Newton's Laws of Fundraising #86 - Hiring a Development Consultant Can Be Very Cost Effective.


Why Hire a Development Consultant?

WHEN AND WHY DOES IT MAKE SENSE TO HIRE A DEVELOPMENT CONSULTANT?

A stereotype is that development consultants cost a fortune. Not all of us! Some of the capital campaign guys do. But the stereotypical high-priced consultant does not have to be the case. If you have specific goals, a specific dollar figure, and specific start-to-finish dates, you can add some real punch to your development activities for less than you think.

For example, we have a client that we write grants for, three hours a week, 12 hours a month for just $1,140 per month. It does not take many grants to make that a very cost-effective arrangement for even a small organization. Plus, once we get a good template established, grants can be written quickly to many different grantors. So in that way, three hours of grant writing goes a long way.

Put another way, that organization is getting a professional grant writer for $13,600 per year—and 100% of that goes to productivity—none to taxes or benefits. It’s a pretty strong argument in favor of using a consultant.

Are you constantly saying to the Executive Director or the Board, “we could really go to the next level if I had an assistant” or “If I had an assistant, I would have enough time to start a planned giving program” or “If I had more time, I would love to write some grants.”

You may not have the money to hire another development person in your department, but hiring a consultant as a development assistant can be cost-effective and very productive. Here’s why:

  • You are only hiring them for specific duties—and usually it’s something they are very good at.

  • There are no benefits to pay

  • No unemployment insurance to pay

  • No taxes to pay on them

  • No drama. When the job’s done, everyone goes their separate ways. No hard feelings, no litigation, there’s not a winner and a loser, it’s just over.

  • No turf issues. If you hire a consultant, they are loyal to you. You never have to worry about them undercutting you or trying to steal your job.

  • You may not have enough budgeted to bring in a permanent part-timer, but you might have enough to bring in a consultant.

  • You won’t have to train them. They can make their first ask on their first day.

  • Bringing in a consultant helps you finally get out of the trap of hiring a string of assistants that do not work out or do not stay. Been there anyone?

Also, it’s a great idea to use a Development Consultant as an interim staffer if your organization is looking for a new Development Director. In general, consultants make terrific interim staff. Usually, they do not want the position permanently. This makes them perfectly suited to help you find the right person to replace them. They can approach the task of hiring their replacement with no biases. It's also important because it allows you to take your time and find the right person so you don’t have to hire the first person who comes along.

Okay so you’re saying that these sound like great ideas, but what’s the catch?

There IS a catch.

The tradeoff comes when you consider number of hours worked. If you are going to bring in a development consultant to be your assistant or an interim staff member, you have to make sure you are getting a lot of value for their hours--that's because you pay them a higher hourly rate than you would a permanent staffer.

A seasoned development consultant, working 6 hours a week for you, may very well be able to bring in more money for your charity than an entry level assistant working 25 hours a week.

Why?

Because the consultant knows where to find the money, with whom to work, how much to ask for and how to make the ask. Oftentimes an entry-level assistant has to work for a year or two in order to be worth the investment. A development consultant should be worth the investment—and then some--right away.

So, you need to make sure you watch your consultant’s hours very carefully.

And these days, another important consideration is that consultants are drama-free. With a consultant you don’t have to worry about turf issues, getting thrown under the bus, insubordination, not showing up for work, having to pay severance when the job is done, flaming social media posts, or any of the staff issues that have become a nightmare for employers.

A consultant works for YOU not the other way around. Each consulting contract has a start and end date that is agreed upon and signed by both parties.

Back to the question of when and why it makes sense to bring in a development consultant…

It makes sense to bring in a development consultant if you are starting an additional development program. Maybe you’ve always wanted to start a planned giving program. The goal here would be for the development consultant to walk side by side with you as together you start the new program, mentoring staff, getting the ball rolling and then once the staff knows how to proceed, riding off into the sunset.

There are not that many charities in any community that have all the bases covered when it comes to development. Oftentimes, they are really great at one particular thing. I can think of a charity in town that has absolutely phenomenal special events, but has not yet really gone after planned giving. I can think of another that’s just the opposite.

Or one that is a real champ at direct mail but doesn’t do anything with grants. Chances are good that each of these organizations wish that they could add another way to bring in dollars for their programs, but for whatever reason, have not made it that far. Sometimes you are too busy draining the swamp to worry about the alligators.

Unfortunately, development departments cannot afford to be one-trick-ponies. Diversification is extremely important for charities these days. Those that rely on government funding are finding that they wish they had another income stream or two.

Here are just a few fundraising emphases that a development consultant can help get established.

  • A Thousand Dollar Givers Club

  • A monthly givers club

  • A wills and trusts program

  • A schedule and a plan for writing grants

  • A special event specifically designed for gaining young and affluent professionals

  • A corporate giving program going

  • And many others

A development consultant can help you with any of these. Charities that have a diverse lineup of fundraising strategies can better keep money flowing if one strategy dries up.

