‘Creating a Successful Fundraising Consultancy’ The AFC’s Gherkin Sessions September 2018

We held a very lively and informative Sessions this year and here we share some of the key outcomes with you.

As professional fundraising consultants under the umbrella of the AFC, we are committed to giving our clients the best possible professional advice and sharing best practice.

Promoting your company

• everyone is different so find what works for your company by trialling different marketing methods and go with the ones that work best;
• measuring marketing can be difficult so make sure you use the platforms available like Google Analytics etc;
• remember that as well as getting your brand known, people need to know exactly what it is you do so remember to tell them;
• ask for personal recommendations;
• ask for referrals; and
• promote your company by running workshops – this shows your expertise and gets your name and your people known.

Why organisations engage fundraising consultants

Clients spend money on fundraising consultants for a variety of reasons including:

• staff shortages;
• need for expertise;
• they have lost their way and need help finding their way forward; and
• they are looking for someone to explain why things haven’t worked and to tell them what they need to do.

Delivering to your clients

As consultants who want to run successful consultancies you must be brave and not just be ‘yes’ people as you need to deliver for your clients.  Make sure you define your consultancy’s particular area or areas of expertise clearly so that there is no ambiguity about what you are delivering.

It is important to form professional relationships and ensure that you always do a good job.  Volunteers can tend to move from one charity to another so ensure that you also form professional friendships here as you never know when it could stand you in good stead. Be seen in the market and do whatever it takes within your niche such as running workshops, speaking at conferences or getting involved yourself as a volunteer within the community.

Terms of Engagement

In respect of terms of engagement, ensure that you have a standard contract that is robust and doesn’t have to be continually altered. Keep it simple and avoid over-complicated ones but make sure it covers all the relevant points and remember that a contract is legally binding. Ensure both parties have a clear understanding of the contract and what is expected of them.  A contract can be a moving target but you do need everything in writing for both of your protection.  Do seek professional advice from a solicitor if in doubt.

Let employees and clients know that you are members of certain associations and for that you must adhere to the various codes of conduct.

GDPR could be your friend. GDPR has helped with the need to have a contract in place before working for a client. Do bear in mind Brexit as it could mean that you will not be able to transfer data from the UK to the EU.

Everyone is eager to get started on a campaign, but be cautious of working with a client before you have a signed contract signed and in place. If you need a reason to justify this to the client then use the professional indemnity insurance reason.

Do not take on commission only contracts. They are not ethical and could impact on your cash-flow. Most importantly it blurs the boundaries between you and your clients.  Whose campaign is it? What is the role of the client and what is your role as the consultant? Commission only contracts do not build critical relationships.

It was agreed that the most successful campaigns are those where the ownership of the campaign belongs to the client and where ‘loyalty is not defined by a day rate’.

Calculating your Fees

When pricing your fees, you may consider day rates or hourly rates. However, your pricing structure may be flexible depending on the client and the project. Consider retainers with lower day rates. Retainers and rolling contracts can often benefit clients as there are no sudden unexpected bills and you have an assured cash-flow for your business.

Remember that determining good value for a service can be difficult. Therefore, you need to make sure your services and their outcomes are measurable where possible.  It is important that you don’t sell your experience and expertise short and to price in line with any high-quality professional service.  That way, the client will respect you and listen to you.

As a basic guide-line take heed of the ‘thirds’ business model when setting your fees:

1/3^rd:  your rate and/or your employees/associates

1/3^rd: Taxes & business running costs

1/3^rd:  Company profit

Please ‘share, share and share’. If you are not already a member of the AFC, please consider joining and becoming one of the professional leaders in fundraising consultancy in the UK.

The Power of the Personal Touch

‘A face to face ask is 34 times more effective than sending an email’.

Harvard Business Review 2017

If there is one thing that I have learned over the past 30 years of fundraising it is to always ask in person wherever possible.  Indeed, not just for fundraising purposes but for anything you truly want in life.

Like everyone else, I use emails just about every day.  It is efficient and quick but I would always advocate caution before we lose the ability of talking and listening to people in person.  As well as being able to pick up tone and body language, it is often what someone is not saying that is as important as what they are saying and taking heed of that all-important ‘in between the lines’ narrative.

Whilst technology has had a hugely positive impact on our lives, we must not lose sight of the importance of the ‘personal touch’.  Certainly, when making the actual ask for large donations it is critical that communication is face to face.  It is only when you are seated next to or opposite someone that you can convey with clarity and conviction your own passion for the cause in question.  Your potential donor will be inspired and confident and only then will they make that all important gift.

Link: https://hbr.org/2017/04/a-face-to-face-request-is-34-times-more-successful-than-an-email

The Association of Fundraising Consultants’ Code of Practice: self-regulation and safeguarding organisations that employ fundraising consultants – By Stefan Lipa, Stefan Lipa Fundraising Consultancy

Members of the Association of Fundraising Consultants (AFC) are seen as professionals who give the best possible advice to charities seeking funds to support the work of their cause and beneficiaries. The maintenance of high professional standards is crucial to the future of providing much-needed support to charities.

