June 9, 2009

If and Only Iff… Thoughts on Commission-Based Grant Writing

One of our most frequently asked questions (see more here) is whether we get paid iff (as in the mathematical term if and only if) the grant is awarded.

The short answer is no.

The long answer is something that has evolved for us over time, though it has long been a practice in the grant writing field. It makes sense in some ways; it is similar to getting paid on commission. There are several reasons to be ‘pro-iff.’ Limited cash flow makes it difficult for nonprofits to hire a grant writer. It provides an incentive for hard work. It could mean greater earnings for the writer, if based on a percentage of the grant award, a la real estate agent commissions. It weeds out those who can’t make a living doing it.

All of these are valid. But, at The Grant Plant, we’ve often expanded our short answer of ‘no’ by stating our resistance to being personally vested in the outcome of a grant award, one of the points made by the Association of Fundraising Professionals. But this can be expanded even further:

  • Grant writing fees incurred from the grant in question normally cannot be written into the proposal. This is part of the broader statements you see in Requests for Proposals (RFPs)  like, “The grant [or the granting agency] is not responsible for costs incurred in proposal preparation,” and “The grant cannot be used to pay for goods or services acquired in the past,” among others.
  • Funding decisions rarely hinge on the proposal alone. There are numerous things that go into the outcome of a grant award such as site visits, a review of financial statements, and geographic disbursement of funds, to name a few. When you see the statement to the effect of, “Such-and-such foundation receives hundreds of proposals in excess of what it can fund and often has to turn down very worthwhile causes” – it’s true. When we have called foundation representatives for feedback we nearly always hear, “It was a good proposal, we just didn’t have enough money.”
  • It can take up to a year to hear about the outcome of a grant award. This is particularly true with federal grants that have a review process of at least six months and often closer to nine. For example, we submitted a federal proposal last October and we don’t expect to hear the outcome until this September. As a small business, it would be fiscally imprudent of us to base our cash flow on unknown quantifiers. With current economic volatility in the grant-seeking world, this is especially relevant and also extends to our clients – they need to know what they’ll pay for professional services in order to budget properly.
  • We don’t always hear the outcome of a grant award. For whatever reason – maybe our contact at the organization has moved to a new job, maybe we are reluctant to bog down busy people by chasing after award notifications, maybe the organization was awarded funds but chose to return it after deciding contract or program requirements could not be filled – we just don’t always know. It would also add a layer to our invoicing process, as continual follow-up with the client would be necessary to know when to bill. Yes, many foundations post their grant awards online, or they may be available on Guidestar.org, but this is also tough because there is often a lag time involved in both these methods. State and federal agencies comply with the Freedom of Information Act that enables us to receive the outcomes of grant proposals, but again, we are looking at a long timeframe during which an organization may undergo several changes in leadership or strategy.

Let’s play devil’s advocate. If we were personally vested in a grant award on a commission/percentage basis, there are potential dangers. We could stop writing small grants in order to increase profitability. Anything less than $100,000 and we refer you to another grant writer. Some of our clients don’t even have annual budgets of $100,000 – this would leave some of our most compelling, resourceful, and vibrant initiatives out to dry. We could weed out clients based not on our belief in their programs but on our perception of their financial picture and site visit charisma.

Instead, our view is that we can maximize our clients’ dollars by, first, letting them budget for our services by providing up-front rates and a project estimate; second, not surprising clients months later with an invoice for a grant; and third, by charging an affordable hourly rate for professional services. Many grant writers charge flat rates for proposals or fees per page and this probably works well for them and their clients in terms of budgeting by project. Because we like to forge long-term relationships with our clients, we offer an hourly rate because the time-intensity of grant writing diminishes as we get more familiar with an organization. Some of our clients have been working with us for years, and we can write a proposal fairly quickly and their charge is minimized.

Of course, the caveat is that the question – do we get paid iff the grant is awarded – normally comes about because we get calls from nonprofit organizations that are starting up and/or do not have operating cash or reserves to pay for our services. I know this is a toughie. It helps to look at it as a return on investment. In 2008 (so far – like I said, some grants are still pending), our clients’ average return on investment was $53 into their organization for every $1 they paid us.

I hope this has clarified why The Grant Plant has taken this particular stance on the issue. Please feel welcome to contact me with your thoughts or questions at tara@thegrantplantnm.com.

Post-script: After writing this, I checked some of my favorite grant writing blogs for additional thoughts on the subject:

Contact: Tara Gohr, CEO/President, tara@thegrantplantnm.com

This post was filed under: