The Philanthropic-Consultant Industrial Complex
Rather than supporting nonprofits, foundations and consultants are increasingly telling nonprofits what they should be doing.
It’s the relative size and the shifting center of gravity we’re concerned about.
You’ve probably heard of the 5% payout requirement for foundations… but most people mistakenly believe this means that foundations must grant out 5% of their assets each year. Actually, foundations must spend 5% of their assets each year… which can include their own salaries, office rents, and so forth.
But perhaps the least examined of all foundation spending is what they spend on consultants, such as consultants to themselves and their initiatives, contract staff, consultants to nonprofits (the $200K strategic planning grant that goes 100% to the consultant, none to you), and so forth.
In fact, in the blink of 15 years, we’ve gone from a time when there was hardly any nonprofit infrastructure support to one where it feels as if the infrastructure — we coined the term Philanthropic-Consultant Industrial Complex — outweighs the nonprofits doing the actual work.
Even more than the money, the philanthropic-consultant infrastructure is changing who’s running the show: rather than supporting nonprofits, foundations and consultants are increasingly telling nonprofits what they should be doing.
(Of course we recognize the value of infrastructure… Blue Avocado is even part of that infrastructure. It’s the relative size and the shifting center of gravity we’re concerned about here.)
These days when a foundation announces it is starting an initiative for low income seniors, we now assume that much of the money will go to regrantors, researchers and consultants rather than to on-the-ground nonprofits and the seniors themselves.
And doesn’t it sometimes seem as if the best and the brightest young people in the nonprofit sector want to be foundation program officers, consultants, or donation app makers? To tell the truth, we have enough program officers, enough (so often unsatisfying) consultants (really!), and enough start-up apps.
We don’t have enough people who aspire to run homeless clinics or foster care homes, to raise money for ethnic theaters or rights for prisoners, to be teachers rather than program officers making grants in education.
Our sector is in danger of hollowing-out. In fact, innovation comes from the ground up, and that’s also where the real work takes place. Let’s start by honoring, celebrating, and paying more to the people on the ground above how much we honor and pay the people in the infrastructure.
Grantmakers and consultants: are you listening?
You made it to the end! Please share this article!
Let’s help other nonprofit leaders succeed! Consider sharing this article with your friends and colleagues via email or social media.
About the Author
Jan is a former editor of Blue Avocado, former executive director of CompassPoint Nonprofit Services, and has sat in on dozens of budget discussions as a board member of several nonprofits. With Jeanne Bell and Steve Zimmerman, she co-authored Nonprofit Sustainability: Making Strategic Decisions for Financial Viability, which looks at nonprofit business models.
Articles on Blue Avocado do not provide legal representation or legal advice and should not be used as a substitute for advice or legal counsel. Blue Avocado provides space for the nonprofit sector to express new ideas. The opinions and views expressed in this article are solely those of the authors. They do not purport to reflect or imply the opinions or views of Blue Avocado, its publisher, or affiliated organizations. Blue Avocado, its publisher, and affiliated organizations are not liable for website visitors’ use of the content on Blue Avocado nor for visitors’ decisions about using the Blue Avocado website.
64 thoughts on “The Philanthropic-Consultant Industrial Complex”
Leave a Reply
Related Posts
Your site has been very helpful and provided invaluable information to help me keep in touch with ways to measure proficiency of staff. Thanks a million!!!
It is a vexing problem. We need consultants to advise foundations and we need advocates in Washington to persuade elected officials, each carrying the message that there are big problems to be solved in neighborhoods across our nation. But, given the economic reset, we can’t afford to fund the overhead to house the work, or the staff to do the work that everybody is talking about.
Your site has been very helpful and provided invaluable information to help me keep in touch with ways to measure proficiency of staff. Thanks a million!!!
OK…I have been working with nonprofits for 25 years…I did not know it is spending NOT granting. OMG!!!!
Amen — to the editor's note that arrived today.
From an Executive Director working the front lines of domestic violence.
