Most fund raising
consulting firms charge on a flat fee basis, based on time and
service provided. Most will not accept assignment on contingency
or percentage basis. Capital Quest subscribes to the industry’s
Code of Professional Ethics and, therefore, does not charge on a
percentage basis.
We, and most other firms, do this for three
specific reasons:
1. Ethics. Virtually every major
association or professional organization associated with fund
raising prohibits consulting firms from charging a percentage of
the funds raised. As a member of many of these groups, most firms,
including Capital Quest, subscribe to these ethical prohibitions.
2. Clients Best Interest.
Organizations need to realize, especially small and medium size
groups with little experience, that there is simply no way a
charity can hire someone to "do" their fund raising. A major
campaign requires the cooperation of the Board of Directors,
Senior Staff, Community Volunteers and Professional Fund Raisers.
When a consultant charges on a percentage basis, often times
volunteers are less motivated to follow the advice of counsel. The
focus of the campaign too easily becomes "well, of course you want
me to make that visit - you’ll make money" instead of a team work
approach that will further the mission of the group.
Additionally, a percentage fee will often
lead a client to pay much, much more than necessary in a
successful campaign. Generally a small or medium size campaign
should have total fund raising costs between 10 and 15 percent of
the goal. A successful campaign (one that raises more than the
goal) should have the effect of lowering the percentage spent on
the campaign - again increasing the motivation of volunteers to be
involved and committed to the campaign.
3. Long Term. As fund raising counsel
we should focus on the long-term fund raising needs as well as the
immediate goals of the campaign. When paid as a percentage of
"cash in the door", counsel will have a tendency to focus on the
short-term cash needs and not build the long-term programs and
cultivation vehicles necessary to insure successful fund raising
in the future.
This said, there are some generally
acceptable ranges for total costs of a capital campaign. There are
generally two types of costs associated with a professionally
directed capital campaign.
Operating Costs :
These are costs that are incurred whether counsel is used or
not and include such things as printing, postage, video,
meeting hall, secretarial, transportation, etc. These are the
expenses that the donors and leaders see and rely on to be
successful.
Service Fee :
The second cost is the service fee charged by campaign counsel
to manage, direct and lead the campaign to success. Most
respectable consulting firms charge on a fee basis based on
the time, service, and expertise required to complete a
campaign.
For a campaign with a goal of up to
$1,000,000, the total costs would probably range from 10 to 15% of
the goal. It would generally take between six months and one year
to conduct this type of campaign.
For a $1,000,000 to $2,000,000 goal, the
costs would be 7 – 10%. It would generally take between eight
months and a year and a half to conduct this size campaign.
Above a $2,000,000 goal, the costs might
equal 4 – 8%. It would generally take over 18 months to conduct
this type of campaign.
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