Selecting Counsel PDF Print E-mail

Securing Outside Counsel for a Capital Campaign

"Asking the right questions now can save a lot of trouble later on."

Any nonprofit organization would do well from time to time engaging an outside consulting firm to provide assistance in developing a strategic plan or providing guidance for special fundraising projects. For a capital campaign, it is always a good idea to seek fundraising assistance from a consulting firm in the private sector. CommunityNexus Consulting, LLC, if asked, is always willing to meet with the organization's leadership to present an overview of our services and to assist the organization in thinking through its options.

Thinking about a Capital Campaign

Only a few executives and Board volunteers have previous experience in managing a capital campaign, and those who have been through this process know that it is very difficult for an organization to reach its campaign goals when it relies on the time and talents of existing volunteer committees.

Securing the assistance of outside counsel is both a wise financial decision and a prudent management decision. An organization will often realize significant benefits from the guidance and advice of outside counsel, but it is important to ask yourselves some key questions at the outset.

Choosing outside fundraising counsel is a task that first requires an understanding of what such firms do, how they go about the process of organizing and managing a campaign, and how they charge for their services. There are several criteria that should be considered when selecting a firm for outside campaign counsel.

What Do You Need?

Few gift-supported nonprofit organizations have the luxury of full program staffing, much less the benefit of full-time fundraising personnel. This makes it a significant challenge just to develop a plan of action when seeking major and special gifts. One common mistake is to assume that all fundraising efforts can be handled "in house" with volunteer committees, regardless of the workload of existing staff.

Another common assumption is that it is necessary to have fulltime "resident counsel" from a large, nationally known fundraising firm. Actually, very few organizations are large enough or sufficiently complex in program and structure to warrant engaging fulltime resident counsel. A rule of thumb might be: a campaign with a goal of $10 million or more may warrant an annual contract for $100,000 to support fulltime campaign counsel (not including various "support" and "expense" line items in the campaign budget, which are always add-ons).

To engage a full-time resident counsel, an organization must have a strong Board consisting of professionals in the financial and business world, and a broad enough donor base to require multiple individual call strategies for major gift commitments. How might "broad enough" be defined? One way to answer this is another rule of thumb: a donor base with a minimum of 250 giving units capable of making five figure gifts and pledges. Short of this, you should not need a "full-time" resident campaign counsel.

That means your Board of Directors must evaluate several other options for campaign counsel, and often this is best done by engaging several fundraising firms in conversations about their services.

Where to Find a Fundraising Firm

Initially, you may be attracted by a firm's client base with organizations similar in size and mission to your own organization or agency. Or perhaps a board member has had experience in a previous campaign and can provide a reference.

Keep in mind, however, that each situation is different. There is no assurance that a "repeat performance"  will work, nor is it likely that a "cookie-cutter" campaign approach will "fit" your situation.

Results in fundraising are typically evaluated based on whether financial goals are met or exceeded. Unfortunately, this is often the one and only criterion a committee tends to use in a review of campaign proposals. A common assumption is that fundraising firms do not recommend goals that a client cannot  meet. This tends to obscure the issue. How is one to know whether a "goal" was achieved adequate to the established need, or whether a goal was achieved at the expense of the organization's annual budget requirements? Other evaluation criteria should be included, in addition to "financial goals met."

How To Measure Success

Ultimately, success in fundraising means increasing the maximum number of faithful contributors as well as generating new dollars. Success is also measured in terms of how much your staff has learned and the professional skills they have developed during the campaign implementation process. This is called “building organizational capacity,” and it should be an important component of any campaign plan.

What Size is Right?

The large fundraising firms might seem the logical choice. These are usually the "full service" firms with the depth and staffing to handle every need and situation. However, smaller firms may offer more efficient and personal service. Their smaller size allows for direct involvement by the firm's "principal," the chief executive and operational officer or the "partners" who provide oversight of all the firm's contracts. In this sense, the name and reputation of the firm's owners are on the line with you.

Fees and Expenses

Most fundraising firms charge on a "straight fee" basis, quoted to you and based on a projected Scope of Work that is defined in advance to meet your specific needs. This is consistent with the Code of Ethics of the Association of Fundraising Professionals (AFP), the international association to which all reputable fundraising executives in the nonprofit world belong. (This Code of Ethics is available from the national AFP office located at 4300 Wilson Blvd, Suite 300, ArlingtonVA 22203; 800.666.3863). Be wary of any firm or individual who bases a consulting fee on a percentage of funds raised. This arrangement seldom works, and often results in a modus operandi that becomes a disadvantage to the nonprofit organization.