You have struck a chord here. I would also like to suggest more forums where grantmakers and seekers can talk/listen to each other’s passions and concerns. No pitching for dollars, just good honest dialogue.
Love this idea!
Exactly right! I am appalled at the foundation money I continuously see being directed to high dollar consultants that aren't actually addressing the (or any) problems. And like the so-called "military industrial complex" and the "prison industrial complex" and the other "industrial complexes" permeating our world, it appears to most often be about the money and taking care of friends. In the meantime ever more children are sinking into poverty, our battered women's shelters are full, art museums and symphonies are closing their doors and our elderly are making choices between buying their medications or eating. There is a role for non-profit consultants but many have less expertise and training than the people working on the ground. Thank you for finally putting the frustration of so many into words.
I agree totally about all the consultants, program officers, etc. I see more job descriptions from nonprofits that have nothing to do with their missions, but more with overhead. I am so glad you have said what I have been feeling for the last couple of years. The nonprofit sector has seemed more and more about “branding” and “attracting talent” than about what it is they do. The salary divide between the nonprofit “workers” and the administration and consultants seems to parallel that of corporations. I stopped volunteering for one nonprofit when I saw that the administrative costs were huge, but a large portion of the money was going to areas that had nothing to do with programs.
I have enjoyed working with the handful of consultants we’ve worked with over the years, and have learned from many of them, but the galling thing for me is always spending a dollar amount on them for a month that could pay a staff person for a year.
You nailed it Jan!
A proud front line fundraiser
Your thesis is that consultants are running more of the show and this is not healthy.
It has face validity but I think it needs much more backing up.
Let’s see if your readers can sharpen your argument without ranting.
Why have we seen a dramatic rise of the consulting class and how are nonprofit organizations complicit in this empire building?
Without naming names, let’s hear some real stories of how this has played out.
Besides limiting capital to nonprofits, (is it really that much?) how does the philanthro-industrial complex inhibit the growth and development of sector? The loss of grants may be chump-change relative to other burdens born by nonprofits.
How can foundations meet their needs related to research, evaluation, communications, capacity-building, governance, etc. without getting sucked into a consultive vortex from which there is no escape?
About three hours ago I met with the president of a large foundation. He told me the story of how they had a $60 million initiative and spent $12 million on evaluators (a very well known national research institute). The evaluators said that they thought that something had been accomplished but couldn't prove it. He also said that most of the evaluators that they talk to say that a good evaluation costs equal to the amount of the grant, so if they are being ask to evaluate a $5 million grant it will cost $5 million to do an evaluation.
This particular president has now sharply limited spending on consultants, but he's an exception.
I've talked with several nonprofit researchers about quantifying foundation spending on consultants, but all have said that it would require very good cooperation from foundations, something very unlikely to happen.
Thanks for your post, and you're right that I was ranting. It's hard not to, but I could do better. Jan
I’m a young (late 20s) nonprofit professional who has been working on the front lines, except for those 2 years I spent at a top notch grad school. Now, I’m looking to transition into nonprofit consulting to pay back that wonderful graduate degree, even though I’d prefer to stay working directly in the community. Although $40,000 a year at my current job (which required a MA) is a lot more than the $25,000 I made working at a domestic violence shelter right out of college, it still doesn’t cut it. I know I’m not alone. Many of my friends and colleagues struggle, so let’s not forget one major reason why the best and brightest young people don’t work on the front lines. We can’t afford it.
Dear late 20's Anonymous: you're absolutely right. The system unintentionally pays people more who are working in the infrastructure rather than the people working on the work. As a result, that's where people want to go. In the for-profit sector, similarly, people want to be hedge fund managers rather than make better cars and airplanes because it pays so much better. As a result, we have our best yount people figuring out how to squeeze profit out of a few basis points than figuring out how to make better cars. The result has been called the "hollowing out" of American industry.
