“Paying Commission On Grant Proposals: Don’t Do It”

Bottom line… doesn’t everyone expect to get paid for working?  Otherwise it’s called volunteering.

This article makes all the valid, and often (necessarily) repeated points:

Contingency pay is considered an unethical practice and is prohibited by leading professional groups (i.e. Association for Fundraising Professionals (AFP) and Grant Professionals Association (GPA)). 

First, funders almost never allow you to pay for pre-award costs out of a grant.  Paying for the proposal writer out of your grant funds will even often result in termination of the funding.

Second, real grant professionals deliver a high quality product for a fair fee. The example given is realistic, “A professional might, for example, spend 160 hours pulling together a highly complex proposal that results in a $5 million grant award. Paying that consultant at $100 per hour for high-level skills would result in a fee of $16,000 — pretty standard for top-level work.”  The opposite — paying on commission — would result in a $250,000 fee ($1,562.50 per hour for a 5% commission), or $500,000 ($3,125 per hour for a 10% commission), and IS outrageous. Since the pre-award work won’t be an allowable expense in the grant budget, where is the money going to come from? It almost seems as though if you have that kind of money to throw around, maybe you don’t need to be pursuing grant money.

Third, there are too many variables that impact grantmaking decisions (only one of which is how well the proposal is written) to ‘lay the blame’ for a not-funded grant solely at the feet of the proposal writer. “You are paying a proposal writer for a solid, professional job, not for a grant award. The applicant organization must assess the situation and assume the risk of moving forward with a grant proposal.”

Lastly, Generally Accepted Accounting Principles (GAAP) standards state that fundraising services should be paid “at the time services are provided.”  Very, very few grant awards are made immediately, and some take between six months to one year to be processed.  “Waiting until an award is received to pay for proposal writing services is unfair to the writer and could also ding your audit… And don’t forget, taking the consultant’s fee from the grant award is probably a prohibited expenditure.”

Grantseeking is an inherently risky endeavor, but it’s simply a cost of doing business.