Consulting Agreement for an Annual Fund Campaign

The following example of an annual fund development agreement between a non-profit organization and a fund-raising consultant is suggested as a guideline for:

  1. Organizations having little or no experience in drafting such documents.
  2. Experienced development professionals beginning a new career as development consultants.

There may be occasions when a contract more formal in its nature, intricate in its wording, and legalistic in its phraseology is needed. However, my experience has been that simpler is better

This sample annual fund agreement can be easily adapted for capital, endowment, sponsorship, and underwriting campaigns. The purpose of the fund-raising campaign and some of its jargon might be different, but for the most part, the steps in the fund-raising process are the same. That can be confirmed by reviewing my website’s articles and plan outlines for those respective fund-raising campaigns.

A good campaign plan must layout what is to be done, when it will be done, and who will do it. The same is true of an agreement between an organization and a consultant. Clearly defined and agreed-upon expectations are at the heart of any successful contract.

Contract Between Fund-raising Consultant and Non-Profit Organization for Counsel for an Annual Fund Campaign

Introduction

Annual fund campaign gifts to the Non-Profit Organization (NPO) provide the entry point of support for most of its donors. Annual funds comprise the foundation of the NPO’s overall operating support, and they are the steppingstones to special and major gifts. As personal contacts by NPO volunteers with donors continue, those donors are made more and more a part of the NPO family through a process of cultivation. As a result, the NPO will better be able to secure future sponsorship, underwriting, endowment, and capital gifts. In addition, certain individuals will be capable of making provisions for the NPO in their estate plans.

Thus, it is axiomatic that the NPO’s sound future relies upon a strong annual fund program that builds a predictable base of support to help meet current and growing operating needs year after year. Such an achievement will provide a pool of proven donors for other fund-raising efforts. It will also encourage the opportunities for special individuals to engage in carrying out the mission of the NPO in volunteer governance roles.

Overview

Fund Raising Consultant (FRC) will assist NPO in the planning and implementation of a renewed and accelerated Annual Fund program for NPO’s upcoming fiscal year.

FRC will work with NPO’s campaign leaders, administrative staff and board of trustees to complete the campaign, which for the next fiscal year, will require contributed income to be raised in the amount of approximately $__________ to balance the operating budget.

Scope Of Work To Be Provided By FRC

  1. Develop a campaign plan:
    The plan will detail work and campaign structure needed to complete personal solicitations of NPO Board of Trustees; current and lapsed donors; and new individual, corporate, and foundation prospects. The plan will include timetables and campaign-related marketing and publicity plans.
  2. Conduct prospect identification and review sessions:
    Identify donor prospects and determine appropriate asking strategies and donation amounts.
  3. Design prospect cultivation programs:
    Prospects are to be engaged in and involved with the NPO so that they develop a sense of “ownership” of NPO and its mission.
  4. Develop membership gift levels:
    Incorporate benefits and privileges to donors for corresponding contributions. Those giving benchmarks will also relate to specific NPO programs and services made possible by donors’ support.
  5. Produce and “package” certain NPO programs and services:
    Ongoing programs and services and new and desired endeavors will be reviewed, summarized, and prioritized by need. Help to identify the most likely prospects for those underwriting and sponsorship opportunities based on past experience, prospect contribution guidelines, and the degree to which recognition and credit for support is desired. Assist in the development of full proposals for funding to the appropriate prospects.
  6. Provide training and orientation for volunteer solicitors:
    Personally work with solicitors to assist them in feeling comfortable with their role as a solicitor. Ensure they have the best and most complete tools possible. Train and advise solicitors on how they should ask for money.
  7. Assist in preparing planning, organizational, and marketing documents:
    These include a fund-raising budget, a case for support, funding proposals, letters, and newsletters. They are all required for successful implementation of any fund-raising program.
  8. Provide ongoing counsel and direction:
    Full and involved hands-on management of the campaign.