The AFC’s Code of Practice, which works in tandem with the Fundraising Regulator’s Code of Practice, reflects the purpose of the AFC and describes the standards that AFC members have agreed to observe. In this article, Stefan Lipa, from Stefan Lipa Fundraising Consultancy, looks at each of the 10 components of the AFC’s Code of Conduct, what the Code means in practical terms for AFC members and how it helps safeguard charities and not-for-profit organisations.

“Members and employees and sub-contracted consultants engaged by members agree to abide by this Code of Practice and its complaints procedure, are committed to the ideals of charitable giving and seek to bring credit to the profession through their conduct. Members will reaffirm their compliance with the Code of Practice each year.”

All members of the AFC are required to abide by the Code of Practice. The Code of Practice is enforced by a complaints procedure by which any relevant person or organization can raise an alleged breach of the Code of Practice. This will be investigated by the AFC with an intention to resolve the issue either by satisfaction of the complainant or by a sanction on the member concerned.

Every few years, the AFC seeks information about practitioner members from several of their respective clients (past and present) to assess their commitment to the ideals of charitable giving and the quality of professional services. Members must sign a document agreeing to abide by the Code of Practice every year when renewing their membership of the AFC.

“Members will make only those claims to experience, qualifications and achievements that can be shown to be genuine and will neither guarantee results nor promise to raise sums that are unrealistic.”

While the first part of this statement appears self-evident, there are nuances that need to be observed. For example, let us assume that a capital campaign with a target of £10 million, achieves its target. A statement by a fundraising consultant saying ‘We raised £10 million’ would likely be untrue. A statement which says: ‘We helped charity x raise £10 million’ would probably be more accurate.

It is impossible for a fundraising consultant to guarantee results truthfully. The outcome of a fundraising campaign cannot be guaranteed and it is influenced by many factors outside the control of the fundraising consultant. This will include:

• The reputation of the client organisation undertaking the project and its existing relationship with potential donors.
• The emotive appeal of the project.
• The commitment of the client organisation to the fundraising campaign.
• The quality of campaign leadership and the campaign ambassadors.
• The quality of the potential donors.
• The quality of the relationship between each campaign ambassador and the potential donor approached by that campaign ambassador.
• The willingness of each campaign ambassador to make personal approaches
• The response of potential donors.

If the fundraising consultant avoids guarantees he/she is less likely to promise to raise sums that are unrealistic. In any event, it is not the fundraising consultant who raises the sums of money.

“Members will acquire clients by fair means only, will not offer inducements to prospective clients or apply undue pressure in order to secure assignments.”

The facts of each situation will determine whether a client has been acquired by fair means. This does not prohibit negotiation on price or range of service. Organizations seeking fundraising advice can often be under stress, needing to raise money but having few resources to do so. It is imperative that during negotiations, no undue pressure is applied which takes advantage of an organization’s possibly vulnerable situation.

“Members will serve only those not-for-profit organisations that to the best of their knowledge have aims that are worthy and intentions that are honourable.”

A good start is to ascertain that a charity is registered with the Charity Commission and to read the relevant information about the charity online. Although a fundraising consultant does not need to be a member or supporter of a charity (in fact it could be argued that being too close to the charity might make it difficult for the fundraising consultant to provide objective advice), it will be beneficial to the relationship if the fundraising consultant considers the charity to have worthy aims and honourable intentions. If the fundraising consultant feels that the opposite is true then it is unlikely that he or she would be able to provide the best possible service to the charity.

“Members will promote or employ only those fundraising practices that are not harmful to the public or likely to bring the profession into disrepute.”

Recent history has shown that there are some fundraising practices that are either harmful to the public or perceived to be so. Examples include bombarding potential donors by post or email and harassing people on the streets.

AFC members are expected to be very careful about the advice they give to clients and they should advise against practices that are harmful to the public. In any event, such practices will be detrimental to the charity concerned and will limit its ability to help beneficiaries.

Any practices that are harmful to the public or to charities and their beneficiaries are also detrimental to the fundraising profession and, consequently, could bring the profession into disrepute.

“Employees and sub-contracted consultants engaged by members will have a record of relevant professional experience, and will be managed by experienced practitioners.”

When a charity retains a member of the AFC, the charity is entitled to expect a ‘gold standard’ in fundraising advice – as should be expected from a member of AFC. However, AFC membership is made up of firms which employ individual practitioners who are not themselves members of the AFC (although they may belong to other organizations such as the Institute of Fundraising).

Fundraising practitioners have a wide range of relevant experience and expertise. Relevant professional experience also depends on the degree and quality of supervision and management of the fundraising professional who is in situ.

“Members will deliver professional services based on an agreed letter of appointment that details all the terms of engagement including the service to be provided; the duration of the service; the professional fee and related expenses to be charged; the method of payment, as well as arrangements for review and termination of the appointment.”

