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Conditional Payment To Grant
Writers Is Risky Business

by Dennis Abenanty


It is no surprise that people work harder and perform better when there is a direct correlation between their results and their reward. Executives strive to take companies to the next level in order to maximize stock option value. Salespeople go all-out to increase commission income. Following this logic, wouldn't it be expected that nonprofits reward grant writers on the basis of approved grants rather than submitted grants? After all, why pay someone an hourly rate regardless of whether the request is granted or not?

This theory is not new. It has been, and continues to be, a very controversial topic in the nonprofit arena.

On one side, it is unfair to the grant writers. The Association of Fund raising Professionals (AFP) considers it unethical for nonprofits to compensate grant writers on a percentage arrangement tied to the grant amount. They are not commission salespeople but if they were, their commission would be due upon delivery of the work product, not when or if grants are awarded. As much as some of us would like to, we don't pay stockbroker commissions only when trades result in capital gains; we put our trust in our brokers and pay them for their long hours of research and insightful advice. Of course, we hope they only recommend winning stocks, but we pay the commission upfront on good faith that their picks are solid. The same principle applies to grant writers; we hire their expertise in writing grant requests and must put good faith in their skills and experiences. Just like the stockbroker who cautions, "Past performance is no guarantee of future results," grant writers cannot predict the future to determine if their proposals will be approved.

Inequities aside however, let's look at why it is simply not good business for the nonprofit to enter into these types of payment arrangements.

The nonprofit could actually lose out on a grant approval if the foundation discovers that the writer is being compensated from the grant proceeds. Grant requests are written for specific purposes and foundations expect the nonprofit to apply 100% of the grant toward that approved project. Monies to pay grant writers are expected to come from operating budgets and few foundations fund general operating expenses.

As well, grant writers could portray your charity in a disapproving light by irritating foundations with an onslaught of unrelenting persuasive tactics and follow-ups in an effort to speed up the review process and get their proposal approved.

You may also unconsciously invite disputes between yourself and the grant writer over compensation on winning grants that are distributed over multiple periods if contingent payment arrangements were not clearly agreed upfront regarding the timing of payments under multiyear disbursements.

If your charity is small and lacks sufficient operating funds to properly compensate grant writers, win the writer over to your cause as a supporter, then negotiate pro bono work until your charity becomes solidly established. You have much more to lose than to gain by paying grant writers on conditional terms, so go haggle with your stockbroker instead.

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About the Author:

Dennis Abenanty is a Board Member of Brooklyn Ballet: http://brooklynballet.org/

For more information on Dennis Abenanty, see his profile on Linked In: http://www.linkedin.com/in/dennisabenanty



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