Last week I outlined the different ways fundraising service providers (FSPs) are compensated. The bottom line was that no FSP can afford to work for a nonprofit organization (NPO) without making a profit; somehow, some way, FSPs are being compensated. As a fundraising manager, you need to choose FSPs with pricing models that make sense to you and you feel best represent the interests of your NPO.
Following are a few more thoughts to help you manage FSPs for the greatest benefit to your nonprofit.
1. The lowest cost may not be in the best interest of your nonprofit. There are two things to keep in mind. First, part of what an FSP is selling is experience. Someone with less experience may charge less. So, in addition to looking at price, you also have to determine the depth of experience you need. Secondly, a large firm has a variety of experience on its staff. If you negotiate a lower price, you may have access to less experienced people. That could be fine, but you need to know what you’re “buying” as you discuss pricing.
2. Using an FSP can be a wonderful investment for your nonprofit. An FSP can help you do something that you don’t have the time (or expertise) to do yourself. FSPs often look more objectively at your programs and help you “repackage” them in ways that are more compelling to donors. They can help you better target your message to smaller segments of donors.
3. An FSP can challenge the status quo. Sometimes we hire an FSP because we want change — but when we see what change looks like, we panic. It’s easy to get in a comfort zone and start saying things like, “Oh, but our donors are different … ” and “Our donors would never go for that.” The FSP you choose should have depth of experience and a good handle on the overall fundraising market. But if you don’t trust your FSP’s people, you won’t truly benefit from their knowledge.
4. FSPs will only be as good as you let them be. Withholding important information (often unintentionally), taking a committee approach to editing or ignoring best practices are all within your purview, but they will make your investment in your FSP less effective. Make sure you are ready to let go a bit before you invest in outside counsel. You’ll want to share information about your donor profile, past successes and failures (and believe me, we all have them!), organizational foibles and the unnegotiables.
5. An FSP is not a cure-all. Mission creep, a lack of vision, poor program performance, an aging donor file or a myriad of other issues need to be addressed, but simply throwing an FSP at them won’t make them go away. An FSP can help you identify these problems and work out solutions, but things won’t really change unless your NPO has the organizational fortitude needed to bring about the transformation.
I wrote an article talking about when hiring an FSP can fail; you can click here to read that from Today in Fundraising’sarchives.
The most important thing to remember is that when it comes to hiring FSPs, clear communication is critical. You need to understand their strengths and limitations as well as their pricing structure, and the FSP needs to understand your organization’s needs and what you want to accomplish from the relationship.
Otherwise, the relationship is headed for failure, something this old dog has seen a few too many times.
One final note: If you send a question or comment to me atPamela@pjbardeninc.com, I will try to answer it and may include it in my next column, as well.
Originally published in NonProfit Pro.