Yesterday, I saw a question in one of my nonprofit Facebook groups that captured the problem almost perfectly. A small nonprofit wanted to know how it could get the money to hire a grant writer. The answers were well-meaning, but not very satisfying. Most people said the organization should raise money from individuals until it had enough money to hire a grant writer.
That sounds sensible until you think about what it assumes. It assumes the organization already has access to people who can write large checks. It assumes the board has donors, business owners, family foundations, generous classmates, affluent neighbors or people who can be invited to a comfortable living room and asked for support. It assumes that the organization has donors who are sophisticated enough to fund capacity building instead of programs. Grant writers are overhead, and most people would rather give to support children, puppies, students, or whomever the organization wants to support.
In other words, it assumes the organization already has the social capital it is trying to build.
If the answer to “How do we get fundraising help?” is “First, use your existing fundraising connections,” we should not pretend we have solved the problem. We have just described the problem more politely.
This is where the prohibition on contingency fundraising becomes harder to accept. I understand why the fundraising profession objects to paying grant writers or fundraisers based on a percentage of what they raise. The ethical concerns are real. Commission-based fundraising can create bad incentives, distort donor relationships and make the professional’s financial interest feel too close to the charitable gift.
But rules have consequences, even when the rules are well-intended. For a large established nonprofit, the ban is manageable. A larger organization can hire development staff, pay a consultant, absorb the cost of an unsuccessful grant application and wait for fundraising investments to pay off. A small nonprofit often cannot do those things. It may need a grant writer because it has no grant writer. It may need fundraising help because it has no development department. It may need professional guidance because its board members are committed and sincere, but not wealthy, not connected and not trained in the rituals of institutional philanthropy.
That is not a minor inconvenience. It is a structural barrier.
We should also be honest about the discriminatory impact. If the only organizations that can afford professional fundraising help are the organizations that already have money, wealthy board members or access to wealthy donors, then the nonprofit sector is rewarding proximity to privilege and punishing those closest to many of society’s inequities.
Nonprofits are often formed by people who see needs that established institutions have ignored. They may come from communities excluded from traditional donor networks. They may be led by people who did not go to the “right” schools, join the “right” clubs or build careers inside well-funded institutions. They may have community trust, program insight and urgency, but very little cash. Telling those organizations to “just raise money first” is not neutral advice. It can amount to saying that community power belongs to people who already have access to money.
There is a fair objection here: many new organizations are not ready for grants anyway. Most funders are not merely looking for a well-written proposal. They want evidence that the organization can deliver what it promises. A new nonprofit with enthusiasm but no systems may not need a grant writer as much as it needs time, discipline and organizational development.
That is true. But that truth only clarifies the access problem without solving it.
An emerging organization may need someone who can say, “You are not ready for this grant yet, but here are the three things you should build first.” It may need help understanding which funders support new organizations, which require a longer track record, which applications are worth pursuing and which would be a waste of scarce volunteer time. That is professional fundraising help, too.
In many cases, the most ethical consultant is not the one who writes the grant application and gets paid an hourly fee. It is the one who prevents the organization from chasing a grant it has little chance of winning.
There is another uncomfortable point. The usual argument against contingency compensation is that it gives the fundraiser or grant writer a bad incentive. That can be true. If someone is paid only when money is raised, the person may be tempted to push too hard, overpromise or chase the biggest possible return.
But a flat-fee arrangement creates its own incentive problem. A grant writer who is paid regardless of the outcome may be more willing to take on a project that is unlikely to be funded. The writer can do the work, submit the application, collect the fee and move on. The nonprofit, meanwhile, has spent money it could barely afford and may end up with nothing but a rejection letter.
That is not an argument that grant writers are unethical. Most professionals want to do good work for clients who have a realistic chance of success. But we should not pretend that paying a flat fee magically removes all conflicts. It simply places almost all of the financial risk on the nonprofit.
That point matters because the rule was written and is enforced by the fundraising profession. That does not make it wrong. Professional standards can serve important purposes, and the concerns behind this rule are serious. But we should notice who bears the risk under the approved model.
Under a flat-fee arrangement, the expert gets paid whether the application succeeds or fails. The less sophisticated party, the nonprofit that may not know whether it is grant-ready, bears the loss. In practice, the profession’s rule can say that the expert must not share the risk of failure, but the inexperienced nonprofit may bear it entirely.
That may satisfy the code, but it doesn’t quite sound fair, does it?
A carefully structured contingency or contingency-adjacent arrangement can be seen not merely as a temptation, but as a way of sharing risk more fairly. It might also give the professional a stronger incentive to ask the hard question at the beginning: “Is this organization actually ready to win this grant?”
That does not mean every percentage-based arrangement should be allowed. It certainly does not mean a grant writer should take a large share of a restricted grant award or profit from unrealistic promises. But it does mean the ethical analysis is more complicated than “flat fee good, contingency fee bad.”
Another common objection is that contingency fees will be too high. They could be, but that is not inevitable. Suppose a grant writer reasonably estimates that a proposal will take 20 hours at $150 an hour. The normal fee would be $3,000. If the grant request is $100,000 and the grant writer estimates a 75 percent chance of success, a contingency fee of 4 percent would produce a $4,000 payment if the grant is awarded. Adjusted for the risk of nonpayment, that is roughly equivalent to the original $3,000 fee.
That does not answer every ethical concern. A percentage fee may still create incentives the profession has long rejected. It may still be inappropriate for restricted grant funds. It may still need disclosure, board approval, a cap and careful review for reasonableness.
But it does answer one argument too often made by assumption. A contingency fee is not automatically a windfall. It could be excessive, but it can also be calculated in a disciplined and reasonable way.
Deferred payment is often offered as one ethical alternative, and sometimes it may be. If a grant writer agrees to a fixed fee and gets paid over time whether the grant succeeds or fails, that is meaningfully different from taking a percentage of the grant.
But we should not pretend the distinction is always clean. If a nonprofit cannot afford to pay the grant writer today, and the grant does not come through, is the grant writer really going to pursue payment from an organization that never had the money in the first place? In many cases, probably not. And if both parties understand that from the beginning, the “deferred fixed fee” may be less different from contingency compensation than the paperwork suggests.
At its worst, the deferred-fee arrangement can become a kind of ethical theater. The contract says the nonprofit owes the money whether the grant is funded or not. Everyone nods. The professional standards are respected. The paperwork is tidy. But in the background, everyone also knows the truth: if the grant is denied, the organization probably will not have the money, and the consultant probably will not chase a struggling nonprofit for payment. That is not necessarily more ethical than contingency compensation. It may just be less candid.
All of this is why the conversation should not end with the word “unethical.” That word may be accurate under the governing professional standards, but it is not sufficient. A serious profession should be able to say two things at the same time: percentage-based compensation creates real ethical risks, and the lack of affordable fundraising help imposes real burdens on small, emerging and community-based nonprofits.
If we care about ethics, we should care about both. Because if the practical rule is that organizations need money before they can get help raising money, then we should not be surprised when the same kinds of organizations keep getting funded, the same kinds of people keep getting invited into the room, and the same communities keep being told to build capacity before anyone will help them build capacity.