Outside Help

There are plenty of reasons why nonprofit organizations seek the expertise of consulting firms. They may face financial uncertainty, a major fundraising campaign, an extended project or leadership changes that would benefit from a third party’s professional insight. Additionally, they may seek counsel during program or organizational expansion to help identify and align new opportunities.

There are also ample reasons why executives sitting on nonprofit boards may be hesitant to engage outside counsel. They may not know how to identify a reputable firm, be wary of consultants in general, feel the cost is prohibitive, or simply not understand how a consultant can address their specific needs.

Neil Giuliano, former Tempe mayor, president of GLADD and recently CEO of the San Francisco AIDS Foundation,who returned to the Valley last month to assume the positions of president and CEO of Greater Phoenix Leadership, says he’s engaged outside consultants for a number of reasons — especially in situations where knowledge or assessment was not readily available in-house. He says consultants have helped his organizations prioritize staffing growth; complete philanthropy department audits of current practices, polices and performance; develop multi-year roadmaps for scaling capacity into the future; and address broad relationship issues with the organization and with senior-level volunteers and board members.

Most notable, though, was the transition of the San Francisco AIDS Foundation from a governance-only board of seven (with no formal fundraising responsibility) to one of 24 who donated or raised more than $600,000 in a single fiscal year, in addition to their governance and fiduciary responsibilities. “Having an outside consultant identify and articulate this need was an important component of the organization’s trajectory,” he says. As a result, the foundation has grown from a $19 million nonprofit with 89 employees in 2010 to $29 million with 150 employees today.

How does a nonprofit find the right consultant? The first step is to identify the consulting services needed. Then, after inquiring of peers and colleagues about their personal experiences with reputable consulting firms, it should research firms online (best in class/in region). The final step is to conduct initial get-to-know-you meetings with a handful of prospective firms.

“The key,” Giuliano says, “is to clearly identify what gaps your organization is seeking to fill by utilizing a consultant.” That level of clarity may not be obvious up-front and may only be revealed during initial interviews.

During those interviews, board members and executive leadership should be honest about the nonprofit’s challenges. That means sharing the nitty-gritty details: staff politics and squabbles, financial concerns, the institution’s overall willingness to embrace change, and details about donor data systems and their access. Withholding such information may simply waste time and money, as consultants will spend additional time unearthing those problems in an attempt to solve the institution’s larger issues. Remember: a prepared consultant is an effective consultant.

Board members should also assess the consulting firm’s:

Experience: Do the consultants have boots-on-the-ground experience with nonprofits of similar missions or in allied fields? Have they worked with clients on executive coaching, strategic planning, fundraising and development, capital campaigns or interim management? Have they held senior-level positions or are they newly minted college graduates?

Personality: How does conversation “feel” during the interviews? Is there a rapport or uneasiness? Pay attention to chemistry during initial meetings in much the same way as with new hires. Follow those gut instincts and assess whether the consultant is a partner/confidant or a taskmaster with periodic check-ins. Canceling a contract mere months later due to personality conflicts is simply wasted time and money.

Cost: Be sure to request bids from multiple firms to compare pricing. Are they in the same ballpark? But also remember that cheaper isn’t always better. If a connection is felt with a higher-priced firm, consider asking for a more palatable fee or adjusted deliverables to meet budgetary constraints. Don’t forget to also weigh pricing and service advantages/disadvantages of local versus national consulting firms. While local firms will not incur added travel expenses, do they offer the proven expertise for the service needed? And always balance cost with the anticipated quality of the deliverables.

“The external set of eyes and inquiry provided by consultants add tremendous value before critical decision-making takes place,” Giuliano says. “Whether it’s strategic planning for large, multi-year projects or for smaller, more concise projects with limited scope, the insight is critical and yields even greater returns in the long term.”

Ask the Right Questions

Before hiring a consulting firm, nonprofits must practice due diligence, beginning with formal reference checks. Ask for the names of at least three former clients with similar projects, goals and missions. Query about their level of satisfaction and working relationship, and about deliverables met. Consider, also, informal conversations with colleagues and acquaintances regarding personal and professional experiences with specific consultants and as well as completing online searches.

During the interview process, ask:

Who will be on my consulting team? Often, the individuals making the initial presentation may not be the consultants working directly with the nonprofit. Request a meeting or phone conversation with those individuals assigned before committing to a contract.

What is the cost of services and terms of payment? Fundraising consultants do not raise money; they position the organization to do so, and, as such, should not be paid based on percentages of funds raised. Determine if the firm charges hourly, daily or per project and discuss payment schedules that work best for the nonprofit’s financial situation.

What expenses are included in the consulting fees? Are mileage, travel, accommodation and copying costs included? Are there any extra costs?

What are my options if the consulting experience is not as hoped? Does the firm offer an “out” grace period by which either party may terminate the relationship? Under what circumstances might the contract be renegotiated?

Will your firm honor confidentiality agreements? Reputable consulting firms will readily sign confidentiality agreements for those clients concerned about use of their personal and donor data.

Fundraising Fact and Fiction

Belief: Consulting is a waste of money.

Reality: Utilizing consultants for a finite period of time at a predetermined amount can be a cost-effective, hands-on way to build capacity in a nonprofit organization.

Belief: Staff, alone — or in conjunction with the board — should be able to accomplish major projects and address issues on their own.

Reality: Because staff members still maintain day-to-day responsibilities — in addition to their roles during larger projects — they often benefit from the additional strategic and tactical support offered by experienced consultants.

Julie Iacobelli is a principal with The Phoenix Philanthropy Group, an Arizona-based international consulting firm serving nonprofit organizations as well as institutional and individual philanthropists.