How much should nonprofits pay consultants?

2022 Survey of Nonprofit Consultants Rates

Heather Yandow, founder of shares some topline findings from this survey.

Rough Transcript:

[00:00:00] This week on the Holywell Podcast, we’re trying to answer a simple question, but it gets really tough. How much should you pay? How much should you charge for a nonprofit consultant? And who better than our friend? Uh, Heather Yau, the founder of nonprofit, is nonprofit ist and consultant. Nonprofit consultant, I’ll say at Third Space Studio to join us again, friend of the pod and friend of the organization.

[00:00:51] How’s it going, Heather? It’s going great. I’m glad to be here. Well, I think we have been quietly in the, the back room planning this for a little bit and you know, clearly whole whale and nonprofit is, have formed a formal partnership and we have enjoyed sending a lot of folks into that platform to go find quality nonprofit consultants.

[00:01:13] But as we go through, you have partnered and created in partnership with other folks, and maybe you can explain a nonprofit consultant survey. Asking a very sensitive question, which I’m surprised what we have 300 people answer how much they’re charging and a bunch of info, huh? Yeah. Yeah. So more than 350 consultants shared with us.

[00:01:33] Wow. All of their details. And this was a survey that was, Started a few years ago by Rebecca and Ska. And I attended a webinar about it early this year and just thought, this is fabulous data and I wanna figure out how to get more data and get more curious about what that data is telling us. So the survey we are, we’re crunching it right now.

[00:01:55] We’re gonna do a, a webinar about it for nonprofits members on August 2nd, which will be fabulous. And then the full report will roll out later this year. Great. So we can tease folks with some numbers getting right into it. What was the biggest wow to you? And you’re like, I did not think that was gonna happen.

[00:02:14] That’s counterintuitive. So one of the things I’m still trying to make sense of is we ask people, what’s your hourly rate and how much do you bill a year? Trying to get a sense, because we have, as consultants often have control over both of those things, how much we wanna charge for our per hour how much we wanna work, and so therefore how much we can bill every year.

[00:02:37] So, One of the things that’s really curious to me, and I haven’t quite made sense of it, is it seems like the data is telling us that if you get advanced education, so if you have a bachelor’s, master’s, doctorate, you tend to charge more and earn more. But that’s not necessarily true about some of these.

[00:02:59] Licenses or certificates that are related to consulting work like CREs or MPAs. And so that’s one of those head scratchers is that, seems like that would, that would align with. More schooling, more experience, and therefore lead to greater being able to charge more and earn more. But it’s not necessarily true.

[00:03:18] So that’s one of the surprises in the data. Yeah, I think what we found from what I’m looking at is there’s a higher correlation to how long you’ve been a consultant, and that seems to be the biggest determining factor aside from. The type of thing you’re consulting on and, and sorting by. All right. Are you doing strategic planning versus accounting versus something else for, for nonprofits?

[00:03:45] Maybe you can talk to us a little bit about that. Yeah. What we see is a direct relationship between how long people have been in the consulting world and how much they’re able to charge per hour. So if you’ve been consulting less than a year, you tend to charge around a hundred bucks. If you’ve been consulting 20 plus years.

[00:04:05] You tend to charge around 200 bucks. The interesting thing is when we then look at how much you bill annually, what you’re, what you’re bringing in we see that that rises by amount of time consulting until you get after 20 years. And then it drops a little bit. And my estimation is that’s because people are starting to pull back.

[00:04:27] That’s because maybe people are starting to Go into retirement a little bit or, or ease off of the consulting. Oh, interesting. Right. You’re like, I don’t need to bill as much. The goal is not that. You know, I’m, I’ve done this enough. You really do see it. And just looking inside of here with 16 to 20 years and then it drops off, you’re like, wait a minute.

[00:04:46] You were going up. What happened? Yeah. Yeah. And, and my guess is that folks are just not wanting to work as much. Once they’ve been doing this for 20 years, they’ve, they’ve kind of figured out their sweet spot. They can make, you know, a hundred and average about $140,000 a year. That’s fine. They might be really slowing down.

[00:05:04] They might have other sources of income, so that was an interesting piece of the data. But you can definitely see, you know, the longer you work, the more you’re able to charge. And it’s funny, the, the line for the amount. Your rate per hour mm-hmm. Begins to get closer and closer to that 200 number amount on average.