Our society needs to pay people more who do the work we consider the most important. And although $42,000/year is currently the median household income in the United States, it's not enough even for many individuals. Thanks for your comments. Ja
In my experience, treating infrastructure work as separate from and less important than the “work work” is part of the problem. It has the perverse effect of leading nonprofits to spend more on consultants to support infrastructure because the people “working on the work” don’t care about or have the skills to do the necessary infrastructure work.
Nonprofit organizations need to be accountable for how tax-exempt dollars are spent and to evaluate outcomes. Neither of these tasks is necessarily easy or fun. Unless executive directors and program folks take these responsibilities seriously, develop their own skills to carry them out, and invest time and effort, they’ll end up paying others a lot more to do this work.
Jan, what a spot on post! In addition I have found that if we don't or can't meet the foundations grant making schedule we are out of luck. Unfortunately, life in our part of the real world all too often doesn't run on the same schedule as the grant-makers whose assistance we seek. They have the box well defined – from their perspective – and it we don't fit, tough luck. They are very nice, wishing us well, but funding support? Sorry.ALSO – many don't want to be the first to give grant support, Well, someone has to go first otherwise we are left at the starting gate. Warren
Jan, I LOVED your memo on the Philanthropic-Consultant Industrial Complex. Full stop.
Tricia
A foundation president once wryly told me in regards to foundations: "No one wants to be first on the beach. No one wants to be last on the beach." So, so true. Thanks for writing, Warren. Jan
Jan, what a spot on post! In addition I have found that if we don't or can't meet the foundations grant making schedule we are out of luck. Unfortunately, life in our part of the real world all too often doesn't run on the same schedule as the grant-makers whose assistance we seek. They have the box well defined – from their perspective – and it we don't fit, tough luck. They are very nice, wishing us well, but funding support? Sorry.ALSO – many don't want to be the first to give grant support, Well, someone has to go first otherwise we are left at the starting gate. Warren
Jan, this essay is brilliant. I so love the work you do, have learned much from you and am inspired to continue being one of those in-the-trenches directors who has been complaining about little arts education money going to actual arts for kids for about, oh…a decade or so. So happy to be swimming in your sea.
Patricia
Patricia, thank you for this nice comment. Keep complaining! Education is one of the areas where the amazing amount of money spent on people with MAs and Ph.D.s is considered "funding to education" when almost none of it trickles down to where the work gets done. Jan
Your piece struck a very personal chord with me because until a month ago I was a happily employed though underpaid and undervalued program person – and had been for the past 10 years.
After being laid off I scanned job listings to see if there were other front line jobs for my experience level but unfortunately there were not a lot of options. There were however, consulting offers; offers by organizations that could not afford to pay a permanent staff person but could afford to pay me.
So while I completely agree with your points about “hollowing out” of our sector, I also understand first hand how and why consultants become consultants. And why both foundations and orgs choose to contract consultants and perpetuate this trend.
Let’s not throw away the baby with the bathwater. Many non-profits are careful about how they spend their money – rarely hiring consultants unless there is a true need for a skill not available in the ranks.
Your piece struck a very personal chord with me because until a month ago I was a happily employed though underpaid and undervalued program person – and had been for the past 10 years.
After being laid off I scanned job listings to see if there were other front line jobs for my experience level but unfortunately there were not a lot of options. There were however, consulting offers; offers by organizations that could not afford to pay a permanent staff person but could afford to pay me.
So while I completely agree with your points about “hollowing out” of our sector, I also understand first hand how and why consultants become consultants. And why both foundations and orgs choose to contract consultants and perpetuate this trend.