Explicit Duties And Responsibilities Of FRC

A key aspect of FRC’s service will be personal involvement in working with NPO campaign management in the formulation of detailed and individualized strategies for all solicitations for major gifts. Major-gift prospects are valuable resources. Each solicitation must be planned with care. FRC will work closely with the NPO campaign leadership to maximize the chances for success in each major-gift solicitation instance.

  1. Coordinate all aspects of the campaign working with the campaign chair. Provide the resources and guidance necessary for the chairperson to lead the solicitors in the most efficient and timely manner possible.
  2. Attend all campaign-related meetings and actively participate in the proceedings.
  3. Develop and prepare documents and exhibits required for all meetings, including agendas, time-lines, etc., with campaign leadership, committee, and staff.
  4. Provide campaign orientation and training to volunteer solicitors.
  5. Assist with the compilation and review of all viable NPO donor prospects.
    • Conduct rating programs to suggest asking amounts for each prospect
    • Recommend the top tier cutoff level of prospects having the best giving potential as those to be personally solicited by committee members.
  6. Work with solicitors to provide solicitation strategies for their prospects.
  7. Assist in the development of other campaign-related materials, such as pledge cards, gift return envelopes, proposals, brochures, etc.
  8. Develop and produce progress and tracking summaries for forecast and evaluation reports and meetings.
  9. Provide opinions and counsel for all situations that directly or indirectly could affect the campaign’s outcome.
  10. FRC agrees to hold all organizational information, including donor records, in strict confidence.

Summary of Responsibilities for NPO’s Campaign Leadership

The volunteers and the administration of the NPO will comprise two-thirds of the team that will launch, implement, and manage a successful annual fund campaign as quickly and cost effectively as possible. The FRC will comprise the other third of the team. In order for the campaign to be successful, all must perform their assigned parts. Some of the key responsibilities of NPO volunteers and administration are:

Campaign Chairperson

  1. Recruit a committee of solicitors sufficiently large enough to assign personal solicitors to all prime prospects. Each solicitor will be responsible to personally solicit five to six prospects.
  2. Convene and lead all required prospect rating and assignment meetings and all tracking, progress, and final report meetings.

Campaign Solicitors

  1. Endorse and articulate the mission and case for support of NPO.
  2. Make personal gifts and secure contributions where personally connected.
  3. Select and personally solicit five to six prospects.
  4. Attend all report and progress meetings of the campaign team.

NPO Staff:

  1. Compile applicable previous donor data, identify new and likely prospects, and provide all other related information required.
  2. Print and help distribute campaign materials, including brochures, pledge cards, gift envelopes, etc.
  3. Help arrange and schedule campaign meetings.
  4. Type letters, proposals, listings, etc. as required by campaign
    leadership and solicitors
  5. Receive and record, apprise appropriate solicitor of, and acknowledge to donors all gifts.

NPO and FRC enter into an agreement as outlined above to work together for a contract period of at least __(*)___, which is of a duration spanning the present time to approximately the end of the campaign and fiscal year. Either party may cancel the contract with 30 days written notice.

Based upon a mutually agreed-upon assessment and review of the proposed Annual Fund Campaign, NPO staff, NPO board, and FRC, estimate that on-site activities and meetings and FRC’s in-office production of campaign resources on behalf of the annual fund campaign, will require an average of __(*)__ days per month of FRC’s time to ensure the fulfillment of all established campaign premises and initiatives and to fully support NPO’s campaign.

The fee for FRC’s services to design, implement, and direct the annual fund program to help NPO meet its short-term and long-term fund-raising goals is $___(*)___ per month, plus travel costs, and all other prior agreed-upon expenses.

For the NPO:____________ Title____________ Date________

Consultant:_____________ Date________

Addendum

Filling In The ____(*)___ Blanks of the Contract
The extent to which an organization must rely on consulting services for a campaign depends to a significant degree on how much of the planning and execution of the campaign can be accomplished by the NPO board and staff. The less able the organization is to handle the planning and management of the campaign, the greater will be the organization’s need of and outlay for consulting services.

On a per-day (eight hours) basis, some consultants might charge $500, but the larger firms and the most sought after and experienced fund-raising consultants charge in the neighborhood of $1,000 per day. Some will be as high as $1,250. In most instances, it doesn’t matter whether the consultant actually works a full day at a time. You just have to be sure the total hours-per-month requirement is met.

