5 Reasons Grant Writers Should Not Work on Commission

Is it a good idea for grant writers and consultants to work on commission? Here’s the quick and easy answer — no, it isn’t. Here are five reasons why this practice harms you, your grant writers, and your chances of receiving some grants

1. Most funders frown upon the fee and will refuse to pay it. 
When most grant funders contribute to your organization, they want their funding to go directly toward your program, not your overhead and fundraising costs. Many funders guidelines even explicitly state that the grants awarded cannot be used to cover such expenses. Therefore, your team will not be able to incorporate the cost of a grant writer into your proposal budget. Be advised, if your organization were to win a grant and use the funds to pay your grant writer, you could be in violation of your grant agreement. In this case, the grant would likely be terminated and your organization would be forced to pay back the awarded amount. 

 
Additionally, the Association of Fundraising Professionals clearly states that members may “not accept compensation or enter into a contract that is based on a percentage of contributions; nor shall members accept finders’ fees or contingent fees.” Likewise, the Grant Professionals Association (GPA) also has a stance on the issue of commissions. Its Code of Ethics, clearly states that “members shall not accept or pay a finder's fee commission, or percentage compensation based on grants and shall take care to discourage their organizations from making such payments.” 
 
Consider the AFP and GPA’s position this way. Your organization is paying a grant writer to create a proposal for a project or need that you’ve identified. The funder is awarding money for that project or need, not the skills of your grant writer. 
 
2. Commission-based pay goes against accounting rules.
The Generally Accepted Accounting Principles (GAAP) are the accounting principles, standards, and procedures that your organization must follow when compiling your financial statements. Included in these Principles is an acknowledgment that fundraising services should be paid “at the time the services are provided.” Because a funder may take several months to make a decision and disburse grants after a proposal is submitted, there could be a significant gap of time between the delivery of your grant writer’s services and their receipt of payment. Not only does this hurt your grant writer financially, it could negatively affect your organization’s annual financial audit, which would likely reflect negatively on the success of any future grant proposals. 
 
3. It could end up costing your organization more money
Let us consider a hypothetical scenario. If a grant writer spends 20 hours on a grant proposal and charges $75 an hour, your organization would be billed for $1,500. Now, if your organization were to win a $50,000 grant and you awarded your grant writer 5%, they would then be owed $2,500. And what happens if the funder won’t include the fee of a grant writer as part of your funding costs? Well, that money would have to come from somewhere else in your organization’s budget. Thus, it’s probably best to do the simple, honest thing - pay your grant writer’s fee upon the delivery of services. 
 
4. Grant writers are not solely responsible for your organization’s success. 
 When determining your organization’s eligibility for funds, funders look at more than just the quality of writing in a grant proposal.  They also look at the strength and sustainability of your proposed project, consider whether it aligns with their funding priorities, investigate your organization’s reputation, track record, and financial history, and much more. These considerations are completely outside the control of your grant writer, who should not be penalized if your organization is not seen as a good fit for a foundation or agency. 
 
5. Professionals should be paid what their skills are worth.
 Within the sphere of nonprofit organizations, grant writers provide a vitally important and necessary service. Their ability to write and prepare a compelling grant proposal requires a significant amount of time, effort, and specialized skill that could ultimately help your organization receive some much-needed outside funding. Therefore, as a client, you should compensate your grant writers in a fair, appropriate, and timely manner - not on a conditional commission.  Remember, your decision to work with a grant writer is an investment in the growth of your organization, not an unnecessary expense. Pay them what they’re worth so they can help you get what you’re worth! 
 
Keep it ethical out there, and best of luck to you in your search for funding! 
Interested in learning more about the ethics of grant writing and proper compensation? Please contact us at MPS Grants today! We’d be happy to assist you and your organization. 
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