[00:05:23] Mm-hmm. And that continues to increase for the 20 plus, but it seems like you’re like, at a certain point they start just charging more and just doing less work, so That’s right. That’s right. I don’t know if there’s a cheat code in here being like, what if you just skip the line at a certain point?

[00:05:36] Because you know, there’s a jump between that six to 10 years and 11 to 15 years. Which is interesting mm-hmm. In the rate per hour. Mm-hmm. Where, you know, you clip over that 150, but that’s the biggest, you know, single, you know, five year, couple year gap on it. Mm-hmm. Although you’re, we’re gapping it slightly differently.

[00:05:55] Yeah. Yeah, I, I think that’s really true. I mean, we see that in other places in the data where, where specific groups of people have really high rates, but maybe lower overall billing. And I think that’s true. I mean, the, the, the interesting piece about this particular set data set around salary is consultants can figure out how much they wanna charge.

[00:06:20] And how much they wanna work. And so we’re kind of figuring we’re, we’re, we’re thinking about both of those things. Obviously there’s external factors, how much the market will bear in terms of how much we can charge, but a lot of this is, you know, as our confidence increases, we’re able to charge more as we are talking more with other people as we’re learning about what it takes to have a sustainable business, we wanna charge more.

[00:06:44] And so some of that you’re seeing reflected in that data as well. And then just, I know we’re teasing some of these I don’t wanna show too much of what we have planned for folks as I dance through these, uh, slides I’m watching on YouTube. I love, I love the, the more you charge, the more you make.

[00:07:03] But we have a, a really smart chart, uh, with a margin of error. R squared 0.27. Yeah, great. I, I wanted to check this, right, because like, that would make sense. The more you charge, the more you make. But as I was you know, playing with Excel, it’s actually exponential. The exponential curve fits better than the linear curve.

[00:07:23] So it’s not just a straight line, one-to-one, it really is. As you’re able to get into that 200, 2 50, you’re starting to see the exponential growth of your annual billing. Mm-hmm. Yeah. Obviously it’s, uh, it would, it would ideally asymptote at some point. I, I worry about a blind exponential assumption. Yes, yes.

[00:07:44] There’s an as tote there. There is, there is because yeah. Consulting with nonprofits is, um, you know, uh, it does have a ceiling and I can tell you that firsthand having run whole whale for 13 years, I suppose it is now what? Else, do you think, let’s, like approaching it from a nonprofit perspective.

[00:08:05] Mm-hmm. Um, and you can get access, I’ll say to this survey and you can kind of parse through to find your own insights at nonprofit is slash consultant survey and you give us your email and you get access to this. Yeah. How do you imagine looking at this dashboard, and maybe I’ll, I’ll pull it up for us.

[00:08:24] What is a useful approach? Let’s just start from the nonprofit perspective, understanding like, This is what consultants are charging. Yeah. So I think this would be really useful if you are starting to think about, um, we wanna hire a grant writer, we wanna hire a fundraising consultant, we wanna hire a strategic planning consultant.

[00:08:42] We have no idea what that will cost us. And so I, as a consultant who’s been in this world for 12, 13 years, often answer those phone calls, right? Like, well, let’s talk through what you’re looking for and what that might cost. But this is a great tool just to start to give you some sense of what the range is.

[00:09:00] So George is gonna show this. So if you were really curious, what are you pulling up here, George? I am trying to show what it looks like if I just go only on that. Yep. Great, great. And then we go and then we get a distribution. Cuz if I’m looking for, you know, fundraising grant writers that we’re looking at an average hourly rate.

[00:09:21] So basically, you know, we have one record count here. We have the belly of the curve here, small sample size, albeit, but. You’re getting something in the range, I’d expect to pay 76 to a hundred dollars an hour. That, yep. Might be a sweet spot I’d be looking for, for that fundraising grant writer. Yep, absolutely.

[00:09:37] I could get something cheaper. I could get. You could. And I think that makes sense. So grant writers tend to. Charge a little bit less per hour. They tend to be able to work a, a higher percentage of their hours. So, like I, as a, a strategic planning and facilitation consultant can only charge for about 50% of my hours.

[00:09:57] Grant writers can charge for, for a higher percentage of their hours often. So they’re, they’re eight. Their overall rate tends to be a little lower. I’m gonna take this question. Hold on. What else did you have to say on that point? Oh, no, no, that’s great. I also pull up grant writing because I think, you know, this is a snapshot, a moment of time, what we’ll say is, A pre-post generative AI availability?

