Can a grant writer share in the proceeds of successful applications?

Summary:

In a word, 'no.' Two experienced observers expands on that answer in this item.

Someone wrote to nonprofit@rain.org:
"I want to hire a grant writer, but can't afford it out of operational
expenses. Are there any Legitimate ways to hire a grant writer and tie
their performance and their pay to their success?"

Tony Poderis (Tony@raise-funds.com) gave one response:
I recognize the difficulties that cash-strapped non-profit
organizations have in providing upfront, fair compensation to consultant
grant writers for the legitimate and important work they perform. In many
instances, it has become a common practice to make compensation contingent
of the award of a grant. Nevertheless, there are concerns this practice
raises which need to be addressed.

Often, the professional ethics of those seeking contingent-pay for grant
writing are brought into question. While I see problems with giving grant
writers a percentage of the “take,” I do not think that the willingness,
or even the preference, to write grants on a commission basis
automatically indicates a lack of ethics.

Rather than preach against contingent pay as unethical behavior, I prefer
to share with contingent- pay seekers and providers some real-life
consequences of such arrangements.

Say an organization wants someone to write a grant proposal for a project
costing $118,000 and that the grant writer was to be paid a 5% commission
if the grant is approved. It is almost always a requirement by funders
that every dollar to be raised for and spent on projects be accounted for
on a line-item basis. For many funders, the line showing $5,900 for
grant-acquisition services, would be reason enough to deny the grant. It
would make no difference what the commission size or even if the
contingency-pay were a flat fee.

Grant-writing expenses are seen as part of an organization’s operating
budget. Few if any foundations, corporations, or governmental
organizations are willing to make a grant when a portion of the money
granted is to be used to pay a grant-writing fee. Remember the grant is
being requested for a specific project, not to offset operating expenses.
A nonprofit that fails to take the possibility of such a caveat into
consideration may be facing a rude awakening.

There is another reason why I believe grant writers should never agree to
contingency pay. It is simply not fair for hard working grant writers to
receive no pay for their efforts when a grant proposal is turned down
because of a bad presentation on the part of the organization, an ill
timed request, or for some other reason beyond their control.

And what if the grant was to be paid out over a number of months -- or
even years? Would the organization be willing to pay for the services
rendered in full at the moment of grant approval? Should the grant writer
be willing to accept a payment schedule in sync with that of the grant?

In the end, grant writers should be paid for their time and efforts by the
hour or project, whether or not the grant is received. I question whether
an organization unable to pay a fair fee for work done is likely to
survive. Few non-profits forced to operate in ways not fully in accord
with accepted professional standards flourish and grow.

Barb --- Not what you wanted to hear, I know. But we have had dealings
enough over the past few years for me to know how practical and
resourceful you are. Thus, I know you will deal with this OK, and not get
into a sometimes messy, most always troublesome, payment-on-award-of-grant
arrangement.

Would you believe it? I've got more on the subject. Maybe you'll review:

Positioning Grant Writers For Success
http://www.raise-funds.com/040202forum.html

And Michael L. Wyland (michael@sumptionandwyland.com) offered another explanation:
Since you're asking the question, I'll assume that
you've done some research on the ethics of contingency and percentage-based
compensation for fund raising, and particularly for grant writers.

If your organization doesn't have sufficient operational funds, it can
reasonably be inferred that you intend to pay the grant writer with a
portion of the grant proceeds they secure. This is not only professionally
unethical, it's unfair to the grant writer to make them assume the risk for
fund raising over which they have limited control. Most importantly, this
course could constitute civil or criminal fraud by your organization as
applicant against any funding source that awarded you funds.

The reason? Virtually no funding source will award grants for work already
performed, nor will they award funds for proposal costs (except under rare
circumstances). This means that you'd have to falsify the budget in the
grant application to "hide" the fee paid to the grant writer. That's
fraud, and funders are becoming more aggressive in pursuing offenders.

Further, if your organization has insufficient resources to pay a grant
writer, then it is unlikely to qualify for grant funding. There are
exceptions, of course, but that's the general truth of the matter.

Before becoming concerned with chasing grant funds, which typically pay
only a small portion of operational expenses and are usually intended to
expand or enhance service delivery, work on developing a donor base. Begin
with your board of directors, volunteers, and "friends" who share your
passion for your organization's cause/mission, and spread from there into
your community. If you believe your organization has unique capacity to
attract grant funding despite lack of operational resources, a major donor
or donors may be willing to contribute funds to support a grant writer.