Here’s another great reason to hire a consultant…consultants come with their own set of circles of influence. Their prospect list may look very different than your own. The list of donors I know in the area is extensive and it may greatly expand your charity’s influence. This is important because if you hire the right consultant, you are not just knocking on the same doors you always have. You are expanding your influence with a group of people who may not know. In this way, you enjoy the benefits of acquisition and cultivation at the same time. When you are done, you will have a larger prospect list than you had before, maybe even completely new types of people than what you’re used to and some new donors too. And when you factor in lifetime donor value, that’s where consultants really prove their worth.

Another great reason to hire a development consultant is that many of us are real experts in our field. For example, I eat drink and sleep grants. I love ‘em. I have a database of 109 area grantors, many of which don’t even appear on guidestar, that I work extensively and constantly add to.

Diplomacy is a real strength of consultants and it’s another great reason to hire one.

If you are lucky, you have a Board of Directors that is actively engaged in fundraising. But, we also know that there are not many Boards who are. A consultant can diplomatically work with a Board to get them onboard for raising money. A consultant need not worry too much about stepping on toes or turf issues with the Board because they are a neutral party, and after their contract is up, they may never see you again.

Of all the things to use a development consultant for, Board development is one of the most-effective and profitable for the organization. Why? Because it brings in money, yes, but it also leads to greater enjoyment and engagement in your board members. Engaged board members are happy board members. Happy board members are more likely to say yes to your projects and raises for staff!

NOW LET’S TALK ABOUT THE DOS AND DON’T’S OF HIRING DEVELOPMENT CONSULTANTS

DO use a consultant to train your fundraising staff. If you have the ability and time to train them yourself, feel free, but hiring a consultant to do it for you will save you time and keep you out there making asks.

Do use a consultant to HIRE fundraising staff. Again it saves time for you so you can be out there making asks. A good development consultant will be able to recognize the experience and qualities necessary to be a good development staffer. You can always have them do first and second round interviews and present you the final 2 or 3 candidates.

Once you have hired a development consultant DO ask them questions about development or brainstorm with them or bounce ideas off them. You have an expert in the house, you may as well use them. Most consultants won’t mind it and as long as it does not get in the way of their work it’s likely just fine.

DO get the consultant all the information they need to succeed. For example, if you have hired a consultant to make asks for you, be sure to provide access to a list of people you are already asking.

One of the first things I like to do for my clients is take a look at their list of donors to see if they have any potential major donors on their list that are giving at a lesser amount. Oftentimes, the charity has no idea that Mr. and Mrs. McGillicuddy have the ability to make a five figure gift.

When you’re working with a development consultant, DO keep them informed about decisions that might affect their work. In that regard, it’s a good idea to have your consultant sit in on staff meetings or even Board meetings. This will ensure that your consultant is always on the same page as the organization.

DO bring a consultant in to get an independent assessment of your situation. That is a great strength of a consultant. We come in with fresh eyes. Maybe you have an existing fundraising strategy that has grown stale, but you’re at a loss to figure out why. Or perhaps you feel like things are going great with your fundraising but you want to see if there are some strategies that will take you to the next level of success. Consultants come with fresh eyes and without any attitude. They will impartially give you any suggestions and help you take a step forward.

Do ask for regular reports from your consultant. You are paying them a lot of money. They should be ready with an answer. Ask them specifically what they are doing every week and how it helps your charity move forward. If a consultant is doing it right, they will have no problem doing this and it could end up being educational for you and your team.

Do share with them how they are doing for you. Let them know about gifts that come in and don’t come in. Let them know about sponsors that still have not paid. Be excited with them when that big first time gift comes in.

DO partner closely with your development consultant in the ask process. One of my clients does a GREAT job with this. I make major, planned, and corporate gift asks for them. So far, in every face-to-face solicitation I have made with the prospects, the charity’s Executive Director has joined us. This is important for several reasons, but most of all because I am temporary. Someday I will move on and I want the prospects to whom introduce them to end up being long-term friends of the organization. In fact, in these meetings I try to stay in the background until it’s time to make the ask.

DO hire local. A local development consultant is going to already know the major individual donors, the area foundations, and knows how people like to be approached. If you use a local development consultant, they will be able to get appointments with the prospects in the area. An out-of-town consultant might not be able to get appointments or gifts quite as effectively as a local one. Plus if you use a local consultant, you never have to pay travel and meals.

DO use a consultant if you have a small shop. I work with many clients that have only one paid staff member—the Executive Director. They don’t have money for a part-time development person, much less full-time. But they can pay for 12 hours a month to help bring in dollars. If the consultant does their job well, the charity may have the ability to bring in a permanent employee down the road.

In a related sense, DO always keep the amount you are paying a consultant in mind and have an amount established in your mind that is the tipping point at which you should hire someone permanently.

For example, I am serving as an interim Development Director for one of my clients right now. They are happy to keep me and keep adding hours for me, which is all well and good. BUT, I have told them more than once that eventually, the dollars they are paying me will reach the amount for which they could hire a pretty good permanent Development Director. When that happens, I owe it to my client to let them know that the better option will likely be to bring on a permanent staffer.

