Questions to ask before hiring a professional fundraiser

If your nonprofit organization is planning a fundraising campaign, you may be thinking about hiring a professional to do the work. Professional fundraisers conduct the campaign for a fee; often it’s a percentage of the money they collect.

Because the fundraiser will be representing your organization to the public, it’s important that you thoroughly investigate every firm you’re considering hiring. Inappropriate behavior can result in negative publicity, fewer or smaller donations and possible legal action involving you and the fundraiser if the law is violated. To avoid these problems, please review the following information before hiring a professional fundraiser.

How to Choose A Fundraiser:

Some basic research will go a long way to ensure you are working with a reputable fundraiser. Contact other nonprofit groups in your area for information and referrals — especially colleges, hospitals and cultural organizations. You also may want to contact the Pennsylvania Department of State’s Bureau of Charitable Organizations (Bureau), toll-free within Pennsylvania, at 1-800-732-0999. The Bureau can provide information on fundraising activities conducted by registered paid solicitors on behalf of charitable organizations in Pennsylvania. (You can also contact your local community fund or an association of professional fundraisers in your area. Likewise, the Better Business Bureau should be contacted to inquire if any complaints have been filed against the solicitation firm.)

Questions to Ask the Fundraiser:

How would they conduct your campaign?

Would they solicit by phone, mail, door-to-door or a combination of approaches?

Would they solicit only money, or would they also sell products or tickets to events?

What portion of the cost would actually come back to your organization? Beware of companies that promise something for nothing or “easy money.”

Would subcontractors be used for any part of the campaign?

How would the fundraiser make sure its telephone solicitors follow the approved scripts?

Be clear that while the fundraiser would conduct the campaign, you would maintain overall control and expect the fundraiser to provide periodic financial reports.

Ask to see financial data from other campaigns to get a picture of their success rate.

Is the solicitor registered or bonded? In Pennsylvania, professional fundraisers conducting charitable solicitations are required to register with the Bureau and maintain a $25,000 bond.

Ask for bids. A reasonable bid is determined by considering all the factors involved — the time and type of labor involved, the nature and duration of the relationship between fundraiser and client, and the ability and experience of the fundraising firm.

Negotiating the Fundraising Contract:

Once you’ve selected a fundraiser, work out the details of the written campaign contract. This protects you as well as the fundraiser. The contract should:

include the legal names and addresses of all parties to the contract;
describe the services to be provided and the financial responsibilities of each party;
address the use of subcontractors;
enumerate the compensation to be paid to the solicitor — a flat fee and/or a percentage of the money collected;
require that the fundraiser use only material reviewed and approved by your organization when contacting the public, especially telemarketing scripts and printed materials mailed to donors;
make sure solicitation materials comply with Pennsylvania laws — Pennsylvania requires that professional solicitors conducting charitable solicitations make certain disclosures,
including that a telephone solicitation is being conducted by a professional fundraiser — descriptions of your organization, what it does and how the funds solicited will be used
should be accurate, as should representations about the tax deductibility of a donation;
specify the contract period, including the closing and settlement dates;
outline cancellation criteria for both parties; and
require the fundraiser to provide detailed reporting of results throughout the campaign and at its end, including penalty provisions should the fundraiser violate any provisions of the contract or state regulations, make sure that all donor checks are made out to your organization, not the solicitor — do not allow the solicitor to endorse checks — and review sales and other financial records on a regular basis, perhaps weekly.

It is important to specify ownership of donor lists in the contract. Typically, these lists belong to the nonprofit. If you retain ownership and decide to offer your lists for rental or exchange, consider the privacy of your donors. You may want to offer donors the opportunity to opt off lists you furnish to outside mailers and phone solicitors.

Monitoring the Fundraising Campaign:

Even though you’ve hired a professional fundraiser to conduct a campaign, you are responsible for the actions taken on your behalf. Therefore, regular supervision of the firm throughout the campaign is a must.

If you’re conducting a telemarketing campaign, insist that the fundraiser institute a system for training and monitoring solicitors to make sure they are following the authorized script. One method is to call back donors at random to verify the conversation. Another method is to conduct random unannounced inspections of the phone rooms to monitor the activities of the solicitors. Provide the telemarketer with answers for commonly asked questions about your organization and a telephone number and address where a representative of the organization can be contacted to answer questions and receive complaints.

You also should closely track complaints from the public. If a problem develops, review the area that’s causing confusion or concern and discuss ways to resolve the issue with the fundraiser.

During the campaign, keep tabs on the flow of money. Make sure you receive copies of original invoices as received, paid receipts as paid, bank statements, checks and deposit slips. Monitor all expenses to be sure they are reasonable and ordinary. Immediately question any expenses that appear excessive or for which there is lack of documentation. Your organization will be held responsible to account for all funds raised by the solicitation.

Several private nonprofit organizations promote standards in philanthropy to evaluate the performance of public-service groups. These standards include guidelines about the use of professional fundraisers. For more information, contact:

Philanthropic Advisory Service Council of Better Business Bureaus
4200 Wilson Boulevard, Suite 800
Arlington, VA 22203-1838
(703) 276-0100
www.bbb.org

National Charities Information Bureau
19 Union Square West, 6th Floor
New York, NY 10003-3395
(212) 929-6300
www.give.org

American Institute of Philanthropy
4579 Laclede Avenue, Suite 136
St. Louis, MO 63108-2103
(314) 454-3040

Pennsylvania Department of State Bureau of Charitable Organizations
P.O. Box 8723
Harrisburg, PA 17105
1-800-732-0999 (toll-free within PA)
http://www.state.pa.us/PA.Execl/State/