Campaign fees can run as high as $50,000 per month for a fulltime resident counsel, plus back-office support from a major firm, but it is hard to justify this kind of financial commitment unless your campaign goal is at least nine figures ($100 million-plus). If your projected campaign goal is in the six figure range, or in the $2-5 million range, your campaign costs should be considerably less.

Although some situations warrant a contract with a consulting firm calculated on a "daily" or a "weekly" fee basis, most nonprofits discover that the best way to evaluate "what you get for what it costs" is on a "fixed fee" basis. This type of contract is calculated based upon a negotiated or a projected Scope of Work, which the firm should be able to provide you, depending on your own "statement of need." The Scope of Work is agreed upon at the outset, and includes what you can do for yourselves and what you might appropriately expect from outside counsel.

The consulting firm should be able to provide your organization with an estimated "fixed fee" for its services, based on its previous experience with other clients similar to yours and the projected Scope of Work. It is also legitimate for the firm to expect reimbursement to cover direct expenses and travel, but the agency would do well to include a "not-to-exceed" clause in such a contract.

It is also important to establish an overall "campaign budget," especially if you can anticipate printing costs, special event costs, and part-time secretarial and/or bookkeeping expenses. If yours is a capital project, you will have architectural costs, engineering costs, and a variety of other expense items that must be anticipated. In such a budget, the fee for the fundraising firm is only one line item among others.

Another common rule of thumb is that the fee (direct cost) for professional fundraising should not exceed 5% of the campaign goal. This does not mean that you establish a dollar goal and then set the fee for the consultant at 5% -- rather, it is a way of measuring what you're getting for the cost. It also means that if your overall campaign goal is something below $250,000, you probably should not be engaging an outside firm at all, because it is not "worth the while" for a major firm to commit the time and expense of one of its professionals to the project. CNC Consulting, however, is open to a consultation arrangement that provides your key development staff with continuing counsel.

Measuring Progress

Because reporting styles vary, you should decide in advance the best reporting format for your organization,  in order to be able to convey the progress being made on the campaign. There can be formal written summaries following each on-site visit, or monthly progress reports. This can be a drain on consulting time-and-effort, however, and the value of such "progress" reports is often overstated in costs because progress  in a campaign is best evaluated long-term.

It is often wiser to identify certain "deliverables" at certain stages of a campaign that will consist of written reports focused on the discrete tasks in the Scope of Work. In this way, your Campaign Steering Committee (by whatever name) can anticipate a specific, tangible outcome associated with a specific task, and this becomes a "benchmark" for further work in the next stage of the evolving Scope of Work.

This approach also allows for evaluation "checkpoints" along the way. Ironically, some of the most valuable aspects of having outside counsel involved with the organization have little to do with money being raised. There may be underlying management issues that should be addressed. One of the side benefits of retaining counsel is that it gets your Board of Directors to face problems, define solutions, and make decisions that may otherwise be unpopular but necessary.

What Is Expected Of You?

Even the best fundraising firm fails if it does not engage the time and talents of the volunteer leadership in the overall campaign strategy. Early on, your Campaign Steering Committee and the Campaign Counsel should agree on a meeting schedule and keep to it (barring unforeseen circumstances). This is critical if you have a contract on the basis of which a fee is calculated on a daily or weekly basis, because the clock will be running. But even if your contract is on a fixed fee basis, regular Steering Committee meetings are essential for communication around "sticky" issues.

The best consulting contract is a "partnership" and even the best of fundraising firms cannot move forward efficiently with a Scope of Work if internal tasks are not being accomplished. During intensive cultivation and solicitation periods, weekly meetings may be required, but normally a bi-weekly meeting schedule is sufficient. Indeed, you will discover that this kind of accountability calendar is one of the chief benefits of having outside counsel involved in your project.

Those clients that have gotten the most out of a consultant will tell you the most important thing you can do to "get your money's worth" is to listen to "the voice of counsel." Good fundraising consultants know what works and what doesn't. They have heard of every shortcut possible, and have heard excuses that you wouldn't believe, and they are candid with their clients to ensure that decisions are reached that are in your best interest. They can also be invaluable in helping you to deal with the "latest" ideas that come out of left field, when these "best ideas" tend to derail the central campaign plan by diverting time and attention from the key things that matter.

                            If you have other questions, please feel free to contact us.