Capital Campaign Consulting Firms: Which Type Do We Hire?
Here’s your primer on hiring fundraising counsel. It includes types of fundraising counsel, benefits to fundraising counsel, why paying a fundraiser a percentage is viewed as unethical and may not be in the organization’s best interest, costs associated with professionally directed capital campaigns, and information on how to select the right consultant.
Types of Fundraising Counsel
There are several types of fundraising consulting options available to non-profit organizations.
Consulting Firms - These firms usually provide the most comprehensive consulting services for major campaigns. Services range from having senior executives do periodic consultations with organizations (a service usually reserved for major institutional clients such as hospitals and universities) to full-time resident counsel. Resident counsel, usually a younger person who works under the direct supervision of an executive, moves to your city and works full-time for your organization.
Most consulting firms charge on a flat fee basis based on the time and service provided. Almost none work on a percentage basis. The more service required, the higher the fee. In almost every circumstance, a resident director firm will cost more than an executive consultant firm. There are relative strengths and weaknesses to each. Be certain to interview everyone in the firm who you’ll be working with – not just the executive making the sales presentation.
Consulting firms are not "Solicitation Firms.” Consulting firms work to teach, train, motivate, and orient organizations to succeed in fundraising. Like any consulting arrangement, volunteer and staff leaders must be very involved and active in the campaign to succeed.
Independent Consultants - There are numerous individuals who consult with organizations - either full-time or as an adjunct to their full-time job. Many are quality individuals with excellent track records. The major difference between an Independent Consultant and Consulting Firm is the number of people available to work on the campaign. Consulting firms will almost always use a "team approach", thereby increasing the quality and amount of advice and guidance available.
Almost always, Independent Consultants are less expensive than Consulting Firms - mostly because they provide less time and resources than the Consulting Firm, and their overhead is considerably lower.
There are many very good Independent Consultants, but the same criteria should be used in retaining an Independent Consultant that is used in retaining a Consulting Firm. In retaining an Independent Consultant, remember that this is the person you will be working with throughout the campaign.
Solicitation Firms. There are companies, usually telemarketing firms, that will call or otherwise contact thousands of people to seek support. They usually charged based on a percentage of the funds raised and may take much of the income. Many consider this type of arrangement to be unethical.
Campaign Consulting Fees
Most fundraising consulting firms charge on a flat fee basis, based on time and service provided. Most will not accept assignment on contingency or percentage basis. Most firms do this for three specific reasons:
- Ethics. Virtually every major association or professional organization associated with fund raising prohibits consulting firms from charging a percentage of the funds raised.
- Client’s Best Interest. Organizations need to realize, especially small and medium size groups with little experience, that there is simply no way a charity can hire someone to "do" their fundraising. A major campaign requires the cooperation of the Board of Directors, Senior Staff, Community Volunteers and Professional Fund Raisers. When a consultant charges on a percentage basis, oftentimes volunteers are less motivated to follow the advice of counsel. The focus of the campaign too easily becomes "well, of course you want me to make that visit - you’ll make money," instead of a teamwork approach that will further the mission of the group. Additionally, a percentage fee will often lead a client to pay much, much more than necessary in a successful campaign. Generally, a small or medium size campaign should have total fund raising costs between 5 and 15 percent of the goal. A successful campaign (one that raises more than the goal) should have the effect of lowering the percentage spent on the campaign - again increasing the motivation of volunteers to be involved and committed to the campaign.
- Long Term. Fund raising counsel should be focused on the long-term fundraising needs as well as the immediate goals of the campaign. When paid as a percentage of "cash in the door,” counsel will have a tendency to focus on the short-term cash needs and not build the long-term programs and cultivation vehicles necessary to insure successful fundraising in the future.
How Much Will a Campaign Cost?
This said, there are some generally acceptable ranges for total costs of a capital campaign. There are two basic types of costs associated with a professionally-directed capital campaign:
Operating Costs - These are costs that are incurred whether counsel is used or not and include such things as printing, postage, video, meeting hall, secretarial, transportation, etc. These are the expenses that donors and leaders see and rely on to be successful.
Service Fee - The second cost is the service fee charged by campaign counsel to manage, direct and lead the campaign to success. Most respectable consulting firms charge on a fee basis based on the time, service and expertise required to complete a campaign.
For a campaign with a goal of up to $2 million, the total costs would probably range from 8 to 15 percent of the goal. It would generally take between six and 12 months to conduct this type of campaign.
For a $2 million to $5 million goal, the costs would likely be 7 to 12 percent. It would generally take between eight and 18 months to conduct this size campaign.
For a $5 million to $25 million goal, the cost might equal 4 to 8 percent. It would generally take more than 18 to 24 months to conduct this type of campaign.
Campaigns over $25 million might be as little as 1 to 2 percent of the goal and could take two or more years.