Painting all consultants as self-serving overpaid lackeys to foundations is as unfair as claiming all nonprofits are poorly run and inefficient. I have worked for social and environmental change my entire career serving as a volunteer, staff person, board member, trainer, conference presenter, university instructor, and for 26 years a consultant. I choose to work mostly with grassroots organizations and share the feelings of many respondents that the foundation game is flawed…and we should work strategically to change the rules. But until that happens, I recommend you 1) Bypass the grants carousel and draw on the passion and donations of your community of supporters; 2) Wisely evaluate if your mission would be advanced by using a consultant to help you solve a problem, learn new skills, provide a neutral voice, or give you another set of hands to get a temporary job done; and 3) Carefully choose a consultant that has a proven track record in the nonprofit sector, understands your needs, timeline and budget, and is a good match with you and your organizational culture. Most consultants to nonprofits do not work with bloated foundations or large firms, or make exorbitant salaries. If they want to do that, they flee to the for-profit sector. Most are sole practitioners who came up through the ranks and feel the best way they can effect change is through the leverage of helping organizations better help their clients. If you are concerned about per hour charges, do some reading and start a conversation with a consultant or two. Like all self-employed people, we pay at least a third of our revenue in taxes, are lucky if we can find or afford health insurance, struggle to provide services (and pay a mortgage or raise kids) without a consistent income stream. I have lived through several economic downturn cycles, and they always bring out a flurry of new consultants — employees who have been laid off, recent grad students who can't find work, and my personal favorite: the for-profit consultant who considers themself supremely qualified because of their for-profit background and thinks there is easy money to be had if they just go find some nonprofit clients. While we still toil under the market system, nonprofits have the power to choose which consultants to hire. And eventually, the community marketplace usually weeds out the ones that don't care about your mission, are incompetent, or charge exhorbitant fees. While we should all advocate for foundation reform, we should also be wise consumers of consulting services when it is the right tool to help us change the world. Diane Brown The Non-Profit Assistance Group www.NonProfitAssistance.com
Thank you Diane, for a thoughtful, fair, and balanced response.
Very interesting post. As a mid-career professional at a nonprofit consulting firms, I’d echo some of the remarks above about the relative attractiveness of jobs “on the front lines” versus jobs in consulting or foundations, especially with respect to compensation, career advancement and the nature of the work. Until nonprofits do a better job of compensating talented people and providing clear pathways for professional development and advancement, they are not going to be appealing to professionals who’ve spent five or six figures on advanced degrees. I’ve seen some programs, often funded by foundations, that attempt to address this and attract folks to “in the field” work (e.g., the Broad Residency). That seems like a promising approach. Nonprofits could ask funders to do more thinking about how to design similar programs across the various sectors within the nonprofit space.
Very interesting post. As a mid-career professional at a nonprofit consulting firms, I’d echo some of the remarks above about the relative attractiveness of jobs “on the front lines” versus jobs in consulting or foundations, especially with respect to compensation, career advancement and the nature of the work. Until nonprofits do a better job of compensating talented people and providing clear pathways for professional development and advancement, they are not going to be appealing to professionals who’ve spent five or six figures on advanced degrees. I’ve seen some programs, often funded by foundations, that attempt to address this and attract folks to “in the field” work (e.g., the Broad Residency). That seems like a promising approach. Nonprofits could ask funders to do more thinking about how to design similar programs across the various sectors within the nonprofit space.
As always appreciate your newsletter! I recommend you to everyone.
Regarding consultants and infrastructure- this may be an issue in state capitals and larger communities but in smaller communities very few nonprofits utilize consultants. We do without the staff AND do with out the consultants – basically we struggle to develop capacity and/or have designated staff to work on planning, fund development, etc. All too often it is just another task added to the Executive Director’s plate. It isn’t done well not because of lack of professionalism, but because choosing between contributing to services today and contributing to the long term success it is so difficult to let go of the today that is shouting for your attention. I have been working all year as an ED to try to work on long term issues with not as much progress as I would like because I have plenty of programming and office management responsibilities. There are no big foundations (just a couple of good ole boy funders), there are no big dollars (for most of us), there are very few well paid consultants in the boonies.
