We’ve had some interesting conversations with prospective clients over the years, but the most common misconception that we run into is how we get paid. It is high time we put a thorough explanation in writing and put this question to bed once and for all. We do not work on commission. We do not work on contingency. We cannot and will not “write our fees into the grant.” And, we do not do pro bono work, no matter how worthy your cause. Here’s why…
Navigating the complexities of securing grants is a critical challenge for many nonprofits, educational institutions, and various organizations striving to fund their projects and high-quality grant writing consultants (like us) are worth their weight in gold. We bring decades and tens of millions of dollars in expertise to enhancing the quality and effectiveness of our clients’ grant applications. Let’s break down the ethical and practical guidelines that underpin why we bill clients the way we do.
Foremost, grant writing is bound by specific ethical standards and funding rules that dictate compensation practices. Understanding these rules not only helps organizations in hiring consultants but also ensures that collaborations are built on a foundation of trust and mutual respect. It is crucial for both grant writers and clients to recognize the importance of these guidelines.
Adherence to Professional Ethics
Professional ethics play an important role in grant writing. Bodies such as the Association of Fundraising Professionals and the Grant Professionals Association have established codes of ethics that explicitly prohibit compensation based on contingency or commission. These standards are designed to prevent conflicts of interest and ensure that the grant writing process remains objective and focused on the quality of the proposal rather than the financial outcome. By adhering to these ethical guidelines, grant writing consultants maintain the integrity and professionalism of the fundraising field, ensuring that all actions are aligned with the best interests of the organizations we serve.
We take ethical standards very seriously. They ensure we are motivated by a commitment to securing funding for viable, impactful projects, rather than the potential for personal gain. In a recent article, we discussed how “we are extremely conscientious in matching appropriate funding sources with our clients’ needs and capacity. It isn’t uncommon for us to discourage our clients from pursuing grants that we know have onerous reporting requirements that the organization will struggle to meet…We have seen organizations that have wound up ‘drinking from a firehose’ and we take care to avoid overwhelming our clients.” If our compensation depended on commission or contingency, we wouldn’t be so motivated to protect your organization’s administrative capacity.
Federal and Funding Restrictions
The compensation structure for grant writing consultants is also heavily influenced by federal and other funding body regulations, which typically prohibit charging pre-award costs, including grant writing fees, to the grants themselves. This ensures that grant funds are used directly for project implementation rather than the preparation of proposals. It highlights the need for organizations to budget for these expenses separately and underscores the importance of transparent financial practices in the grant writing process.
Practicalities
Grant writers provide a professional service, just like doctors, lawyers, and accountants. You’re still going to get a bill from the doctor who treats you, the lawyer who represents you, or the accountant who does your books even if your disease is uncurable, your case is unsuccessful, or you get audited by the IRS. The same goes for grant writers. The big thing all professional service providers have in common is that our time and effort have value, regardless of the outcome, unless there is some gross negligence at play, and we all have bills to pay and families to feed. And most of us understand the market rate for our services based on our track record and charge accordingly.
At KFA, we are very intentional about our fees to ensure that they are appropriate to where our clients are in their development. Most of our clients are bumping against a growth plateau that can be overcome with major grant funding, but cannot quite afford a full-time grant writer on staff. At $48,000 a year for four major grants (in excess of $100,000), we come in at roughly half the cost of a full-time grant writer’s salary and benefits which is an ideal investment for our clients where they are.
Impact of Federal Indirect Cost Rate Increase
The recent increase in the federal de minimus rate for indirect costs from 10% to 15% is a significant development for organizations receiving grant funding. This increase allows organizations to allocate a greater portion of their grant funds to cover indirect costs, which include the expenses related to the general administration of the recipient organization. By understanding and utilizing this new rate, organizations can ensure that essential expenses are recovered creating greater budget flexibility to afford the services of a professional grant writing team.
To be clear, organizations still cannot recover pre-award costs through the indirect line item of grant budgets. But indirect cost recovery can offset general operating expenses like paying the rent and power bill or compensating administrative personnel who may not be considered an allowable direct cost for the grant. Effectively leveraging the increased indirect cost rate to offset recurring operating expenses can lead to the budget flexibility to afford grant writing services without straining operational budgets.
Evaluating Legitimacy and Return on Investment
When selecting a grant writing consultant, just like any other professional service provider, it is important to consider more than just price. Reputation and results matter. Now you know, if a grant writer is willing to work on commission or contingency, they aren’t adhering to any relevant professional code of ethics and that should be a red flag. An experienced, reputable grant writer should be more than willing to provide credible references and legitimate work samples.
Return on investment is a little trickier. The value of grants that allow an organization to Do More, Better isn’t measured solely in the dollar amount of the grants received. Much like economic impact calculations, grant investments have multiplying factors which include the growth and capacity building external funding can achieve as well as the impact of awards on an organization’s credibility and future funding prospects.
That said, KFA always seeks to pay for ourselves in hard dollars, even if they aren’t immediate. Generally, we don’t write grants less than $100,000 because we know that doesn’t provide a good ROI at our price point. We write four major grants at our price point because we know our overall success rate sits well above 85%. Back of the napkin, if we write four $100,000 grants and only get 75% awarded, at a 15% de minimis indirect cost rate, that’s $45,000, pretty close to our annual fee. But most major grants are multiyear, so the ROI is very positive.
Final Thoughts
Fiscally mature organizations of all sizes should enhance your grant acquisition strategy by partnering with professional grant writing consultants who adhere to the highest standards of ethical practice and are knowledgeable about the latest in funding regulations and financial strategies. Invest in expert grant writing services to not only boost your funding success but also to maintain compliance and fiscal responsibility.
And remember, we do not work on commission (we’d be retired by now if we did). We do not work on contingency (your success hinges on your credibility, not ours). We cannot and will not “write our fees into the grant” (that’s usually illegal). And, we do not do pro bono work, no matter how worthy your cause (we have families to feed). If all of this makes sense to you, reach out today to learn how we can help you achieve your funding goals with integrity and expertise.