Hiring a nonprofit consultant to execute and amplify your organization’s philanthropic initiatives may seem like a no-brainer. However, subpar fundraising campaigns can often result when organizations do not perform due diligence, which include, scaling the benefit of a fundraising consultant, selecting the right person for the job and knowing how to stay tax compliant. Here we offer five pre-planning tips for selecting a nonprofit fundraising consultant to avoid pitfalls and reap long-term benefits.
1. LET “NEED” BE THE DRIVING FORCE behind your decision to engage a fundraising consultant. Most professional fundraisers would tell you size doesn't matter, that costs can be adjusted to fit the organization's objectives and additional funds raised will meet and ideally exceed the costs. However, you know your organization best. While “need” should drive your decision to hire a fundraising consultant, make an informed decision by asking the following questions
- Are funds needed to expand your organization’s mission?
- Can your organization dedicate the time needed to support a fundraising campaign with?
- Does your organization have successful past experience executing fundraising campaigns?
- Does your organization have a need to expand its facilities or acquire new space?
- How important does growth capital (capacity building and organizational expansion) weigh into the conversation?
- Are you hoping to strengthen or grow existing programs or launch new program initiatives?
- Are you planning to create or grow an existing or new endowment for future needs?
Once your organization has accessed the “need,” the next step is to rally support. The board and staff are inherently entrenched in corporate insights and culture. They must be willing to guide the new fundraising consultant through the lens of the organization's mission, goals and vision.
2. IT’S A FAMILY AFFAIR when it comes to using a fundraising consultant to launch a fundraising campaign. Scrap the “set it and forget it” mindset to avoid a lack of commitment and support from your organization's leadership. Don’t leave it up to your fundraising consultant to know the intricacies of your company’s mission. Every level of your organization—the board, management and the staff and volunteers—must get involved in order to identify prospects, open doors and influence philanthropy. Aside from ensuring the organization’s mission is reflected in fundraising initiatives, your board must be the legal and ethical guardrails for entities that engage with your nonprofit.2
Once you identify the “need” and have the backing of your organization’s governing body and management, it’s time to find the perfect fundraising consultant.
3. DO NOT TAKE MATCHMAKING LIGHTLY when selecting the perfect fundraising consultant. Choose a quality fundraiser who is well-versed in social and digital media with a proven track record.1 Ideally, they will provide an innovative approach that’s tailor-made to your organization.
You are handing over the keys of your organization’s philanthropic growth. Perform the same due diligence you would with a new hire. Conduct interviews, request references and testimonials, and schedule meetings with cross-functional partners. The right individual will have the winning combination of experience, innovation and will be the right cultural fit.
4. IF YOU BELIEVE IT…YOU CAN ACHIEVE IT — WITHIN REASON. Set realistic expectations from the onset. Nothing happens overnight. It usually takes more than a year to establish a successful program. The first year of fundraising can be the least efficient. Many donors are needed to raise large sums of money. Map out first year performance goals for your campaign with the governing body, anchored in tangible benchmarks that align with industry standards. Always shoot for the stars, but know it takes time to fully takeoff.
5. TAX COMPLIANCE 101 WITH FUNDRAISING CONSULTANTS. Professional fundraisers typically target a wider area of prospects than an organization would target itself. This may require crossing state lines for donors. This means the organization must also factor in the management and cost of charity registrations and annual filings across multiple jurisdictions. In addition to federal rules and regulations, most states require filings as a result of fundraising solicitations. Approximately 40 states (and DC) require professional solicitors to register, as well as register by the organization soliciting the contributions.
Ready to take the plunge and engage a paid fundraiser? Contact Audrey J. Sherrick, CPA, at ASherrick@FriedmanLLP.com or your personal Friedman advisor for details on compliance with additional state rules and regulations.