I absolutely agree about the penchant of foundations to spend wads of money on consultants and evaluators, while investing far too little in "on the ground" work. I was once one of a stable of consultants in a statewide multi-year funder-driven initiative that funded over 40 community-based collaboratives. As in many of these initiatives, the vast majority of funding went to us consultants and the evaluators. One consultant in the group referred to it as a "sheltered workshop for consultants":). (However, this didn't stop us from taking the money to earn a living. It is easy to self-justify that funders are going to spend money in this way, anyway, so why not me?) Since I primarily work in economic, health and other social equity, I have long thought that a good metric for BOTH foundations and nonprofits in this field would be how much of the money, over time, is not only invested at the grassroots level, but gets directly into the hands of residents. Shall we say a minimum of 50% to CBOs and similar organizations (since we need structures for activities) and a minimum of 25% directly to residents to use for their priorities? A modest proposal… Molly
Thank you for coining this term & for yet another insightful essay. You have hit the nail on the head. The overabundance of foundation "initiatives" (disconnected from and disrespectful of on-the-ground service workers) is so alarming, and you have sounded the alarm.
I'd welcome an article from Jan on holiday leftovers! Turkey and avocado sandwiches are the feast, but how some nonprofits are surviving these days by utilizing the leftovers.
What can be done about foundations who abuse the intent of the law to direct a large percentage of a modest portion, 5% of their assets to actual charitable program spending i.e., grants to nonprofits and not to high or questionable internal admin costs, self-serving salaries or perks? I understand foundations have some admin and evaluation costs and that occasionally a funder may spend to bone up on an issue or do a self evaluation.
Well, something can be done through the blessing of a vigilant public, responsive nonprofit sector, and the Internet. Why don’t we have an annual contest or prize to nominate those foundations that have the highest pro rata (internal spending to assets or grantmaking) admin overhead, or salaries or perk spending for trustees, or astounding financial or investment management fees?
People could anonymously nominate foundations whose annual reports they have perused and found tangible evidence of possibly extreme spending. (Is there a way to analyze all foundations reports easily?) Nominations would be screened and picked by a small independent group capable of evaluating financial statements. The chosen nominees could then provide an acceptable explanation or be publicized on a web site and in the media. The web site would then offer space by chosen to explain situation or offer to look into issue.
A Floundering Five List or somesuch name. Get it, 5%? The prize for worst would have a catchy name.
The purpose is not to slam any foundation or denigrate the sector or discourage charitable gifting. Rather, to use a little sunshine and social pressure to encourage foundations to be responsive and fulfill their charters. (The foundations are not visibly policing their own! It’s a bit of the Wild West out there.)
Lest we forget, some percentage of funds dedicated to a foundation (and its later income) are sheltered from taxes. So Americans and the US Treasury don’t get tax revenues when private assets are tax-sheltered. Put another way, private and public foundations are effectively subsidized by American taxpayers. The consolation is that foundations will spend for the public good and not just in-house. Let’s help them do that with a nudge from the Prize or List.
Why haven’t we thought of this before? Any volunteers to join this? You can respond, anonymously if you wish, to getgoal1@gmail.com. Who am I? Someone who has been a fundraiser, grants evaluator, community organizer and even a foundation manager. I’m independent, not with any “5%” foundation.
TS
How courageous of Jan to begin a discussion of the elephant in the room! I believe that foundations should fund whatever they want with their money but they ought to consider the unintended consequences. Hollowing out and lack of innovation are among them—my concern is shoving out as foundations increasingly hire their own staff to work in the field and thus shove aside the expertise of nonprofits. Where will the funding come from to develop, test, and refine new programs if foundations are funding only their own causes? Who gets left out when only the “next big thing” receives funding?
I nominate Jan to select 9 other nonprofit leaders who share her concerns to meet with the top 10 foundation funders of nonprofits. Foundations need to hear from our brightest and best about the consequences of the direction they’ve chosen.
Priscilla
Priscilla, thanks for such a kind and thoughtful note. My follow-up question: wouldn't the only foundations that would come to such a discussion be the ones that are already open to these points of view? Jan
That’s the best place to start–with those who are open to these points of view!
Thank you for such a thoughtful and candid opinion piece. As a non-profit consultant, I am definitely listening and have taken the message to heart. However, what I say or believe may influence those within philanthropy, but it won’t change the situation at hand. Those at the highest levels of philanthropy – executive leadership and Board – must absorb this message and take action.
