Hiring and Working with Consultants

According to a recent survey, more than 40% of nonprofits expect to pay more than $50,000 in consulting fees in the coming year. So, how does a nonprofit find the right consultant? If your organization is considering hiring a consultant to help with fundraising or development needs, here are few things to think about before you engage a consultant.

Do you need a consultant or a staff person?
The first thing you need to know is whether you are looking for a staff person to fill the role or if you need a consultant. If you need full time work or someone to be on site on a regular basis, you probably need an employee rather than a consultant. Hiring a consultant is not a way to avoid paying benefits to employees. In fact, the IRS has strict regulations about who is an employee and who is an outside contractor. Things like supplying an office and equipment, supervising the person's work directly usually mean that person is an employee and you must pay employment taxes and possibly benefits. For a complete list of IRS guidelines, check the IRS website.  

Know the law and ethics of consulting
While some states not require nonprofits or consultants to register in order to do fundraising campaigns and activities, many states do; so if your organization is headquartered in one of these states you may need to check into state regulations regarding the hiring of a consultant. And of course, the AFP code of ethics prohibits its members, including consultants, from working on a percentage of money raised basis. Be sure to ask for references of other clients. And ask if the consultant is a member of the Association of Fundraising Professionals (AFP) or another association that carries a standard of ethics. And ask if they are registered to do business in your state, if registration is required.

Understand what type of consultant you need
Consultants can offer many areas of expertise in different areas of fundraising. There are grant writing consultants, planned giving consultants, event consultants, search firms, capital campaign consultants, board development consultants, consultants who can help you develop a plan or audit your organization's development office. Some full service firms will provide a combination or even all of these services. But, you need to know what type of consultant you are looking for. Do not hire a grant writer to run a capital campaign or a capital campaign consultant to plan a special event.

Have you budgeted adequately for consultant fees?
Your organization needs to understand that you are not usually paying the consultant for the hours they are working, but you are paying for their knowledge, their experience and their expertise. Often, board members who have not worked with consultants before are not prepared to pay the fees involved because they do not understand this concept. Also, be aware of other costs, such as travel expenses if you are hiring a consultant outside the area. Ask what type of hotel accommodations they expect, what typical airfares will run, do they charge for mileage, phone calls, faxes, etc. Is there a charge for materials they provide?

What are the criteria you are looking for in a consultant?
Sometimes organizations feel it is important to have a local consultant, other times they're looking for someone with a national reputation and experience. Some organizations feel it is important to hire someone who has worked with similar organizations; for example a YMCA may want someone who has worked with other YMCAs. If the consultant is truly knowledgeable about their work, these things are often not as important as they seem. Some important criteria to look for are: Does the consultant seem to understand your needs? Do you feel the chemistry between the staff and board is good? Is the consultant willing to learn enough about your organizations and your constituents so they can effectively help you present your case?

Ask about the consultant's work style
Will they be providing actual work products, or are they providing you with direction so you can produce the products yourself? For example, is the grant writing consultant actually writing the grant, or reviewing and editing grant proposals you will write? Will they be on site or do they work from their own office? How accessible is the consultant to you by email? Make sure their style and the services they offer fill your organization's needs. Does their personality fit your organizationfs culture? Some organizations want a polished sophisticated person, while other may prefer a more down-to-earth style. You need to be comfortable with your consultant's style.

The written contract
A written contract or letter of agreement with the consultant, signed by your organization and the consultant should always be in place. This contract should outline fees and other expenses, a schedule of when fees are to be paid, a scope of work to be performed, a starting and ending date for the work, and a provision to extend or cancel the contract.

Welcome the consultant into your organization
Be sure that the staff members of your organization who will be working with this consultant get to meet them and know what is expected of them and of the consultant. A tour of your facility so they can get to meet program staff and others will be helpful. And, feel free to tell the consultant if you are unhappy or uncomfortable with anything they're doing. Remember, that consultants do not raise money for you, they help your staff and volunteers develop the skills and relationships to raise the money.

In summary, here are ten tips for hiring and working with a consultant

1. List what it is you expect the consultant to do, have a list of expected outcomes and items to be accomplished, similar to a job description for a staff member.
2. Know whether you need a consultant or a staff member. The IRS has strict guidelines about the roles of outside contractors and staffs members.
3. Determine whether the tasks you need done can be done by someone internally or do you really need outside expertise.
4. Determine the qualities the organization thinks are most important: experience with a particular type of organization, geographic location, working style, etc.
5. Research the types of consultants that are available in this specific area of expertise. Some good sources are the Consultant Directory Online at AFP International, if you are in the New York, NJ area, try Nonprofit Central NY/NJ, or your state association of nonprofits such as the Pennsylvania Association of Nonprofit Organizations (for a complete list of state nonprofit associations, check out the National Council of Nonprofit Organizations.)
6. Ask other nonprofits to share their experience with similar projects, i.e. if you are looking for a capital campaign consultant, talk to other nonprofits in your community that have used a consultant for a capital campaign.
7. Call several of the consultants on the list you have developed and determine the ones you think best meet your needs.
8. You may want to develop a simple RFP (Request for Proposal), however be aware that many consultants do not respond to RFPs, particularly if they are many pages long with a lot of requirements.
9. Schedule in person interviews only with consultants you are seriously considering; it will save your time as well as theirs. Make sure you interview the consultant with whom you will actually be working.
10. Remember that the chemistry between your staff and board and the consultant is one of the key ingredients of a successful relationship if not the key.

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