It is generally accepted among fundraising professionals that taking a percent of dollars raised from a fundraising is unethical. In fact, most fundraising codes are clear and prohibit consultants from taking a percent of dollars raised.
CNM’s publication, Nonprofit Consultants: How to Choose Them and How to Use Them, underscores the importance of establishing a fee schedule with consultants before they are hired. Consultants can present the fees for a project in several ways, among the most common – and acceptable – are the following:
- Flat rate – the consultant commits to one fee for completing the entire project regardless of how many hours are spent
- Hourly rate – the consultant quotes an hourly rate with time estimates for each part of the project
- Hybrid approach – a combination of both a flat rate and hourly rate for each component of the proposal, that is calculated on time estimated for each portion of the project
Often times a contract with a consultant will include a “not to exceed” provision, meaning actual charges may be less but cannot be more than the estimate. An agreement with a consultant should include how and when the consultant will be paid. It is typical for a client to pay a portion of the fee up front as a “retainer” and then receive monthly invoices.
Bottom line, if a consultant requests a percentage of any fundraising opportunity, keep looking. You may be short-changing your organization in more ways than one!