Why Grant Professionals Don’t Charge Commission-Based Fees

It is unethical for a grant professional to charge a percentage of the grant award. FULL STOP.

And I get it; so many people do not understand the world of grants. Clients ask all the time – can I just pay you a percentage of the grant? Many industries work that way – real estate agents, financial advisors, and travel agents, to name a few. So why is it wrong for us grant pros?

Kimberly and I take a deep dive into this topic on the latest episode of the Fundraising HayDay Podcast HERE. In my mind, the biggest reason is that charging a percentage of the grant does not behoove the client (hopeful grant recipient) or you (the consultant).

Consultants bring experience and expertise to the table. Clients bring programs and services. A consultant is earning a living. A client is getting a finished product ready for submission, saving them staff time, effort, and a learning curve. Consultants should earn a fair wage, and clients should pay a fair wage. But what does that look like if a percentage of the grant is paid?

I’ve written a $1 million proposal that was an online application, 8 total pages of information, and it took me 25 hours to complete. If I was paid even 5% of the grant award, I would have earned $50,000. On the flip side, I’ve written a $20,000 grant proposal that was over 100 pages, complete with narrative, detailed budget information, and over 20 attachments. It took me 50 hours to complete. With that same 5% payout, I would have made $1,000.

Let’s dive deeper into the issues here:

• The size of the budget does not always equate to the amount of work and skills needed to develop a grant proposal. As a consultant, I don’t want to earn less than the value of work I’m delivering. And I also don’t want to overcharge my client.
• Many grant applications allow you to request a range of funding. Sometimes the range is as large as $0 – $4,000,000. But no matter how much money you request, you are still completing the same proposal. So why should the budget request dictate your pay?
• Many clients suggest paying you a percentage of the grant on the assumption they can use the grant award to pay you. But most grant awards do not consider that an eligible cost, though there are a few exceptions (such as the Federal Emergency Management Agency’s Assistance to Firefighters Grant, though even they limit the amount the grant will pay).
• And many clients who want to pay you a percentage of the grant only want to pay IF the grant is awarded. As a grant consultant you are delivering a product, not a guarantee of a grant award, and as such should be paid for your work.

I’m not the only one preaching about this. Both the Grant Professionals Association and the Association of Fundraising Professionals discuss commission-based fees in their code of ethics. You can read the specifics HERE and HERE.

So, if you’re not charging a percentage of the grant award, how do you charge for your work as a grant or fundraising professional? You have options.

HOURLY – You can set an hourly fee. And there is no rule that the hourly fee has to be the same for all your work. You might have a set price for writing, one for management work, and still another if it’s a “rush job.” You might have a set rate but be willing, on occasion, to give a price break to a client because you love their mission, they serve a community you have ties to, or just because you feel like it. It’s your fee – do with it what you will.

PROJECT-BASED – An experienced grant professional understands how much time, effort, and experience is necessary to develop a one-page Letter of Intent, a large foundation proposal, and a juicy federal grant application. You can set a certain rate for these different deliverables.

RETAINER FEES – When you have a client who wants to work with you over a longer period of time, rather than one or two grant projects, you can set a monthly fee (aka a retainer). Typically, you will agree on the amount of work that will be completed either monthly or in totality over the contract period, often 6 months or more. Then you will receive a set retainer amount each month.

There is no rule that says you have to pick one method and stick with it for every client forever and ever. Use the different pay models as needed. Just don’t charge a percentage of the grant, even if you’re not a member of GPA or AFP. It’s not a good business model for anyone.