By Brendan Manson / President of Fellowship Development
Launching a capital campaign is a large undertaking. Most development offices can’t handle such a task on their own. That’s where a fundraising consultant comes in. They provide the expertise and knowledge to conduct a successful capital campaign.
But you may be asking yourself, how much does a fundraising consultant charge and are they worth the cost?
What Is a Fundraising Consultant and What Do They Do?
A fundraising consultant’s role is to help a nonprofit organization conduct a large scale fundraising effort, like a capital campaign or debt reduction campaign. The consultant will conduct the feasibility study, interviewing and surveying your community to help understand if there is support for a campaign. Then the consultant will embark on the campaign planning process and help your team enact the plan.
The services offered by fundraising consultants varies.
Some, like Fellowship Development, offer a full-service, onsite approach. Our campaign managers work onsite with the client three days each week. In addition to capital campaign management, our campaigns include grant writing, graphic design, data analysis, wealth research, volunteer training and more. A full-service consultant will lead capital campaign communication as well.
Other consultants may offer a different set of services. Some may offer an onsite manager five days per week, but hire out third parties for design, grant writing, etc. Others may use a consultancy model where they do not spend much time on site, working less hands on but guiding from afar.
The type of services offered will certainly impact the cost. That is something to consider as you interview consultants.
Basis of Fundraising Consultant Fee Structures
There are multiple ways that a consultant may charge for fundraising services. Some are better for short-term projects, others are better for long-term goals.
When a church, school or other nonprofit is considering hiring a fundraising consultant, it is important to consider the cost of the services against the expected fundraising total. Nonprofits should strive to be efficient stewards by spending less than 10% of the funds raised on costs. Ideally, that number is as low as possible.
Reputable fundraising consultants will be clear with their fee structure and any additional costs that may arise. This will help your organization with budgeting and allow you to better calculate your return on investment.
Common Fundraising Consultant Fee Structures
Flat Fee
A flat fee is a one-time, fixed payment for a specific fundraising project or event. This could include hiring a consultant to run your golf fundraiser or to craft your case for support. Ideal for short-term projects.
Pro: A flat fee allows your organization to budget properly and provides a smaller cost for a smaller scale project.
Con: There won’t be much flexibility if the scope of the project changes since the contract details were specific.
Ideal Project Types: Crafting a case for support, creating a fundraising video, drafting a one-time fundraising email campaign.
Monthly Retainer
A monthly retainer is ideal for nonprofits that have an ongoing need for fundraising consulting. That could include a church capital campaign consultant or ongoing counsel for your annual appeal.
Pro: This cost structure provides flexibility for a long-term project or a project that may change in scope over time. By paying on a monthly basis, development offices can budget accordingly.
Con: This is usually best for nonprofits with long term needs and a reasonably sized budget. Smaller organizations will likely not find the cost -benefit ratio to work in their favor.
When retainers make sense: Most capital campaign consultants will charge a monthly retainer for the period of time agreed upon for the campaign. This allows the consultant and the nonprofit flexibility should the scope of the campaign change. That could include ending the contract early or extending the contract because there is more work to be done.
Hourly Rate
Hourly rate consultants are ideal for small, one-off projects that only require a few hours of work.
Pro: Ultimate flexibility. Hiring a consultant for only a few hours or work may be more economical for smaller nonprofits.
Con: If the project requires more work than initially expected, the costs could rise a lot. Having a set fee is safer in that regard.
Scope-Specific Use Cases: A nonprofit may hire a consultant on an hourly basis for coaching or short-term support/advice on a specific project.
Performance-Based (Percentage-Based) Fees and Why They’re Controversial
One controversial fee structure is payment on a percentage basis. This is where a fundraising consultant receives a percentage of the fees raised – no matter how much is raised.
Pro: The fundraiser is deeply incentivized to raise a lot of money. The more money raised, the more money earned.
Con: The incentive could mean that fundraisers may push to hard to raise funds. That may mean pressuring donors to give more money and could jeopardize relationships.
