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Smart use of consultants takes planning

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Todd  Cohen

Sooner or later, nonprofits tend to think about working with consultants on issues like strategic planning, fundraising, board development and communications.

Consultants can fill critical short-term gaps in expertise nonprofits may lack, or provide fresh perspective to help a nonprofit change the way it does business.

But farming out work can be a mistake, experts say, if nonprofits are not prepared to partner with a consultant or are not careful in hiring them and overseeing their work.

“Consultants are a completely unregulated industry,” says Joel Orosz, distinguished professor of philanthropic studies at the Dorothy A. Johnson Center for Philanthropy and Nonprofit Leadership at Grand Valley State University in Grand Rapids, Mich.

So deciding whether to turn to a consultant, and then finding the right one and ensuring a successful outcome, experts say, requires that nonprofits be ready for change and clear about what they want.

They should look for consultants who “fit” their organizations, and must be willing to form a working partnership with their consultants.

And nonprofits should be ready and willing as an organization to team with a consultant, creating a true collaboration in which the goals, relationships and respective roles are spelled out in written form and understood.

“The process has to be one of joint, shared responsibility,” says Kathleen Reich, program officer for organizational effectiveness at The David and Lucile Packard Foundation in Los Altos, Calif. “A consultant can’t just do the project. You need to be engaged in the process every step of the way.”

Predicting success

The Packard Foundation uses consultants all the time, working with them to inform its own program strategies and, through grants it makes, to help nonprofits build their organizational capacity, Reich says.

Based on its experience, she says, the foundation has identified two key factors that predict the effective use of consultants.

First, a nonprofit should be ready to work with a consultant and to make the kinds of changes consultants recommend.

A nonprofit “needs to be at a certain level of sophistication about its own organization’s health,” she says. “They need to know what they need.”

Being ready means the CEO, senior leadership and board must be “really committed to going through a change process,” investing the time, money and energy required, and willing to “act on what in the end the consultant recommends,” Reich says.

Second, she says, the consultant must be in sync with the nonprofit’s mission, passion and way of doing business.

That means having “the right consultant for this particular job and their organizational culture and their organizational values,” Reich says.

Even if the eventual outcome of the consultant’s work differs from what the nonprofit initially expected, she says, being prepared and finding the right fit likely will help ensure a successful project.

The consultant option

In the face of an economic recession that is stretching limited resources, nonprofits with a particular need or project looming can find their existing staff already is working long hours and under stress.

“You can’t possibly have all the expertise you need on staff,” says Orosz, a former program director in charge of philanthropy and volunteerism programming at the W.K. Kellogg Foundation in Battle Creek, Mich. “Sooner or later you’re going to have to go outside staff to get the expertise you need.”

And nonprofits may find that consultants represent a cost-effective option for getting a short-term job done quickly.

“It may take you a while, even in this economy, to find the right person to hire, and it might be quicker to hire a consultant with targeted expertise,” says Jenny Chandler, vice president and director of network support and knowledge transfer at the National Council of Nonprofits in Washington, D.C.

So the right consultant, with the right guidance and relationship, can be a cost-effective and productive partner for a nonprofit.

“The engagements are shorter, and that is one way to manage cost, and frequently it’s an intervention or a specific project, and again that helps with the budget,” says Kim Meredith, executive director of the Center on Philanthropy and Civil Society at Stanford University.

Nonprofits thinking about working with consultants typically are trying either to expand or contract their business and might “really need a third-party lens,” she says.

“Sometimes it’s easier for staff or boards to hear the outside expert’s opinion,” she says.

Finding a consultant

Reich, former policy director at the Social Policy Action Network in Washington, D.C., says hiring a consultant is much like hiring an employee.

“You have to go through the same sort of dating and assessment process,” she says.

Chandler, former senior counsel and director of special projects for the Nonprofit Risk Management Center in Leesburg, Va., says a key step is to write a description of the scope of work the consultant would undertake, and to make clear the consultant would serve as an independent contractor, not an employee,

The National Council of Nonprofits, she says, encourages nonprofits to perform “due diligence” in searching for a consultant.

Due diligence might include asking other nonprofits about consultants they may have worked with on issues such as strategic planning or fundraising strategy.

Nonprofits also might contact their state association of nonprofits, which may have lists of consultants on their websites.

