Commission-based Grant Writing
Potential clients sometimes ask if I can work on a commission basis: if the application is successful, I will get a percentage of the award.  At first, it sounds like a win for everyone because the nonprofit does not spend any money on an unsuccessful application, while the grant professional has the potential to earn a far higher rate.  What is 10 percent of a million dollars?  Let me get my calculator. 
 
This proposition may be tempting, but the grant professional must first understand whether commission-based grant writing is a win-win or a violation of bedrock ethical principles in our profession.  Industry standards indicate the latter.
 
Four Good Reasons Not to Use Commissions
Commission- or percentage-based proposal development is considered a grave ethical lapse by the fundraising community.  In their book Prepare for the GPC Exam, Annarino, et al. provide four good reasons not to do it:

1. Most funders do not allow commissions.
2. It encourages organizations to apply for grants for which they may not be ready.
3. It encourages grant writers to prepare applications beyond their level of professional expertise.
4. The commission does not reflect the amount of work in proposal development.

 
Foundations and government entities expect their funds to go to costs incurred in program delivery.  Funding requests may include indirect costs, if allowed, such as rent or accounting systems.  They may not, however, include prior fundraising costs.  This is the first and foremost reason commission-based grant writing does not meet professional standards.
 
Commissions also encourage nonprofits to reach beyond what they can accomplish.  If the agency cannot afford to pay a grant professional, it probably cannot afford the fundraising, operating, and financial systems necessary to deliver and report on the project outcomes!  The converse is also true; commissions encourage inexperienced grant writers to take a gamble on an application they are not prepared or qualified to write.
 
Still not convinced?
Does commission-based fundraising still seem like it might be a good idea?  Could it be that grant writers are just fuddy-duddies, unwilling to encourage innovation and take risks?  On the contrary, we love innovation but not on ethically shaky grounds.  Our colleagues at Association of Fundraising Professionals (AFP) agree.  AFP states percentage-based compensation can lead to putting self-interest over the organization’s good, violating the self-inurement principle.
 
“By law, compensation based on skill, effort and time expended, remunerated by salary or fee, does not constitute personal inurement. Conversely, AFP believes that a commission or percentage based compensation or a finder’s fee breaches the no-inurement principle and is, therefore, a violation of its Standards for six specific reasons.”
 
You can read the six reasons here, but know that winding down the road towards self-inurement (or even the potential for such self-dealing or appearance of impropriety) leads to a loss of mission focus and an irreparable loss of donor trust.
 
The Opportunity
On the positive side, we have the opportunity every day as grant professionals to help organizations move toward strategic, sustainable, and ethical operations.  If someone has a great but small organization, the grant writer will help develop a capacity building grant.  If the organization is not ready yet, organizational readiness materials can help lay the groundwork for future success.  In my consulting role, I provide not only grant writing (proposal development) services, but also tools to map growth in organizational capacity and leadership for strategic planning. Taking the time and making an effort to produce sustainable results will pay off in the end!

Did you know there is a “secret” tool that moves SWOT (Strengths, Weaknesses, Opportunities, Threats) from a static description of your organization to a dynamic tool for planning strategy and fundraising? At our Grant Professionals Association (GPA) meeting just a few days ago, we used a tool called TOWS to help us discuss and develop our organization vision.  You can use this tool to plan capacity building approaches for grant applications.

The secret of TOWS is to look at each element as from a strategic, actionable perspective. With TOWS, you will use Strengths to take advantage of Opportunities and avoid Threats.  You will use Opportunities to overcome Weaknesses. Finally, you will examine the intersection of internal Weaknesses with external Threats to avoid or minimize these areas. 

For example, our GPA chapter offers a Strength in knowledge of proposal development but lacks internal resources to scale up our programming (a Weakness). Happily, we have developed partnerships (Opportunities) where we can offer educational programming without developing registration and extensive promotional systems.

The approach can be quite sophisticated when you add fundraising specific attributes (such as culture of philanthropy and natural donor constituencies) and think more broadly about your organizations abilities (money, time, brand, adaptive ability, operational and technical capacity, leadership capacity, and more).

I have used TOWS to engage organizations in planning, build buy in, and win the grant. For a tutorial with examples, you can download my SWOT/TOWS Guide for Fundraising and a worksheet at www.arthurdavisconsulting.com/resources.html

​This is one of many tools to evaluate capacity building approaches. In future posts, I will share GIVES, ROI, and how to analyze donor data.

How do you prepare for a funder visit during the grant application process? 
Dana Miller of M.J. Murdock Charitable Trust and Darcie Spar of Oregon Food Bank and Grant Professionals Association (GPA) answered this question at today’s GPA chapter meeting.  Key points included who should be in the room, how they should be prepared, and the right level of detail.

Who and how many
The people who are critical to implementation, success, and reporting for the project should be in the room. This includes not only program and development personnel but, most importantly, organizational leadership.  A bottom line for attendance is that a board member and the CEO/E.D. must be there.  Someone who will manage the program and someone who will report on the grant should be there as well; these may be the same person.  If it’s a collaborative proposal, then a representative from the partner agency should participate.  

The specific number of people will vary by the project and funder.  Three people may be enough.  Four to six is reasonable. Eight to twelve is probably too many to manage an effective meeting that allows time for the funder to get the information they need.  However, there are times when a proposal with multiple partners or geographic areas may necessitate more people rather than fewer.  You will probably have a larger team to prepare for the meeting, and prepare you must.

How to prepare
Leadership must be ready to answer both high level questions about the agency and to drill down to the details.  The funder will want to know that your agency’s leadership “owns” and understands the project.  If the foundation’s program officer asks about “the budget number on page seven,” and the executive director turns to the grant writer or a consultant for an answer, this is a problem.  Everybody will have a copy of the proposal in front of them, and they will understand it.  Also, they must be on the same page regarding the proposal and the organization: if someone says, “She and I don’t see eye to eye on this issue,” that’s a sure sign that the organization is not prepared to effectively carry out the project and wisely steward the grant funds.

What about a presentation? 
Do we need PowerPoint slides, client testimonials, a lot of information about other aspects of the agency?  No, we do not.  Generally, the website, the proposal, and a walking tour should give enough information.  A brief client testimonial at the beginning may occasionally be effective, but that testimonial could also use up valuable time for answering the program officer’s questions.  Finally, be sure that leaders are there to answer questions about this project, not to “pitch” another idea that they hope to seek funding for!

How do I learn more? 
There are many details to consider.  Luckily, Dana and Darcie have prepared an extensive checklist of what to prepare and what to expect in The Funders are Coming!  Preparing for a Grant Site Visit  This presentation builds on work by GPA members Alyssa Hanada, Michael Wells, Susan Jordan, and Rick Horton.