Why Percentage-Based Fees Are Controversial: Ethical Concerns and Expert Opinions
While it may seem appealing to hire someone on a percentage basis because it provides incentive for them to raise lots of funds for your organization, it is something we highly recommend against at Fellowship Development. And it goes against the ethical standards of the Association of Fundraising Professionals.
Ethically, it is quite dubious. A reputable fundraising consultant should want to help you raise as much as possible without needing the extra incentive of receiving a percentage cut. It opens up a fundraising endeavor to potential risks, including fraud and corruption.
Fee Benchmarks: What You Can Expect to Pay
The cost for fundraising consulting can vary on a lot of factors, including:
- Fee structure.
- Length and complexity of the project.
- Services offered.
- Experience level of the consultant.
- Travel and other expenses.
All of these are things that you should keep in mind when hiring a fundraising consultant. They will greatly impact which consultants will fit your budget.
Geography can play a role too. If your consultant will be traveling to you frequently, those costs can add up. Finding a consultant that is local to your area or that is located near a major airline hub can help limit costs.
A few benchmarks to consider:
- Hourly: A consultant could charge from $100 to more than $500 per hour, depending on the consultant and the scope of the project.
- Monthly retainer: There is a large variation here. For a full-service consultant that offers a range of services, you could expect to be charged $25,000 or more per month. A smaller, less hands on consultant could charge $2,500 per month.
Factors That Influence a Fundraising Consultant’s Fees
As already mentioned, consulting fees vary wildly and depend on a variety of factors.
Consultant’s experience, track record and specialization: Hiring a new consultant with limited experience will certainly be cheaper than hiring a firm with decades of experience. That may be a safe bet if you are looking at a quick, small project. But a proven track record is important when conducting a large-scale fundraising effort, like a major gift drive or capital campaign. Additionally, you should consider if your consultant has experience with an organization like yours. A church may want to hire a consultant that understands stewardship and other religious aspects of fundraising.
Complexity and scope of the project: Fundraising efforts (and the fees) come in all shapes and sizes. A consultant for a golf fundraiser will be cheaper than one for your annual appeal or a capital campaign. A capital campaign for an Episcopal diocese looking to raise more than $50 million will have a much larger scope with greater complexity than a campaign for a small Christian school looking to address deferred maintenance. Both are important! But the fees will differ quite a bit.
Duration and intensity of involvement: A hand-on fundraising consultant that works onsite alongside your team for weeks and months at a time will charge a higher rate than someone that consults from afar for only a week or two.
Are There Any Additional or Hidden Costs?
There will be additional costs that occur during a fundraising consulting contract. They should never be hidden or completely unexpected. A professional consultant will be able to let you know of potential costs in advance.
Some potential additional costs to fundraising consultants:
- Travel expenses and on-site visit fees: This should be discussed with the consultant and laid out in the contract. If your consultant will be traveling to work with you onsite, you – the client – will be expected to cover this expense. If there will be a lot of travel during the project, make sure to plan accordingly.
- Research tools, software subscriptions, or database costs: Many fundraising consultants will offer the use of research tools, software subscriptions or other technological costs. This should be discussed up front and the terms outlined in the contract.
- Marketing or campaign materials not included in base fee: There will always be fees related to marketing or campaign materials. That includes printing and postage. These will be covered by the client, as outlined in your contract. If a consultant does not offer copy writing or graphic design, those fees may go above and beyond the base fee of the contract.
- Overtime or rush fees: Depending on the scope of the project, the fee structure of the contract, it is possible a consultant may charge fees for working more than outlined in the contract. Or for rush work.
Ethical Considerations in Fee Arrangements
Hiring a fundraising consultant is an important step for an organization. While we hope all fundraising consultants will follow the ethical guidelines of our profession, there is no guarantee that is the case. So it is important to educate yourself on the ethical considerations of fundraising and fees.
As stated previously, the Association of Fundraising Professionals considers commission-based fundraising to be against its ethical guidelines. It is best to avoid hiring a consultant that uses this type of fee structure – it is unethical and could result in issues for your organization.