This document may be:

• a formal agreement signed by both parties;
• terms and conditions of the AFC member (assented to in writing by the charity); or
• a letter or email from the AFC member agreed to by the charity by letter or email. This document is required by the AFC whether or not a firm is required to enter an agreement under the Charities Act 2006.

The agreement should outline what services will be provided by an AFC member or it may simply refer to a proposal and the date of that proposal issued previously. Often a termination date is specified, with the proviso that the parties can agree a renewal. Sometimes the agreement is stated as being in force until terminated by either party.

The agreement should set out the fee; sometimes an hourly, daily or other rate; or alternatively a set fee for a specific task. All expenses for which a consultant proposes to charge should be included in the document. This would include where appropriate: a mileage rate, travel, accommodation and subsistence etc. The document should specify when fee and expenses payments are due, and how they should be paid.

The document should also provide for:

• A regular review meeting.
• An ability for either party to require a review.
• A provision to terminate a contract in addition to the termination date described above. This should allow both the consultant and the charity to terminate an agreement with a reasonable period of notice, and also an ability to terminate where the consultant is not able to provide the service (e.g. staff problems) and where fees are not being paid on time.

“Professional fees payable for services rendered by members will not be calculated as a percentage of the amount raised, either on a commission or contingency fee basis. This commercial approach is a disincentive to giving, does not properly reflect the value of the service provided and encourages opportunistic and damaging fundraising practices.”

Many potential clients often ask us if it is possible for fees to be paid on a commission or contingency basis – calculated as a percentage of the amount raised. This query is understandable, particularly where a charity is strapped for cash.

If a fundraising consultant is paid as a percentage of an amount given by a donor, it increases the chances of a donor having a negative reaction – he or she may feel they are paying the salary of a fundraising consultant without reference to the value of that service. However if a fundraising consultant is paid on the basis of hours of input and of expertise, it is more likely to be seen as a normal professional cost in the same way as the fees of other professionals engaged by the charity.

It is almost impossible to value the input of a consultant by commission. A donation may be the result of the long-term teamwork of many people within the charity rather than specifically the fundraising consultant. The task of a fundraising consultant is not to ask for money, but to structure a campaign that the charity can implement successfully. The only fair method for the consultant, the charity and the donor, is for an agreed fee to be paid to the fundraising consultant based on their input.

Payment by commission can easily be interpreted (rightly or wrongly) as excessive remuneration. Paying a consultant by commission can also lead to internal dispute and tension involving trustees, officers and volunteers of the charity. If a consultant is paid by commission where trustees and volunteers are fundraising without payment, there is potential for ill-feeling. However if a fundraising consultant is paid for the number of hours of input, on the same basis as officers and other consultants and suppliers, there is less room for problems to arise.

Payment by commission could also encourage bad practice involving advice given under pressure or incorrect advice, putting personal gain ahead of the charitable interests of the donors, the charity and the beneficiaries.

“Members will honour the confidentiality of information to which they are privy when serving clients.”

A fundraising consultant comes into contact with a lot of information about a client. This does not just apply to tangible issues such as finance, future planning, trustees, staff etc., but also the intangible such as internal tensions and politics.

Maintaining confidentiality can be a practical problem for a fundraising consultant when issues arise between the fundraising consultant and the client. At all times, the fundraising consultant must bear in mind the need for a professional approach.

Pursuing a policy of confidentiality is vital to client confidence, not only the current client, but also future clients, who will expect the same treatment, and would be disconcerted by any rumour or publicity which indicates that a fundraising consultant has breached confidentiality.

“Members will take care to avoid any conflict of interest in the provision of service to clients.  All financial relationships between Members and their clients and other involved parties shall at all times be transparent to those involved. Members, who are providing advice to their clients about the purchase of goods and services and recommend particular suppliers, will not accept payment from those suppliers for being so recommended.”

This seems to be an obvious statement, but its application is not always straightforward.

One factor that needs to be taken into account is whether by acting for a particular client, the fundraising consultant is creating a potential problem for another of his or her clients. For example, the fundraising consultant may be advising two churches, schools, museums or theatres in the same area; or there may be two similar clients at opposite ends of the country, both of which might apply to the same very restricted source of potential funding.

The best course of action is transparency. Both the existing client and the potential new client should be given full information about the fundraising consultant’s role with the other relevant clients at the earliest possible opportunity. If either objects, the fundraising consultant needs to think again.

Fundraising consultants are often asked for advice about possible suppliers. It is perfectly reasonable for a client to ask, and part of the fundraising consultant’s professional role is to answer to the best of their ability based on knowledge acquired while advising other clients.

Any advice must clearly be based on previous experience – and no pressure should be applied. It may be helpful if the client considers not only the consultant’s recommendation but also looks at other alternatives. In all cases, the fundraising consultant must not accept payment from any suppliers in return for any recommendation.

If you have any comments about this article, or would like to discuss any of the issues raised, please contact Stefan Lipa at Stefan Lipa Fundraising Consultancy on 01256 698090 and enquiries@stefanlipa.co.uk or visit www.stefanlipa.co.uk. You can also follow us on Twitter @StefanLipa and LinkedIn.