How to Contract with an Independent Consultant for Your Nonprofit - dummies

How to Contract with an Independent Consultant for Your Nonprofit

By Stan Hutton, Frances Phillips

You need to have a signed contract with every consultant with whom you work for your nonprofit. It’s a good idea to have a basic understanding of what these contracts should look like. These points should be clearly stated in the contract:

  • The scope of work and expected results: You can include more or less detail here, depending on the type of project. If you’re hiring the consultant to facilitate a one-day retreat for your board of directors, be sure that the contract includes the preparation time needed.

    Also, will the consultant be writing a report after the retreat? Try to touch on as many details as possible. The more specific, the better. Sometimes if the scope of work is very detailed, that detail is included as an attachment to the main part of the contract.

  • Fees, of course: Some consultants charge an hourly rate plus expenses; others charge a flat rate that may or may not include expenses per project. The contract should state that you must approve expenses over a certain amount. Or you can write into the agreement that expenses are limited to a certain sum each month.

    Consultant fees vary, just like salaries, from one geographic area to another and depend on the type of work to be done and the consultant’s experience.

    Don’t pay fundraising consultants a percentage of money raised. Although some consultants, grant writers, and, in particular, telemarketers work under this arrangement, percentage payment isn’t considered good practice by most fundraisers and nonprofit managers. See the Association of Fundraising Professionals’ code of ethics for more information about this issue.

  • The schedule of when you’ll pay the fees: Some consultants who work on an hourly basis may send you an invoice at the end of the month. Consultants working on a flat-fee basis may require advance payment on a portion of the fee. This is fine. It’s protection for the consultant, who probably has as many cash-flow issues as you do.

    The final payment shouldn’t come before the project is completed. Be sure to ask the consultant for an estimate of her out-of-pocket expenses and how she plans to bill you for such costs.

  • Special contingencies: What if the consultant gets sick? What if your organization faces an unforeseen crisis and you don’t have time to work with the consultant? What if you’ve chosen the wrong consultant? You should include a mutually agreed-upon way to end the contract before the project is completed. A 30-day cancellation notice is common.

  • A timetable for completing the work: You and the consultant need to negotiate the timetable. Have you ever had remodeling work done on your house? You know that contractors can get distracted by other work, right? That’s why having a schedule is so important.

  • The organization’s role in the project: If the consultant needs access to background materials, records, volunteers, board members, or staff, you must provide this access in a timely manner so the consultant can complete the job on schedule.

  • Required insurance: What if your consultant injures someone while working on your project? If she’s not insured, the liability could become your organization’s responsibility. Just to be on the safe side, many consultant contracts include standard language about the consultant’s responsibility to carry liability insurance and pay workers’ compensation insurance and other legally required benefits if the consulting company has employees who will be working on your project.

  • Ownership of the finished product: This point doesn’t apply to every consulting project, but if yours focuses on developing a study or report, specify in the contract whether your organization, the consultant, or both have the rights to distribute, quote, and otherwise make use of the results.

    Often the organization has the right to publish and produce the report if it gives proper credit to the author, and the consultant owns the copyright and has permission to make use of lessons learned in articles or future studies. Sometimes you agree to seek approval from one another before using the work.

Having the consultant prepare the contract is a good idea. It’s the final chance to make sure he understands what you want done. You may suggest changes when you see the first draft.