Is a Consultant’s Fee Important?

ABNORMAL, adj. Not conforming to standard. In matters of thought and conduct, to be independent is to be abnormal, to be abnormal is to be detested. Wherefore the lexicographer adviseth a striving toward the straiter [sic] resemblance of the Average Man than he hath to himself. Whoso attaineth thereto shall have peace, the prospect of death and the hope of Hell.
--from Ambrose Bierce’s ”Devil’s Dictionary”

Back to our thread: "Is price really a substantive issue in consulting?"

Some fledgling consultants have asked me "How much can you charge as a consultant?" or "How little do you have to charge to get the work?" or " What’s the 'going rate'?"

But I think we need to look at at this issue another way. A lot of people in nonprofits try to “bid out” consulting work. They've heard that this is fair and just and government agencies do it. Also it gives a possible range of prices and you get at least some idea of the different kinds and degrees of consulting service available. So "bidding" is all right, so far as it goes.

But this practice is short-sighted at best. It is not only a strategic mistake, it’s indicative of a concentration on price that belies an underlying fear of change in the organization, and a fervent hope that whatever advice they get from the “low bid” consultant will not make them change anything they’re doing. But you, as a reader of this blog, might say, "Whoa, John, hold on there a minute. It's quite a jump from "short-sighted" to "fear of change." Are you sure there's a connection here.

Yes, of course. Let's start from the top. Everyone wants a bargain! Everyone wants to get a product or service at the “lowest possible price.” Not bad if you’re dealing in commodities. Cars, handbags, groceries, hardware, appliances – the cheaper the better, right? No problem. Until you get a lemon! And if you’ve paid $10,000 for a brand new car that doesn’t run when you want it to, is that a bargain? There are even limitations in buying commodities. Is cheaper always better? Or would you rather buy “quality plus price”?

But fundraising advice, modeling and production is not a commodity, in any way, shape or form. Some do it better than others. Some do it with a style that is more compatible with your people than others. Knowledge and chemistry count in the consulting relationship. Everybody wants a bargain..... UNLESS that bargain turns out to be non-productive of new streams of revenue, right? Or unless that consulting relationship turns out to mean substantial institutional change.

On the one hand, if the consultant doesn’t know the field well enough, has not had the breadth of experience, doesn’t know the community or the donors, or doesn’t have the interpersonal chemistry to build working relationships, then any price is too expensive. On the other hand, if the consultant sees that the organization has a very long way to go and many changes that need to be made in order to raise substantially more contributions, then, again, any price is too expensive if the leadership in that organization aren't up to making the necessary changes.

So let's unpack this. The real question is “What are you getting for your money?” Have the leaders of the nonprofit organization carefully defined their objectives – what they want to accomplish – in specific enough terms that a consultant can really help the situation? Has the consultant, spelled out exactly what he/she is going to do for these people, the inputs that will be needed from them, the results they can get, and the conditions under which they’re going to be able to obtain those results?

Price is not really the issue. Again, if you gave it away, a lot of organizations would still turn you down on your offer, because they’re not ready to make the kinds of changes necessary to raise more money. And, if they are ready, price is not the issue but rather the relationship that develops, the way preparations for a consultancy are done and the specificity of both the ingredients going into the consultancy and the expected outcome – both on the part of the nonprofit leadership and the consultant.

Put it this way. If the nonprofit is at the $250,000 mark in annual contributions and has a program budget that really demands $500,000, the price charged by the consultant that can show this group how to raise $1 million annually in contributions and actually motivate them to do the work necessary to get there frankly just isn’t relevant.

How much would be too much to see your organization move from $250k annually to $1 million annually? Would $50/hour be too much? Would $100/hour be too much? Would $500/ hour be too much? Only if you, as the client, somehow persist in seeing your organization as buying a commodity rather than investing in a process that will pay off handsomely for your organization far into the future. The fact is that relationship and results count a whole lot more than price.

This is a good time to add, however, that “relationship and results” is a two-sided game. Nonprofit leaders have to make the effort to establish, invest in, monitor, grow and regularly evaluate the relationship, just as does the consultant. The nonprofit leadership must ensure that they’re putting in the effort to learn and then apply new methods and techniques; they need to be continually investing time, money and other resources in the necessary infrastructure or training or fundraising program changes required to get to the $1 million mark. Similarly, the consultant must continually provide the inputs of training, coaching, proposing, and implementing with an astute sense of timing, in order to move the nonprofit along on a track that produces the results everyone agreed to at the beginning were necessary.

Price isn’t really the issue, it’s relationship and and the results that count. It’s also clarity of expectations. What are the nonprofit’s leaders wanting to accomplish? Do they know? Have they written this down? Do they understand what they’re doing and how to go about it? Are they prepared to learn and appropriate and apply that learning? Are they prepared to undergo change themselves? Are they prepared to have the policies and procedures of the fundraising program challenged, and changed for the better? Are they really sure that they need and want more money? And do they know what they will do with that money when they get it?

The consulting relationship is a two-sided relationship, with as much, if not more, time, effort and work being put in by the client as by the consultant. It is patently NOT the case that the consultant is “brought in to raise more money for our organization.”

The fact is that if the consultant is doing a good job, the nonprofit leadership is actually "doing" the fundraising – these are the people who are doing the learning, changing and carrying out new programs of fundraising. The consultant facilitates this, provides the training, shows the direction, maybe even leads the way. But the client, ultimately, does the work. They have to do it year in and year out when the consultant relationship is completed. “That’s why they get the big bucks!” Right?

See ya tomorrow! Have a great spring day!