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Nonprofit organizations rely on volunteer efforts and donor contributions, so they often need help raising the support they need. Fundraising consultant businesses help nonprofits develop and implement strategies that raise support.
The National Center for Charitable Statistics reports that there are over 1.5 million nonprofit organizations in the United States. With so many nonprofits, there is a significant demand for consulting services.
Who is this business right for?
Anyone who is passionate about serving the public good may enjoy running a fundraising consultant business. Though they are private business owners, consultants work closely with organizations that help others.
What happens during a typical day at a fundraising consulting business?
Fundraising consultants spend much of their time strategizing with leaders of nonprofit organizations. Depending on where in the consulting stage they are, a consultant might spend their day:
- Discussing an organization's challenges, needs, and past efforts with leaders
- Privately developing a strategy to address an organization’s challenges and needs
- Collaboratively reviewing and revising a strategy with leaders
- Implementing a strategy, which may include coaching or training an organization's members
Much of this work is done in meetings with either one person or a small group of people. In the final stages of the process, consultants might present strategies and ideas to larger groups.
What is the target market?
Fundraising consultants work for nonprofit organizations of all sizes and in all areas. After all, most nonprofits would benefit from raising more money.
How does a fundraising consulting business make money?
Fundraising consultant business owners make money by charging for the time they spend helping a nonprofit organization.
As consultants Linda Lysakowski and Mazarine Treyz explain, nonprofits will sometimes offer a percent of the total funds raised as compensation. Commission-based compensation structures should be avoided, however, because they’re considered unethical. When presented with such an offer, consultants should explain they charge for the time they work.
What is the growth potential for a fundraising consulting business?
Many fundraising consultants work only for themselves, but a few grow their businesses to include more people. Campbell & Company and Graham-Pelton are a couple larger businesses that have a few dozen consultants. Amy Eisenstein has a one-person business.
What are some skills and experiences that will help you build a successful fundraising consulting business?
Because they will be helping others strategize and plan successful fundraising events, fundraising consultant business owners must be experts in the field of nonprofit fundraising.
When becoming an expert, there’s no substitute for real-life experience. Fundraising consultants should have years of experience working as a fundraiser for a nonprofit before striking out on their own. Having experience will give consultants credibility and help inform their strategies when working on challenging problems.
In addition to working as a fundraiser, business owners should also read extensively on the topic and attend training sessions led by others in the industry. Books, like The Generosity Network and Nonprofit Fundraising 101, explore relevant topics in depth. The Association of Fundraising Professionals has a number of events, webinars, conferences, courses, and other training opportunities that cover many different topics.
What are the costs involved in opening a fundraising consulting business?
The costs associated with opening a fundraising consultant business are minimal, for consulting doesn’t require specialized equipment. Business owners need marketing materials, a computer, a phone, and a mode of transportation. Most business owners already have what they need aside from the marketing materials.
What are the steps to start a fundraising consulting business?
Once you're ready to start your fundraising consulting business, follow these steps to ensure that your business is legally compliant and avoid wasting time and money as your business grows:
- Plan your business. A clear plan is essential for success as an entrepreneur. A few important topics to consider are your initial costs, your target market, and how long it will take you to break even.
- Form a legal entity. Establishing a legal business entity prevents you from being personally liable if your fundraising consulting business is sued.
- Register for taxes. You will need to register for a variety of state and federal taxes before you can open for business.
- Open a business bank account. A dedicated checking account for your fundraising consulting business keeps your finances organized and makes your business appear more professional to your customers.
- Set up business accounting. Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
- Obtain necessary permits and licenses. Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
- Get business insurance. Insurance is highly recommended for all business owners. If you hire employees, workers compensation insurance may be a legal requirement in your state.
- Define your brand. Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
- Establish a web presence. A business website allows customers to learn more about your company and the products or services you offer. You can also use social media to attract new clients or customers.
Select your state below for an in-depth guide on completing each of these steps in your home state.
Where can I find a business mentor?
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
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What are some insider tips for jump starting a fundraising consulting business?
What previous clients have to say about a fundraising consultant business greatly influences the business’ future success. Satisfied clients can provide referrals, while displeased clients may have negative comments that damage a business’ reputation beyond repair.
The best way to avoid unhappy clients is to set expectations before working for a client. Some nonprofits expect a consultant to come and solve all the organization's fundraising woes or do all the required work. Consultants can’t simply wave a magic wand and say a few special words to fix problems, though. Instead, they should clearly state what they’re able to do up front so the client knows what will be done.
How to promote & market a fundraising consulting business
Marketing efforts for a fundraising consultant business should focus on establishing the authority of the consultant, for the consultant's expertise is what clients pay for. Consultants can grow their reputation by speaking at events, publishing books, and offering basic training programs.
Becoming a member of the Association of Fundraising Professionals also provides credibility.
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How to keep customers coming back
Fundraising consultants can set themselves apart from other experts by specializing in some way. Consultants might focus on serving nonprofits of a certain size, nonprofits within a particular region or nonprofits in a particular field.
How and when to build a team
Many fundraising consultants have successful careers without ever hiring an employee. Those that do decide to grow their business beyond what one person can do typically hire an administrative assistant and then another consultant. These hires are made when the workload requires extra help and revenue supports employees’ wages.
State & Local Business Licensing Requirements
Certain state permits and licenses may be needed to operate a fundraising consulting business. Learn more about licensing requirements in your state by visiting SBA’s reference to state licenses and permits.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, check out our informative guide, Sales Tax for Small Businesses.
For information about local licenses and permits:
- Check with your town, city or county clerk’s office
- Get assistance from one of the local associations listed in US Small Business Associations directory of local business resources.
How much can you charge customers?
Fundraising consultants frequently charge by the day or hour. Consultant Tony Poderis reports that daily rates for experienced consultants range from $500 to $1,500-plus per 8-hour day. Hourly rates can run between $100 and $125 per hour.
What are the ongoing expenses for a fundraising consulting business?
There aren’t many ongoing expenses for a fundraising consultant business. The main costs include marketing and transportation expenses.
How much profit can a fundraising consulting business make?
A fundraising consultant business can earn a significant annual revenue. Working only 1,200 billable hours each year, a consultant could earn $75,000 (based on a $500 per 8-hour day rate). Consultants who work more or charge over $500 per day can see six-figure annual incomes.
How can you make your business more profitable?
Some fundraising consultants expand their business by adding other nonprofit consulting services. For example, Campbell & Company also assists with executive searches, communications and strategic decisions.