Some consultants will charge by the hour, and their hourly rates are likely to be in the neighborhood of $100 to $125. Based on an eight-hour day, that adds up to about $1,000 per day.

Focusing too strongly on fees for consulting services, in terms of cost per hour, per day, or per month can mislead. A stated hourly, daily, or monthly rate is relatively meaningless. It all comes down to the total time provided by a consultant to the consulting engagement.

Remember, the best consultant for your particular situation should not be considered solely based on what your organization can afford or what it has provided in the budget. I recognize the serious constraints under which most non-profits operate when it comes to having money available to pay for professional services. However, what really determines a consultant’s value to any organization’s fund-raising program is the consultant’s mastery of the fund-raising process. Don’t look at the dollars alone. Look for someone with:

  • Good decision-making ability
  • Proven and well-regarded professional experience
  • Proper temperament
  • Keen judgment

These attributes create a value that will help you move forward more rapidly and aggressively. Especially when it comes to fund-raising consultants, you really do get what you pay for. The lowest bid is not necessarily the best bid.

Take note as well that these are fees for professional services only. All fair and applicable expenses must also be factored into the total budget for fund-raising counsel.

For more information regarding fund-raising consultants, you are welcome to review my article To Consult, Or Not To Consult, That Is The Question.

Those are my views on the subject of agreements by non-profit organizations with fund-raising consultants. What are yours?

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7 responses to “Consulting Agreement for an Annual Fund Campaign”

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  1. There are various benefits for using a nonprofit organization but the process of making money is quite different and that’s the reason that these organizations are tax-exempt and they doesn’t have to pay taxes on the money it raised.

    • Tony Poderis says:

      Richard, You are correct. Non-Profits are given that name/status for a very good reason. They are not in the "business" to make money for their investors and shareholders. They are in business to serve the needs of society—needs which would not ordinarily be served by any commercial or governmental entity.

      In addition,

      How an organization raises and spends money is knowledge a successful fund-raiser must also have at his or her fingertips. They need to know and understand theirr organization’s budget so that they can delineate the cost of operation and how the money to cover that cost is to be generated.

      Nearly all non-profits are, by their nature, limited in their capacity to increase earned revenues, and many are unable to produce any earned income because they serve groups that cannot afford to pay.

      The inability to produce enough earned income to cover the cost of doing business is why non-profit organizations must be fund-raisers.

      However, understanding their organization’s capacity to produce earned income, knowing where such income comes or could come from, and maximizing it, are essential to developing a successful fund-raising campaign. If their prospective donors believe the organization could be producing more earned income, they will be far less likely to give of their limited philanthropic resources.

      No matter what your role in a fund-raising campaign—be it organization director, development director, campaign chairperson, or solicitor—to operate at optimum effectiveness you need to be convinced your organization is maximizing its potential to produce earned income—within the confines of its mission. That last part is very important. There are things non-profit organizations simply cannot do which are second nature to businesses seeking to improve their bottom line.

  2. Tony Poderis says:

    Steven: With my rather comprehensive reply to your good concerns and questions, I did try to downplay the idea that such as what you plan to do is thought by some of us (old guard) as being done by swindlers. I did not state the obvious. No swindler is going to be posting openly that he will be working in that way—for a "cut."

    Anyone such as you who thoughtfully and openly discusses the hot topic of contingent-pay, and thinks it to OK, and that it will work, is not at all in any unsavory category, relative to the "industry" calling such a practice unethical. I only think that doing so is a mistake.

    I have heard of a number of swindlers and hired guns and unethical performers of the raising money for charities and pocketing most of what is raised via contingent-pay schemes.

    You are far from that group with your willing dialogue about the practice. The others dare not surface.

  3. Tony Poderis says:

    Steven: Lisa did indeed state plainly what I missed. It was not the first time startup/new organizations’ founders and other volunteers wanted some form of compensation for fund-raising, and my knee-jerk took me there in error.