[00:10:21] Uhhuh. I am actually just honestly kind of nervous about the hourly first billing approach. Mm-hmm. How do you think that may shift, because we did have, did different people in terms of how they bill, like we have other layers of data that aren’t fully revealed, obviously go to the webinar for that.

[00:10:40] How do you think something, even like grant writing may shift, will hourly rate, for instance, Drastically increased because it’s like actually more about outcomes and we end up in this weird zone. So what we found in the data is that people prefer a project rate or a retainer rate more than hourly.

[00:11:02] When we ask people, what’s your preference, project rate was number one. So that is you and I talk about the work we wanna do. I figure out what it’s gonna cost. Often that’s based on some kind of hourly calculation. But also on value to the client. And then I say, okay, for that whole thing, it’s $10,000.

[00:11:19] Retainer, a monthly kind of contract. I am committed to so many hours per month up to so many hours per month, and you just pay me every month. Hourly is really challenging for a lot of consultants, and so, I’m, I’m not surprised that people don’t prefer it. It is often it, one, it, it causes for me the clients.

[00:11:41] To kind of have a pause before they call, before they ask for help, before they send an email. They don’t wanna be charged for that, like your every five minute time block of a lawyer, right? Like, I’m not interested in that kind of relationship. I wanna help you get where you’re going. And it also doesn’t pay for the accumulated wisdom.

[00:11:58] So if I can do something in a half an hour, but it takes you two hours. And I can do it in a half an hour because I’ve done it a hundred times before. There is still value in that. So getting paid for that, that accumulated experience. So when we’re thinking about AI and grant writing, you know, I think that equation might really change.

[00:12:17] And it may be the case that people are getting paid for their experience in writing great prompts. Or in editing what comes out of the AI or in really interviewing staff members to come up with, what’s that fodder for the grants? Yeah, so I, I’m, I’m curious too about what’s gonna happen a year from now and two years from now.

[00:12:38] Yeah. Just send me a note if you know, we have, we’re, we are post covid, we’re almost post post covid because you know, i r l events are back. We’re getting into some flows of normalcy we have and can see it seems like data over the years, did you have some additional views on some of those work changes and client changes that you saw in, in the, in the numbers or takeaways from that?

[00:13:06] Yeah, so I think what, what we are seeing is that people are relying, you know, more on word of mouth and more on those kind of connections with people. I think that’s coming back into the world as we’re getting back together and as we’re. You know, have gotten really good at online networking. And I think there are still fewer in-person opportunities.

[00:13:30] That’s what we saw in the data, that even though in-person is back in a lot of ways for some organizations, for some venues, it just doesn’t make sense to get together in person. So we’re still seeing a lot of online. Mm-hmm. I mean, I also happen to know personally, you seem to be doing a lot more in person workshops.

[00:13:50] Like you’re flying around, you’re, you’re going places again, which I think is a huge advantage for agencies and consultants that are operating at like five and under size wise. Mm. To be like, no, no, no. Like you’re getting personalized attention and by the way, we don’t have to worry about Covid anymore.

[00:14:10] Yeah, yeah. Absolutely. I think I think what we’re seeing in the data is that people are, did not see a huge decrease in their work volume during Covid. In fact, we had a lot of people who started businesses during Covid. They actually began their consulting career during Covid. Most people are conducting the majority of their work virtually.

[00:14:35] I think like myself, I am in person when I need to be, when I’m facilitating big meetings. But all the prep work for those meetings has happened. Virt has happening virtually. I have not been even out for a coffee locally with folks and, and as much as before. So we’re definitely seeing that in the data as well.

[00:14:55] Mm-hmm. And you can stop me if you feel like we’re giving away too much for the, the upcoming moment. We’ll have a lot more insights for the consultants that are members of the nonprofit network and that much deeper dive. I thought it was maybe also interesting in terms of services by spending. That’s like a little secret query we can run because we have access to the full data set.

[00:15:20] I was super surprised by this, and maybe it’s obvious, obviously, like not inclusive of people doing large website red devs. Mm-hmm. I’ll say that, right. But of the industries that were looking at, strategic planning, fundraising, fundraising, grant writing, meeting facilitation, monitoring, evaluation, people management and communications.

[00:15:40] You are actually of the sample set, which we mentioned is 350 folks. Able to break it out by the amount that folks are spending on it. So we asked what they’re spending money on. I, I think that’s my, yeah, that’s interesting. Yeah. Yeah. I think slide eight.