DO expect that your development consultant will keep your charity’s donor information confidential. Do expect that if your development consultant is making an ask of Mr. and Mrs. Ernest Terwilliger, that the consultant will not be hitting up the Terwilligers for another client. Discretion is the hallmark of a good and ethical consultant.

DON'T have a consultant represent your organization. I recently did a publicity campaign for a local charity. A number of news outlets were happy to do stories on the organization’s outreach, but there was a problem. The Executive Director wanted me, as a consultant, to appear on camera to represent the organization. I gently let him know that the Executive Director, Board President, key volunteer or development director should speak on behalf of the organization. As a consultant, I am temporary. You want a person who will be identified with the organization for a while to represent you.

Don’t hire a consultant if you don’t have time to work with them. Recently, I arranged for a tour of a charity’s program with a potential major donor. We were to meet the Executive Director for the tour, and if all went well, make an ask for a major gift. The Executive Director texted at the last minute that he could not make it and to do the tour without him. This particular Executive Director is well known in the community and is highly-charismatic. The potential major donor was put-off by missing a chance to meet the Executive Director and it’s doubtful we will get the gift.

Don’t expect a miracle. We development consultants are good at what we do, but you have to give us something to work with. If your house is not in order, it might be very hard or even impossible for the consultant to raise much money for you.

Don’t have your consultant making asks of any less than $1,000. My hourly rate is relatively cheap, but even so, it adds up. Any development consultant worth their salt should be effective at getting “gifts with commas.”

Don’t have open-ended plans with them. Give them a definite start date and a definite finish date as well as how many hours you’ll pay for. This will keep you from paying too much for a consultant.

If it’s a project you need, then spell that out too and agree on how many hours it will take beforehand. It probably goes without saying, but work all this out in advance and get it in writing. Any ethical consultant will give you a written contract before starting.

Don’t hire them on commission. It’s against Association of Fundraising Professionals ethics, last time I checked. One reason why is if one of your donors makes a designated gift and you’re having to pay a percentage of that to a consultant then that donor’s designated gift ends up being less than 100% designated. That’s a big problem.

Don’t hire a consultant if you’re just going to do the same things you always have. A good consultant will make you stop and think. A great consultant will inspire you to do things better. The best will show you how.

HOW TO HIRE A DEVELOPMENT CONSULTANT

  1. Hire local. As previously stated, local development consultants know all the major donors, foundations, corporate foundations, news directors and other contacts we need to move a charity forward. These contacts will take our calls and accept our appointments. The out of town guys may not be able to.

  2. Ask other organizations if they have used a consultant and what their experience was like. Ask for a referral.

  3. Insist on checking references. Any good consultant will have them.

  4. Don’t be afraid to approach more than one consultant for a proposal. Rates can vary, as can areas of expertise.

  5. Don’t be afraid to ask a Development Consultant for a referral. I do it all the time.

  6. Have an idea of what you’d like to spend, going in. You might even ask a consultant, “what can I get for XX amount of money?” They might make you a deal. I have been known to cut a deal now and then.

  7. If you’re a small charity or if you catch the consultant on the right day, you might get them to donate a job to you. Every consultant I know writes off jobs, including me.

  8. Have an idea of what your goals for the consultant are before you sit down with them for the first time.

  9. If you want to engage the services of a consultant completely confidentially, that’s OK too, just spell that out right away.

  10. Now for the big question, What will it cost to retain a fundraising consultant? There’s a lot of variance on this. Full-service guys like me are going to be less expensive than the capital campaign guys.

Some consultants charge by the hour, some by the job. Some charge on a retainer of up to a certain number of hours per month.

If you want someone to write grants for a few hours a week, that will cost less than having someone start a planned giving program for you, which will cost less than most capital campaigns.

My smallest contract right now is a six total hours of grantwriting contract for a school in western Kansas for a total of five hundred and seventy bucks. My largest is 8 hours a week to be the interim development director for a charity here in town. That works out to a little over $3,000 a month. Capital campaign guys get a lot more than that.

  1. Another important question…How much can you expect them to raise? Well, it depends on a lot of things. If you have your consultant making major gift asks right from the start, then the return on investment should be very high.

If you have them beginning a special event from the ground up—typically a lower ROI—expect a lower return. If you have them beginning a wills and trusts program, you may not even see a return on investment for several years, but the ROI will get better and better with each passing year.

Again, don’t be afraid to talk goals with a consultant. But again, as I have stated earlier, if the consultant needs to get your organization to a basic competency level to raise money in the first place, the return may be quite a bit lower.

The return may be a lot higher if you are starting a new program and you have lots of “low hanging fruit”—people who have not been asked before.

But, if you program has been going a long time, the results may be less dramatic. Again, it’s good to talk goals before the contract gets signed.

... As for the platypus? Why not!

#NonprofitConsutants #Peoria #StrategicPlanning #PhilNewton #RobinBallard #Consultants #Consulting #NonprofitConsultants

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