The Dilemma of Fundraisers Consulting as a Side Hustle

The fact is that the best fundraisers are in high demand. These professionals know the art and science of cultivating, stewarding and, most importantly, making the right ask at the right time to the right person for the right reason. I recently had several development directors asking me about consulting. It's not to say that these directors are looking to leave their positions, but they wanted ideas about how to do it as a side hustle. 

The questions the development directors asked me about consulting as a side hustle caused me to consider three critical things concerning the profession:

1. Why do a side hustle if the salary earned is competitive?
2. How success fees can incentivize all fundraisers. 
3. Is it ethical to have a job as a fundraiser and a consultant?

Let’s explore these three aspects of becoming a consultant when someone is already employed as a development director.

1. Compensation: Balance the Financial Rewards

It’s long been known that there’s high turnover in the nonprofit industry. Regarding professional fundraisers, the best ones can quickly get recruited to higher-paying jobs. Unfortunately, one of fundraisers’ biggest complaints in the sector is that they're asked to work long hours and always have to compete against a financial goal. Still, unlike salespeople, they don't get the financial rewards.

The counterpoint is that working in the nonprofit sector (i.e., for social good) should be rewarding enough. That's an excellent idea, but it's a dated argument. The fact is that people do have the right to be paid a competitive salary, and many nonprofits don't do that. Increasingly, nonprofits compete against for-profit organizations that do social good, make a profit and pay their employees well. 

Undoubtedly, a motivating factor for any worker is money. At times, development directors find themselves loving the missions of their organizations and not wanting to leave their jobs. So, they remain at organizations they love but feel the need to add to their work with a consulting side hustle to earn the money they genuinely need to provide well for their families. 

2. Bonuses: Align the Incentives for All

Nonprofit boards and executives have long leaned on the argument that they don't have to pay their teams a competitive salary because there should be fulfillment in the fact that workers are making a social impact. However, we know that that idea doesn't hold in today's world, and money is, in fact, a motivating and necessary factor for workers. So, how can nonprofits balance being lean and effective and providing their workers fair compensation?

One of the biggest things I always advocate for is bonuses or incentive compensation. I realize this seems to go counter to the Association of Fundraising Professionals Code of Ethics. Their code of ethics states: “Members shall not accept compensation or enter into a contract that is based on a percentage of contributions; nor shall members accept finder’s fees or contingent fees.” This is something that nonprofit boards have leaned on against success fees.

However, nonprofits can reward employees for the success of their work and that of their team and the entire organization. The code also states, “Members shall be permitted to accept performance-based compensation, such as bonuses, only if such bonuses are in accord with prevailing practices within the members’ own organizations and are not based on a percentage of contributions.” In other words, compensation can be structured to pay employees a fair and competitive wage so long as it’s not a percentage of donations. 

3. Ethics: Obligation to the Nonprofit

That brings me to my third and final point: What a director of development owes a nonprofit. As fundraisers, we know that donors give to the organization, and the fundraiser's role is to serve as the conduit. Often, there's a perception that fundraisers carry a little black book of contacts that they can open up and give to nonprofits. That's not how it works. Donors aren't on speed dial to support causes. They fund what they want to support.

So, what if a nonprofit development director needs to earn more but loves an organization's mission? Should the fundraiser leave? I would say no. Nonprofits need top fundraisers. However, if a nonprofit doesn't pay a competitive salary for whatever reason, a worker still has the right to earn what they need to provide for themselves and their family. Still, taking a consulting gig can raise questions of divided loyalties or conflicts of interest.

Transparency is critical if a nonprofit development director wants to have a consulting side hustle. It's essential to communicate it to executive directors, and on the other hand, executive directors have to accept the additional work, especially if the organization isn’t paying a competitive salary. Clear boundaries need to be established. And if there’s any question ever about donors or work time, it’s essential to have transparent and open conversations. 

I believe a consulting gig for fundraisers who also work directly for a nonprofit is fine, but context and transparency matter. If they love the nonprofit where they work, but they're not paid a competitive salary, there's no reason they can't have a side hustle so long as there's no conflict with donors or work hours. 

For a nonprofit, however, adding bonuses or incentive compensation for fundraisers is an excellent way to keep them focused exclusively on the nonprofit while paying them a contingent pay based on successful performance. In short, a mutually beneficial relationship can be done to benefit a fundraiser and also a nonprofit.

The preceding post was provided by an individual unaffiliated with NonProfit PRO. The views expressed within do not directly reflect the thoughts or opinions of NonProfit PRO.