Fundraising Service Providers (FSPs), Take 2

Last week I outlined the different ways fundraising service providers (FSPs) are compensated. The bottom line was that no FSP can afford to work for a nonprofit organization (NPO) without making a profit; somehow, some way, FSPs are being compensated. As a fundraising manager, you need to choose FSPs with pricing models that make sense to you and you feel best represent the interests of your NPO.

Following are a few more thoughts to help you manage FSPs for the greatest benefit to your nonprofit.

1. The lowest cost may not be in the best interest of your nonprofit. There are two things to keep in mind. First, part of what an FSP is selling is experience. Someone with less experience may charge less. So, in addition to looking at price, you also have to determine the depth of experience you need. Secondly, a large firm has a variety of experience on its staff. If you negotiate a lower price, you may have access to less experienced people. That could be fine, but you need to know what you're "buying" as you discuss pricing.

2. Using an FSP can be a wonderful investment for your nonprofit. An FSP can help you do something that you don't have the time (or expertise) to do yourself. FSPs often look more objectively at your programs and help you "repackage" them in ways that are more compelling to donors. They can help you better target your message to smaller segments of donors.

3. An FSP can challenge the status quo. Sometimes we hire an FSP because we want change — but when we see what change looks like, we panic. It's easy to get in a comfort zone and start saying things like, "Oh, but our donors are different ... " and "Our donors would never go for that." The FSP you choose should have depth of experience and a good handle on the overall fundraising market. But if you don't trust your FSP's people, you won't truly benefit from their knowledge.