Jan, your post really speaks to me. I’m one a 20-something ED, and I’ve been running a small, established Los Angeles nonprofit since 2005. For the first four years, I received an annual salary of $25k. The work is exhausting, but if I slow down there are very real consequences: clients won’t get services, or staff won’t get paid because I didn’t raise enough money. Our nonprofit has thrived under my leadership and my salary has improved to an extent, but I can’t deny that those well-paid positions at well-endowed foundations are extremely tempting. They call out to me “You will always be paid on time, you will never have to fundraise again, I will give you more money, a retirement plan, and health care. Come to me and you will have the space to relax and think – you can even take a two week vacation.” I think your assessment is spot on. I’m one of those “best and brightest” you talked about, and I’m fighting my selfish urge to take the easy road and become a program officer.
Thanks so much for this latest on the "Philanthropic-Consultant Industrial Complex." I love it and appreciate your calling out this pernicious trend.
Great food for thought. My only concern is the assumption that the best investments in solving community problems is by awarding grants to nonprofits for service. It is important for foundations to use ALL their tools (networks, knowledge, relationships, money, etc) as well as implementing various strategies (research, convening, capacity building, ADVOCACY) to make real, sustainable change.
Great food for thought. My only concern is the assumption that the best investments in solving community problems is by awarding grants to nonprofits for service. It is important for foundations to use ALL their tools (networks, knowledge, relationships, money, etc) as well as implementing various strategies (research, convening, capacity building, ADVOCACY) to make real, sustainable change.
I appreciate the concerns undergirding your editorial about “The Philanthropic-Consultant Industrial Complex”. Consultants have had both positive and negative impacts on organizations they have served. The problem is not the consultants but the purpose for which they are hired. The roles consultants play in the non-profit, for-profit and public sectors defy a single definition. Consultants can be lobbyists, advocates, specialists in specific management disciplines, teachers and trainers, fundraisers, accountants, lawyers, counselors, PR marketers, and the list goes on. Normally, consultants provide a broad range of significant services in all sectors.
Any effective organization whether nonprofit, for profit or public sector, has a strong infrastructure and a built-in mechanism for short term as well as long range planning, and for managing its program/mission activities. However, if needs arise an organization may engage outside expertise to help plan, train and improve its mission-focused functions and processes. The decision to engage a consultant is triggered differently for different organizations and situations. For instance, most organizations that decide to hire a consultant do so because they do not have someone on their professional staff team with the skills and experience to deal with a particular situation or challenge.
The role of a consultant performing such an assignment compares to the role of a mechanic overhauling an automobile…not merely performing maintenance chores like changing oil and rotating tires! Once the overhaul job is completed the owner drives away safely, hopefully, for a long time! It would not make sense for the owner to hire a full-time skilled and experienced mechanic for the overhauling job that is not performed frequently; just as it would not make sense for a nonprofit organization to hire someone with specialized skills and expertise as full-time staff, for services not required on a full time basis. However, all too often an organization may hire contract employees whom they call consultants…but that is another issue for another editorial!
I must add I have performed my share of organizational capacity building consultation work for several small and medium sized nonprofits. Some of these assignments were funded exactly as you describe, where an agency was granted funds with which it purchased my services. In all these cases, the grant-maker felt more comfortable requiring the organizations to develop a strong infrastructure before allocating significantly larger amounts than my consulting fee, for their program services.
For this reason, the statement that “100% goes to the consultant and none to you” is misleading. The organization does receive, or is expected to receive services worth 100% of the allocated grant, paid to the consultant as a fee for services. If the organization does not receive the benefit of the amount allocated and paid to the consultant, it is because the grant was managed poorly or not managed at all. Therefore, and the consultant profession should not be held responsible for the poor oversight and mismanagement of allocated funds in a particular case. We should not paint all consultant activity with such a broad brush.