    However, having experience with countless thousands of organizations seeking funds, I can count on just a couple of fingers when someone, from the outside was to be “the” raiser of funds, and wanted to know what her “cut” should be. Such requests are rare, to none. My error was in perception, but my argument against the hiring of paid solicitors remains unwavering. That’s dealing with outside paid solicitors.

    Then there may those who provide true fund-raising consulting advice, but who still expect a cut of the funds raised. Same problems, same objections on my part.

    The only direct and formal response I have to consultants starting out in their business, engaging with potential clients wanting those professionals to work on a contingent-pay basis, is—do not do it. Or, go ahead and do so, it’s your decision, and be prepared to accept the risks and real potential damage to your reputation and to the organization’s future. (If you are starting out in consulting, maybe my article on the subject will be of use.)
    — How Can I Become A Non-Profit Fund-Raising Consultant?
    http://www.raise-funds.com/2009/how-can-i-become-a-non-profit-fund-raising-consultant/
     
    My statement, “A contract for a cut of any money raised is a bad contract,” is not calling anyone a swindler. However, in my experience I have known of such paid solicitors/"consultants" whom I do call hired guns, as the Internet-posted records by states’ Attorneys General, show such paid solicitors and fund-raising “firms,” do indeed carry away, on the average, about eighty percent of what they raise—if they raise any money.

    You are not among that kind. But dare I say that when you present yourself as a consultant, and you plan to work for on a contingent-pay basis, then you are straying far from being a consultant and being more a paid solicitor because your actions, human-nature-driven, will work fund-raising efforts for the short haul. To get money faster to be paid faster, does not bode well for the future health of the organization.

    From strong personal experience with the AFP (years ago President of a local chapter of fund-raising professionals), the old guard and the young Turks all—then and now—worked the practices and processes which have seen to it that billions of dollars have been raised by millions of non-profits over decades of time. So, old guard or not, there are those professional standards and tenets of conduct which do not change. They should not change.

    I do not think it is dated thinking you are resisting, as much as perhaps drifting into what may seem to be an easier way for a non-profit board of trustees to have someone else do their job for them. If you are a consultant, then consult. And do so for a fair and reasonable fee. If the organization cannot pay that fair and reasonable fee, then perhaps the organization should not be operating at all.
    What’s going to happen when you leave, should your short-term contingent-pay agreement work in some way? Maybe better at the beginning to not provide services needed, then to provide them for awhile, only to be forced to withdraw what people need and have come to rely upon.

    The AFP’s strong and mainly sole condemnation of contingent-pay is based on principles of ethics. My arguments are practical and they are many.

    — The Argument Against Paying Development Professionals Based Upon The Amount Of Funds Raised For Non-Profit Organizations
    http://www.raise-funds.com/1998/the-argument-against-paying-development-professionals-based-upon-the-amount-of-funds-raised/
    — Asking For The Money Is The Job Of The Leadership And Friends Of A Non-Profit Organization:  Never Hire Someone To Do What Is Their Responsibility
    http://www.raise-funds.com/1998/asking-for-the-money-is-the-job-of-the-leadership-and-friends-of-a-non-profit-organization/

    — To Consult, Or Not To Consult, That Is The Question
    http://www.raise-funds.com/1999/to-consult-or-not-to-consult-that-is-the-question/

    If you can work around the many real and serious pitfalls of contingent-pay, so be it.

  4. Steven says:

    Tony-
    In your response to Lisa you reference her being a volunteer.  She plainly states that the ORG is made up of volunteers and has no starting funds, and the she is being hired as a fundraiser.
     

    (4) You are volunteers. Bless you. But to want a “cut” in any amount of any of the proceeds, removes for certain that volunteer label. Volunteers do not get cuts of anything, especially when it comes to money they raise for a charity.
    (5) You read the sample agreement for a paid consultant. That being for the services of a paid professional advisor, definitely not someone who raises the money. Volunteers are the ones who must raise the money.

    I know this is an older post, but I'm sure Lisa, and other starting consultants, like myself, would like a direct and formal response to her questions. What do you do when you are just starting out your business and almost every single client wants to pay you a percentage? 

