations, especially those who aren’t very familiar with the nonprofit sector’s nuances, may not know about the requirements in your state for working with consultants. The next step would be to check with your state’s attorney’s office or other appropriate office to get a copy of the applicable laws and procedures. Remember, some states have no regulations for fundraising consultants, while others have very comprehensive and complex rules and procedures for consultants and solicitors,
including possibly registration and fees, bonding requirements, and other instructions.
If your organization works in more than one state, you may have to deal with each state individually and ensure that both your organization and the consultant or consulting firm meet each state’s requirements. While there have been efforts to develop standard requirements, definitions, and registration procedures that could be used by several states, each state still has its own laws and procedures, with some states having extensive regulations and others having few or no regulations. Enforcement procedures and actual enforcement can vary considerably, with some states being considered as tough
and others less so.
Also remember that, at least according to some attorneys I have met, the registration requirements and rules for a consulting firm you contract with may depend on what specific service you are to receive. According to one attorney I spoke with, a consultant contracting to carry out a feasibility study may not need to register in the state where the organization is located, while a consultant or firm managing a capital campaign might be required to register and possibly even post a bond. Many of the differences in state laws appear to be based on exactly what the consultant is doing for the organization. Is he or she or the firm just doing a feasibility study or development assessment? Is the consultant or firm providing advice and guidance for a capital campaign? Is the consultant or firm actually carrying out the campaign where the consultant functions as staff to manage the campaign (sometimes called onsite campaign management services
)? Is the consultant or firm actually soliciting for money? Does the consultant or firm handle any gifts received? In each of these situations and in each of the variety of states that have laws pertaining to consulting services, there may be different requirements. These will be based on the specific roles of the consultant or firm and their contract and arrangements with your organization.
Where can you find a comprehensive summary of state-by-state requirements and regulations for fundraising consultants and solicitors? There are many sources available, and you should always check with a knowledgeable attorney and your organization’s state before contracting with a fundraising consulting firm (or before finalizing any contractual arrangements with a consultant). One summary of all state regulations I have found very useful is the Giving USA Institute’s (formerly the AAFRC Trust for Philanthropy) Annual Survey of State Laws, now published as an e-newsletter and available through their site at www.givinginstitute.org.
CHAPTER 1
No, We Don’t Need a Consultant!
When I work with smaller organizations that are looking to hire their first development staff member, I often caution them to not assume the development person’s chief role is to take all of the fundraising responsibility on his or her shoulders, thus releasing the other staff and board from this onerous
responsibility. The same caution can be applied to the process of seeking a consultant. The operating attitude on the part of some nonprofit staffs and boards is that hiring a fundraising consultant will bring in more money, thus solving the organization’s cash flow problems, meeting its capital needs, or enabling it to expand its services and programs. This approach—to see money as the solution or end—can be very limiting, both for the organization and the consultant. Often, fundraising issues are complex and they can be related to many other organizational issues and even the external environment. In most of my consulting experience the get more money
solution simply is not the single answer to an organization’s problems.
Nonprofit organizations also, at times, tend to see a single simple question that will be answered by hiring a consultant: Can we raise X dollars for our capital needs?
or Is our fundraising operation as effective and efficient as possible?
or Can our annual campaign show better results?