Avoiding Unethical Pay Structures: A Guide for Grant Writers + Nonprofit Professionals

Avoiding Unethical Pay Structures: A Guide for Grant Writers + Nonprofit Professionals

As a grant writing coach, sometimes I think that I have heard it all between my own personal experiences and the stories that my students relay to me. “Sheleia, I need a grant writer; how can I guarantee they will win an award before I hire them?” Or, “I’ve paid this grant writer thousands of dollars, It’s been almost a year, and they never sent me a submission receipt or let me know if I won anything. What should I do?

In starting my own company, I’ve had to learn my boundaries and identify not only what I do but what I don’t do as well. I, a young, Black, woman, have had to ensure that my time and talent are reciprocated through my company’s cost structure. I’ve had to answer, time and again, every grant writer’s most dreaded question: will you consider being paid according to the amount of funding awarded? 

Ahhh, the age-old dilemma of commission-based compensation: it’s a common pay policy, often seen as an incentive to increase worker productivity and the organization’s bottom line. Simply put, commission- or contingency-based pay is receiving compensation based on a favorable outcome regardless of the work required to achieve it.

While this popular fee structure may be acceptable in the for-profit sector, it raises some ethical issues in the nonprofit industry, specifically for grant professionals. Here are some reasons why it causes more harm than good: 

Grant Writers Deserve Trust

Grant professionals have no DIRECT control over whether you win an award or not. Any good grant writer is going to submit the grant as well as they can, and that will not dictate if the funds are awarded or not. A well-written grant is only one piece of the puzzle, and often the success or declination of a proposal is based on things like available funds, funder interests, lack of organizational readiness, et cetera.

Grant professionals, especially independent consultants, should not work for free. So, winning grants by nature, is a risky business. Because there is no guarantee of funding (regardless of a stellar proposal), nonprofits often think that commission-based pay is the way to go because they will not have a lot of financial liability. While this is half-true, it still poses the risk of leaving the grant writer uncompensated for their time, expertise, and effort due to decisions beyond their control.

On the flip side, winning a grant that you agreed to pay commission on can cost you more than what you bargained for. Let’s say you’re applying for a $500,000 grant and offer to pay the grant writer 5% if awarded. That’s a $25,000 bill! I know this is extreme, but you get my point. This type of large payout can be tempting, and if the grant writer does not uphold ethical grant-seeking practices, they could falsify information (like padding your key performance metrics to make funders think you are reaching more people or making more impact than you actually are) in your proposal for the sake of upping your chances of winning the award. 

Furthermore, it might be months before the funds are distributed. And, they’re likely not covering the grant writer’s fees. 

Unless explicitly stated, most funding opportunities do not cover compensation for grant writers. Funders are against covering fundraising expenses like hiring a grant writer. So, “putting a little money in the project budget to hire a grant writer,” is downright dishonest. Funders can revoke a your grant award for unauthorized spending: as in, using grant funding to underwrite costs that are not identified in the grant agreement. If you spend it on things like this that aren’t approved in your grant agreement without their consent.

Generally Accepted Accounting Principles (GAAP) standards state that fundraising services must be paid for at the time the services are provided. This means that a grant writer’s compensation should not and cannot be contingent on a grant award (or amount of the award).

Contrary to popular belief, contingency/commission compensation practices are frowned upon and strictly prohibited among industry associations like the Association for Fundraising Professionals and Grant Professionals Association.

So by now you’re probably thinking: “Ok, Sheleia, but our nonprofit is a start-up, and we run a small operation; how else can we get grants if we can’t pay commission?” Have no fear! Let’s explore some equitable alternatives:

  • Advocate with aligned grant-makers to offer more grant opportunities for general operating or capacity-building support. These types of grants are great for hiring a grant writer because they are specifically for helping your organization become more efficient and sustainable. 
  • Rally your board members to secure the financial resources to bring on a consultant to build your grant-seeking capacity and other fundraising needs.
  • Seek out grant-makers with special capacity-building programs that will pay for grant writing support at no cost to you. 

Developing competitive grant proposals takes time, and time IS money. An ethical, quality grant writer will deliver a compelling proposal in exchange for a fair fee (project- or hourly-based), and will likely ask for a down payment up front. As practitioners of trust-based philanthropy, we often find ourselves holding funders accountable, but we must also ensure to practice what we preach and ensure equality in our pay practices. 

Sheleia Phillips, MPH, CHES is the Founder and Principal Consultant of SMP Nonprofit Consulting. A servant leader, Sheleia has dedicated herself to the growth and development of nonprofits for the past five years. As a Grant Writer and Fund Development Consultant, Sheleia has secured over $3 million dollars in grant revenue for youth development, education, and health programs.

To learn more about Sheleia’s work and experience, read her full bio.

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