    A contract for a cut of any money raised is a bad contract

    This statement makes it sound like anyone who accepts the offer presented by the npo or charity itself is a swindler, which is just not true.  Following these guidelines the stance seems to be (by the AFP certainly) 1. Do not start an npo or charity for any reason without having funding in place already or volunteers who will do all the fundraising 2. As a fundraising professional do not accept any business from an npo or charity who offers a percentage of the funds raised, even if board approved.
     
    I know this is a hot topic, but maybe the old guard of fundraising professionals should re-evaluate their stance in the modern era, especially in a recession and the current economy as more people start new businesses (many of them with charity beginnings or foundations), consulting firms, etc. I, and some respected members of AFP have let our memberships lapse due to extrememly dated thinking, and constraints which only seem to benefit those consultants already established in the field.

  5. Tony Poderis says:

    Lisa,
    Please do understand that the need for brevity in my reply to what you described as being, to me, a more personal issue, may come off as being hard on you and your volunteers. But, it is necessary to get my points across as simply as possible. I know you will understand.

    (1) “Tough love” for the organization itself, is that if the founders had no idea from where to get money in the first place, they probably should not have organized a charity before they did. We can try to move on from there, but it is not easy.

    (2) As volunteers, especially those with organizational skills, there are any number of articles on my website which you can use directly or adapt to how you begin and operate a fund-raising campaign. Plans, tools, the “how-to,” are all there for you.

    (3) Look for some experienced volunteer counsel from chief development officers of some of the area’s larger, established, non-profits. My door was always open during my twenty years as Director of Development for The Cleveland Orchestra for such beginning organizations and its fund-raising leadership. As well, check for the local chapter of the Association of Fundraising Professionals (AFP) for what I know will result in a capable and generous professional giving you some amount of free counsel.
    AFP: US
    http://www.afpnet.org/audiences/chapters.cfm

    (4) You are volunteers. Bless you. But to want a “cut” in any amount of any of the proceeds, removes for certain that volunteer label. Volunteers do not get cuts of anything, especially when it comes to money they raise for a charity.

    (5) You read the sample agreement for a paid consultant. That being for the services of a paid professional advisor, definitely not someone who raises the money. Volunteers are the ones who must raise the money.

    (6) Reading these articles will better let you know of my strong stand against anyone raising money for a cut, i.e., “Contingent Pay,” bein from percentages, commission, and bonus.

    — The Argument Against Paying Development Professionals Based Upon The Amount Of Funds Raised For Non-Profit Organizations
    http://www.raise-funds.com/1998/the-argument-against-paying-development-professionals-based-upon-the-amount-of-funds-raised/

    — Asking For The Money Is The Job Of The Leadership And Friends Of A Non-Profit Organization: Never Hire Someone To Do What Is Their Responsibility
    http://www.raise-funds.com/1998/asking-for-the-money-is-the-job-of-the-leadership-and-friends-of-a-non-profit-organization/

    A contract for a cut for any money raised for an organization is a bad contract.

    If you are volunteers seeking to raise money, you must do it on purely a volunteer basis. Seeking a money gain, is not volunteering.

    Presented with understanding and cordiality, but with a non-wavering and firm opinion. The opinion is not based on what my doctrine is alone, as much it is based, from experience, on the real and serious damage which can be done to a non-profit when paid solicitors do the job of the Board of Trustees and other volunteers.

  6. Lisa Hultin says:

    We are starting with a non-profit organization as fundraisers. They at this point have really no money, only volunteers. WE are trying to get them to the next level as they want a funraiser to help them with a first year operating budget so that can hire staff etc. We as fundraisers are starting with zero. We are having to put together the packet (tools) to even start with before we can actually go out and raise any money. They have no money to pay us anything so we are asking for 10% cut of what we can secure. We are also having to come up with the agreement that legally binds. Do you have a sample agreement for an exclusive fundraising contract for a non -profit. Thank you for any feedback and help.

    Lisa Hultin
    http://www.operationrest.org