[00:15:57] I don’t. I don’t know why else while I was there. We’ll talk about that later today. Don’t put that in YouTube. Um, I, I, we’re definitely leaving all it in with a curiosity gap. Tune in later to find out why. But yes, I think that this is is really interesting is, is where people are spending their money as consultants.

[00:16:18] So technology, software that makes sense, right? All of the things that make our lives easy and moving everything from. Canva to make things pretty to, you know, Riverside, which we’re recording this on all the way through. Taxes and fees and all of those. All those things. Professional development, again, makes a lot of sense, right?

[00:16:38] Like we are responsible for our own professional development. We’re going to conferences, we’re taking classes, we’re doing webinars. We’re part of nonprofit, right? That’s a professional development. I recall Uhhuh subcontractors. That’s interesting. And when we actually break it out by types of business, you’ll see that that subcontractor line item really gets a lot bigger for those who are obviously owning businesses have subcontractors.

[00:17:02] But overall in the dataset for our largest expenses, that was the largest expense for about 14% of people. Yeah. And clearly, You know, pay yourself first. That’s not represented. Like salary payrolls, like aside from that, let’s look at the other Yes, yes pieces. I was like, wait a minute. Do they pay themselves?

[00:17:21] Yes, yes, yes. Clearly they do. I think there’s really more nuance and insight here actually in this like professional development area. I was very impressed to see that. Being higher than something like business development and marketing. Mm-hmm. Mm-hmm. You’re like, I am investing in me. And that’s actually, yeah.

[00:17:39] Like something folks are, are in there. And I wonder if, uh, like coaches are way at the bottom, but I wonder if professional development and coaches aren’t like maybe a little over overlap beyond that. Yeah. Um, I agree. I agree. And yeah, I think there, there certainly is some over overlap there, but I, yeah, I was happy to see professional development so high as well.

[00:17:56] I am not a tax professional, but I bet there are some tax professionals being like, I wonder why taxes and state fees are so high. I wonder if there aren’t some advantages that you might be able to find inside of that. Yeah, yeah, I don’t, absolutely. Absolutely. And you know, for, depending on the type of consulting you do as a.

[00:18:17] As a fundraising consultant, you have to have a solicitation license in North Carolina, and if you’re fundraising in multiple fees can get you, yeah, the fees can get you, so, yeah. Mm-hmm. But there may, there may be tax savings there too. I know. Offered. I think that, yeah. The other thing that’s represented in this data set is, you know, it’s a lot of solopreneurs.

[00:18:37] It’s a lot of people who are on their own. And so for that, you know, your taxes might be one of your big expenses. Um, if you don’t have a lot of other expenses, if you’re not a, in investing in office space, for example, I just remember when I got started, cuz I was a shop of one when, you know, In 2010 we got going and there was, so I’ve screwed up my taxes so many times.

[00:19:01] It, you know, it makes me cry thinking about it. So I don’t wanna weep on camera here. The amount of sort of learning that you kind of go through because you start, because you’re an expert in X. Yes. Strategic planning, fundraising, doing facilitations. Not because you know, the tax code for a pass through L l C fund, like started in Delaware, run out of New York.

[00:19:22] Like that’s not where your domain of expertise is. Mm-hmm. Mm-hmm. So there’s just so much. I think that, you know, again, being part of a community of practice, you have like a space to be like, how are you all doing this? So that I can just sort of like hear how many times you screwed up and like, what did you arrive at can be so much more valuable than a like cold Google search how to taxes.

[00:19:43] And then you end up with. Absolutely. I mean, how to pay money. Yes. How to pay money. We, you know, I saw this really clearly. During the pandemic, uh, we at, when the pandemic hit and everything shut down, we started doing weekly phone calls with the nonprofits network and, Early on, the conversations obviously were around ourselves and our concerns and how this was impacting our clients.

[00:20:10] But one of the early conversations was about p p p and if and how to apply for it. And so that space of people saying, yeah, I’ve done it, and here’s how. As a, as a solopreneur, as a single, uh, as a small shop, was really, really helpful. Well, I don’t wanna give you too much. Again, if you’re a member of nonprofit, uh, we’re gonna be demoing even more insights and dives on that.

[00:20:37] Uh, Heather, any final thoughts or words as we wrap up here? I’ll just say thanks to everyone who shared your data, uh, who shared all of your insights. We really appreciated it, and there’s so much more to come on this, um, and I can’t wait to do it again next year. Brilliant. All right. Sounds like you have a, a small dog requiring attention.

[00:20:56] So we’ll, we’ll end on that. Thanks, Heather.