Another ethical consideration is that of a finder’s fee. Some consultants may offer to introduce a nonprofit to a major donor for a finder’s fee. This is another unethical practice, according to the AFP. In addition to the ethical concerns, it is bad fundraising – your biggest donors will be fans of your organization. An outside donor will not have the connection needed to your organization.
Ignoring these potential ethical concerns could put your organization at risk. Maintaining transparency and donor trust is paramount. A professional fundraising consultant that follows best ethical practices will be transparent with you and your staff, your community and your supporters.
Contract language that protects both the nonprofit and the fundraising consultant should be used.
Return on Investment (ROI) and Value Assessment
Hiring a fundraising consultant, especially for a capital campaign, represents a large cost for most nonprofits. When the contract is over, you’ll want to assess whether your return on the investment was worth it and assess the value of hiring a consultant. Here are some things to consider:
- Funds raised: This one is obvious. You had a fundraising goal. You hired a fundraising consultant to help you reach that goal. Did you achieve your vision? If so, then you likely received a good return on your investment!
- Campaign reach: At Fellowship Development, our goal is to engage the entire community in a fundraising effort. This provides momentum by exciting the whole community. It also helps lessen some of the burden on your major donors. It can feel overwhelming to a donor if they are expected to consistently support an organization when others do not.
- Donor retention: A fundraising campaign should not lead to a large influx of donations from donors that never donate again. While helpful in the short term, this is not good for the long-term health of an organization. The right fundraising consultant will engage your community in a fun way that inspires consistent support. We have found that our campaigns inspire increased weekly or annual giving from donors because they are more engaged in your community.
- Donor engagement: Did your community enjoy the fundraising? A fun, well-run campaign will create excitement within your community.
While the upfront costs of a fundraising consultant could seem overwhelming, they are worth it when you consider the long-term gains of a successful fundraising effort. It could be tempting to hire the consultant with the lowest fee. But that lower fee comes with some potential tradeoffs – that could be less experience, less services offered, less attention. And it likely will result in less funds raised. The experience and staffing capacity that a larger fundraising consultant will bring to your organization will help you raise more funds.
Choosing the Right Consultant and Fee Structure for Your Nonprofit
Because of the cost of hiring a fundraising consultant and the importance of the fundraising effort you are embarking on, it is important to find the right fit. Will our fundraising consultant be a partner that helps keep us on track to reach our fundraising goals?
Steps to vet and interview consultants:
- Peer recommendations: Start with the people in your network. Ask your connections if they know of any reputable fundraising consultants. Post on LinkedIn. Keep an eye on similar organizations locally that run a large fundraising effort. A positive review from someone you trust should help a consultant stand out.
- Past clients: If available, review a list of former clients that a consultant has worked with. Do they sound like organizations similar to yours?
- Ask for references: Ask potential fundraisers to provide references. Reach out to these other nonprofits for their feedback on working with the consultant.
- Letters of recommendation: Does your consultant have letters of recommendation from past clients? If so, read through them and see if the description of the consultant matches with what you are looking for.
- Interview multiple consultants: Finally, you should conduct group presentations with multiple stakeholders to interview the consultants. Talk with multiple firms.
It will be important to match your needs to the right pricing model. A monthly retainer for a fundraising consultant that offers many services could be cost-prohibitive for a smaller nonprofit. On the other hand, a large nonprofit hiring a small, inexperienced consultant in order to save some money could also be a bad fit.
Final Thoughts: Making the Most of Your Consultant Partnership
Finding the right fundraising consultant for your organization is a big task. But I hope that this outline has helped clear up the process and what you should look for when hiring a consultant.
Some key questions to ask yourself:
- What fee structure works best for our organization and this project?
- What services do we need for this project?
- Would we benefit from only one service or a full-service model?
- Does the consultant’s experience match with our organization and needs?
- Do we have any ethical concerns with our fundraising consultant candidates?
- Do we have any consultants that come with strong recommendations from other nonprofits?
