When dealing with local government and non-profit organizations in rural areas, I’ve found that many potential applicants believe commission or contingency based services are the standard within the profession. In fact, not long ago I had a lively discussion, regarding grants, where the head of the organization responded “we’re not interested in applying for grants, they’re too costly.” Thinking matching funds commitments were the issue, I started to explain that if an organization had the capability to match funds it would allow them to leverage existing funds for other uses on a long term basis. The reply was “NO! The grant writing and administrative fees are too costly. They are based on a percentage of the grant money awarded which takes away funds from the project.” To convince the individual otherwise, was a futile exercise.
From experience, two or three out of five prospective clients will ask “Do you perform grant writing services for a commission or percentage?” Followed by,”can we pay you when the grant is awarded?” When I respond with ‘I’m sorry, but no;’ I’m always met with raised eyebrows and a response along the lines of “We can’t afford to pay upfront. We are on a tight budget, that’s why we are wanting to apply for a grant.” The logic of the potential client is understandable, but there is sound reasoning behind the decision not to work on commission or contingency based fees:
The fact that it is considered unethical within the profession should be reason enough. Leading professional groups such as the Association for Fundraising Professionals (AFP) and the Grant Professionals Association (GPA) have defined and implemented comprehensive industry standards. They consider the practice unethical and prohibit their membership from providing grant writing services on a commission basis.
To offer a little more insight on the matter, it boils down to time, as most everyone understands the concept of – Time is Money!
Developing or consulting on grant proposals consumes time which is not only costly to the client, but also to the grant writer. Especially when there are no guarantees that a proposal will pay off with a grant award. Sure, client applicants are looking to minimize risk by paying for the cost of developing the proposal only if a grant is awarded, however, success or failure is not born solely by the grant professional.
Grant awards are based on a variety of factors including need, economic sustainability and technical feasibility. An applicant’s financial footing, track record in responding to identified needs, defined goals of the proposed project and their capability to execute a project weigh heavily in grant scoring and outcomes. Add to the fact, that any costs incurred pre-award are typically not allowed as part of the proposed project budget. In addition, many grant programs will not support fundraising expenses at all. Which means applicants cannot include grant writing assistance in their proposal budgets or pay for the services from any funds awarded – so they end up covering those costs out-of-pocket anyway.
Professional grant writers often have a proven track record and have developed reasonable fixed or hourly rates. According to The NonProfit Times, “real grant development professionals deliver a high quality product for a fair fee. They don’t gouge. A professional might, for example, spend 160 hours pulling together a highly complex proposal that results in a $5 million grant award. Paying that consultant at $100 per hour for high-level skills would result in a fee of $16,000 — pretty standard for top-level work.”
In layman’s terms, when a business or organization decides to pursue grant funding they are betting on the success of their business or the innovative idea for which they are seeking funding. Ultimately the decision to seek and apply for grant funding requires confidence in the ability to execute and an understanding that there is an inherent risk in doing so that rests with the applicant – not the grant writer.
Another way for the applicant to look at it, is the grant writing professional is being compensated for the job of preparing a proposal, not for a grant award. A skilled grant writer understands the challenges facing applicants and will invest their time and energy in delivering professional, compelling and persuasive proposals. However, due to increased levels of competition among all levels of grant funding such as foundations, state, and federal programs even the most well-written, sound proposals are rejected through no fault of the professional writing the grant. This is largely due to the fact that most programs receive more applications than available funding.
Grant writing is also considered as fundraising under Generally Accepted Accounting Principles (GAAP). Those standards state that fundraising services should be paid “at the time services are provided.” For local governments or non-profits waiting to compensate a grant writing professional until an award is received could yield a negative audit finding, as awards can take anywhere from six months to a full year before they are processed. Since most grant sources generally restrict their funding to direct program costs; they also require some level of financial disclosure from the applicant. If local governments or non-profits include their annual budgets where all expenses are accounted for – a line item for fundraising may raise questions with the grant reviewer or grant source.
In a nutshell, grant writing is a professional service much like legal, accounting, advertising, engineering, etc.; to devalue the service by seeking commission or contingency arrangements is unfair to the profession and the professionals who bring a unique skill set to your organization. Many often go the extra mile in providing quality writing and consulting to the application process; as their success depends on your success.