We recently had the question at Spokes, “What are the pros and cons of using independent contractors for fundraising and basing their fee on the amount of money raised?” Good question!
The answer? Well, when done correctly, it is legal, but there are lots of steps that must be taken. In addition, there are ethical and practical issues that you really need to consider before taking this route. If you or your board is considering this approach, Spokes recommends you carefully review the following references, in order.
Compensating Nonprofit Fundraisers – this is a good overview that gives pros and cons.
Professional Fundraising Consultants and Grantwriters – Pay particular attention to the section, “Did you know?”
California Attorney General’s Guide for Charities – California is a state that does require both the fundraising professional or company to be registered and the charity/nonprofit to follow specific procedures as to contracting, etc. See Chapter 9 beginning page 68.
AB5 issue. – Finally, be aware that California now has very stringent rules with regard to employees versus independent contractors. Basically, a person is an employee unless “proven otherwise.” There is a list of exceptions that includes “grant writer” but not fundraising consultants.