PS: The 5% issue: Thanks for the usual Blue Avocado fact check…yes, the 5% disbursement requirement is about spending and not about granting. It is good to keep reminding everyone about this fact.
I appreciate the concerns undergirding your editorial about “The Philanthropic-Consultant Industrial Complex”. Consultants have had both positive and negative impacts on organizations they have served. The problem is not the consultants but the purpose for which they are hired. The roles consultants play in the non-profit, for-profit and public sectors defy a single definition. Consultants can be lobbyists, advocates, specialists in specific management disciplines, teachers and trainers, fundraisers, accountants, lawyers, counselors, PR marketers, and the list goes on. Normally, consultants provide a broad range of significant services in all sectors.
Any effective organization whether nonprofit, for profit or public sector, has a strong infrastructure and a built-in mechanism for short term as well as long range planning, and for managing its program/mission activities. However, if needs arise an organization may engage outside expertise to help plan, train and improve its mission-focused functions and processes. The decision to engage a consultant is triggered differently for different organizations and situations. For instance, most organizations that decide to hire a consultant do so because they do not have someone on their professional staff team with the skills and experience to deal with a particular situation or challenge.
The role of a consultant performing such an assignment compares to the role of a mechanic overhauling an automobile…not merely performing maintenance chores like changing oil and rotating tires! Once the overhaul job is completed the owner drives away safely, hopefully, for a long time! It would not make sense for the owner to hire a full-time skilled and experienced mechanic for the overhauling job that is not performed frequently; just as it would not make sense for a nonprofit organization to hire someone with specialized skills and expertise as full-time staff, for services not required on a full time basis. However, all too often an organization may hire contract employees whom they call consultants…but that is another issue for another editorial!
I must add I have performed my share of organizational capacity building consultation work for several small and medium sized nonprofits. Some of these assignments were funded exactly as you describe, where an agency was granted funds with which it purchased my services. In all these cases, the grant-maker felt more comfortable requiring the organizations to develop a strong infrastructure before allocating significantly larger amounts than my consulting fee, for their program services.
For this reason, the statement that “100% goes to the consultant and none to you” is misleading. The organization does receive, or is expected to receive services worth 100% of the allocated grant, paid to the consultant as a fee for services. If the organization does not receive the benefit of the amount allocated and paid to the consultant, it is because the grant was managed poorly or not managed at all. Therefore, and the consultant profession should not be held responsible for the poor oversight and mismanagement of allocated funds in a particular case. We should not paint all consultant activity with such a broad brush.
PS: The 5% issue: Thanks for the usual Blue Avocado fact check…yes, the 5% disbursement requirement is about spending and not about granting. It is good to keep reminding everyone about this fact.
I too can appreciate the concerns represented by many here, but I get weary of people scorning the work of consultants and painting all of those who provide such services as overpaid, ineffective and only out for ourselves. First, I am a nonprofit service provider who earns a living on a self-employed fee for service basis. I chose to become a “consultant” after 15 years in the nonprofit arena because it was the best way for me to use my skills in support of organizations in whose work I truly believe. Like everybody I have every right to earn a living doing what I do best (capacity building) in the community I am passionate about. Second, while some might, not all consultants make $200k on strategic plans. The last two I completed, paid for out of grants from philanthropic foundations, were each 10% or less than that. That is the norm more than the exception. Most years, I have made an annual income no more than I made as a senior staff person in a nonprofit. Third, I found it fascinating that this was written by someone who has spent many years in the infrastructure building business that is enabled by philanthropic foundations. I don’t begrudge CompassPoint’s ability to raise significant funds from foundations in support of its work. I believe that it plays an important role in the ecosystem. As do we all. Finally, I think that our entire nation is reeling from a recession that has far outlived our expectations. The nonprofit sector has been hammered by it and the work is more important now than ever as a result of it. The Occupy Movement has raised our consciences to the fact that a very small percentage is richer than the whole of the vast majority of the population. In this scenario, it appears that the foundations are the 1% and the rest of us the 99%. Foundations certainly have room for improvement, but angry rants and snide comments directed at consultants and philanthropy just aren’t productive. I concur with those who advocate for good honest dialogue in the spirit of better understanding and a desire for change. Let’s put all that leadership development work we’ve done on philanthropy’s dime to good use. Victoria Plettner-Saunders
Victoria, I'm afraid you've missed my point. I value the work of consultants and I appreciate the infrastructure. What I take issue with is that the individual decisions of grantmakers add up in total to an over-investment in the infrastructure compared to investment in nonprofits. I don't begrudge an individual becoming a hedge fund manager; we need a few of them. But we don't need more hedge fund managers than we need people in industry.
