Contingency Fees

A Violation of the Ethical Code

We all understand that grant writing is risky – many hours are spent researching and writing proposals with no guarantee of success.  Some organizations believe that it is a standard practice to pay a consultant on a contingency basis (i.e., if the grant is funded, the consultant is paid).  This is incorrect.  Consistent with both the Grant Professionals Association and the Association of Fundraising Professionals Codes of Ethics, our members are not allowed to work on a contingency basis.  Not only does this practice violate the Codes of Ethics, nearly every government agency and most foundations do not allow the practice.
 
Most government agencies and foundations state in their guidelines that they do not fund pre-award costs.  Therefore, all costs associated with the preparation of the proposal cannot be paid from grant proceeds.  Some organizations will "hide" this payment under inflated costs for project management or evaluation – a practice that no Code of Ethics could ever endorse.
 
Finally, from a financial perspective, hiring a grants professional on a contingency basis can cost your organization a lot of money.  Those grant writers that charge on a contingency basis usually charge 10% on grant award over $100,000 and 15% (or more) on grants under $100,000.  In real terms, using a government grant as an example, with a $600,000 award spread over three years, the consultant's contingency fee would be $60,000 (or $20,000 per year).  Consider that the average federal grant takes approximately 60 hours (or more, depending on the complexity) to write.  Using the contingency example, the grant writer would be paid $1,000 per hour – far above the industry norm, not to mention unreasonable!