A remarkable phenomenon right now is the zillions of fundraising consultants who are under-utilized (under-employed) that exist simultaneously with nonprofits unable to find development staff. This says a lot about how the individual choices people make (because the incentives are wrong) lead to an imbalance. We need zillions of fundraising staff and a few consultants, not the other way around.
Thanks for writing, Jan
I too can appreciate the concerns represented by many here, but I get weary of people scorning the work of consultants and painting all of those who provide such services as overpaid, ineffective and only out for ourselves. First, I am a nonprofit service provider who earns a living on a self-employed fee for service basis. I chose to become a “consultant” after 15 years in the nonprofit arena because it was the best way for me to use my skills in support of organizations in whose work I truly believe. Like everybody I have every right to earn a living doing what I do best (capacity building) in the community I am passionate about. Second, while some might, not all consultants make $200k on strategic plans. The last two I completed, paid for out of grants from philanthropic foundations, were each 10% or less than that. That is the norm more than the exception. Most years, I have made an annual income no more than I made as a senior staff person in a nonprofit. Third, I found it fascinating that this was written by someone who has spent many years in the infrastructure building business that is enabled by philanthropic foundations. I don’t begrudge CompassPoint’s ability to raise significant funds from foundations in support of its work. I believe that it plays an important role in the ecosystem. As do we all. Finally, I think that our entire nation is reeling from a recession that has far outlived our expectations. The nonprofit sector has been hammered by it and the work is more important now than ever as a result of it. The Occupy Movement has raised our consciences to the fact that a very small percentage is richer than the whole of the vast majority of the population. In this scenario, it appears that the foundations are the 1% and the rest of us the 99%. Foundations certainly have room for improvement, but angry rants and snide comments directed at consultants and philanthropy just aren’t productive. I concur with those who advocate for good honest dialogue in the spirit of better understanding and a desire for change. Let’s put all that leadership development work we’ve done on philanthropy’s dime to good use. Victoria Plettner-Saunders
Victoria, I'm afraid you've missed my point. I value the work of consultants and I appreciate the infrastructure. What I take issue with is that the individual decisions of grantmakers add up in total to an over-investment in the infrastructure compared to investment in nonprofits. I don't begrudge an individual becoming a hedge fund manager; we need a few of them. But we don't need more hedge fund managers than we need people in industry.
A remarkable phenomenon right now is the zillions of fundraising consultants who are under-utilized (under-employed) that exist simultaneously with nonprofits unable to find development staff. This says a lot about how the individual choices people make (because the incentives are wrong) lead to an imbalance. We need zillions of fundraising staff and a few consultants, not the other way around.
Thanks for writing, Jan
This is my first visit to your site. You are a breath of fresh air.
Check out the comment he made to my rensopse on his blog: they MAY dial down the emphasis on overhead. I understand that it’s important for you, your project and your funders to play nice here, but it’s frustrating to watch you call out organizations like Kiva/Acumen fund who are a hell of a lot better than most and then applaud while an organization that misleads millions of donors/dollars annually makes a verbal commitment to potentially change.So he signed on for your pledge, that’s awesome. You know what would be better? Shutting down his site until they have something worthy of the hard working people who try to make an impact every day. Don’t get off his back now the non-profit sector and the people we serve deserve better.
[…] Archaeology click for more info […]