They also can contact state or local chapters of national organizations such as the Association of Fundraising Professionals or Accountants for the Public Interest to identify consultants with expertise in those groups’ field of interest.

Due diligence also can include checking with other nonprofits or membership organizations about appropriate pay for a consultant.

Nonprofits typically pay consultants by the hour or for an overall project, Chandler says.

Meredith, former chief development officer for Planned Parenthood Federation of America in New York City, says a nonprofit should determine how much it is willing to pay the consultant, and include that in its written request for proposals.

The nonprofit also should look for a consultant who will be a partner, not simply a vendor.

“This is a relationship and this is expertise you’re looking for,” Meredith says. “Are they people who can work in your organization? Will they produce the quality you need? Are you comfortable having them talk to your donors, constituents, board? Are they good at relationships?”

Chandler says nonprofit boards typically do not get involved in choosing consultants.

While board members, staff or funders might suggest possible consultants, she says, nonprofits should be on the lookout for possible conflicts of interest, making sure the consultant is not a family relative or business partner of whoever suggested the consultant.

Even if, after disclosing and vetting the possible conflict, it concluded the consultant would do a great job, the nonprofit still should consider what the ramifications might be for its relationship with whoever suggested the consultant if the organization had to terminate the consulting contract.

Making a choice

Orosz, who concedes he has hired his share of consultants who “weren’t great at all,” says many nonprofits are willing to pick a consultant simply based on a resume or after hearing that another organization had a good experience working with the consultant.

“Hardly anyone knows how to choose a consultant,” he says.

Nonprofits typically “would do a lot of due diligence” before hiring an employee, he says, “but they would hire a consultant without doing much thinking about it.”

If a nonprofit does not take the same care in selecting a consultant that it invests in hiring an employee, he says, “it really can come back to haunt you.”

With limited funds, he says, “if you waste it on a consultant, it’s not like you get a do-over.”

Reich says nonprofits should interview at least two to three consultants to “get an idea of who’s in that space and who you can work effectively with.”

Nonprofits should ask the consultant candidates for samples of their work and work plans “to see what they’ve done with others and if they’re right for you.”

And nonprofits should ask for references, Reich says.

Chandler says that once a nonprofit has identified a consultant it likes, it still should comparison shop.

“As with any other vendor, compare apples to apples and get proposals from at least three different consultants,” she says.

Writing a contract

Nonprofits should write a “strong contract that includes a work plan, a set of shared expectations and a budget,” Reich says.

“A really good consultant will want something from you as well and have clear expectations from you” on issues such as the period of the contract, who at the nonprofit the consultant will have access to, which documents the nonprofit will share, and a schedule for meetings between the nonprofit and consultant, she says.

“The contract needs to be a two-way street between the nonprofit and the consultant, and both parties should hold each other accountable and have meetings,” she says.

Meredith says a good contract should provide for a “fast feedback loop” and a “commitment to be flexible.”

The contract, for example, should spell out regular times to check in to make sure the work is on track and determine whether any course corrections are needed, she says.

But while the nonprofit should monitor the consultant and communicate regularly, “don’t micromanage,” Meredith says. “Let them do the work.”

Chandler says the contract also should spell out the “deliverables” the consultant will provide, such as facilitating a conference or submitting a written report.

“The deliverables need to be clearly articulated,” she says. “The risk is that a deliverable is not what you expected or doesn’t reach the conclusions you hoped for. That’s why checking in during the course of the project is important, so you’re not surprised at the end.”

The contract also should spell out terms for early termination of the consulting relationship, Chandler says, including reasons for ending the contract, whether notice is required, and how to handle costs either side may have incurred.

The contract should include a schedule for meetings and phone calls, as well as dates for submitting reports and other deliverables.

And it should make clear that the nonprofit will own whatever research the consultant develops.

As a “way of guaranteeing them work,” Orosz says, a lot of consultants “do all the learning and keep all the learning in their own heads and don’t share it with you.”

So when the consulting relationship ends, “you have no more knowledge about the problem you had or the opportunity before you than when you started,” he says. “So if something like that comes up again, you’ve got to turn to that consultant again.”

To make sure that does not happen, he says, nonprofits should tell consultant prospects “we want to you to build our capacity,” he says. “We’ll pay you. And teach us what you’re learning.”

If consultant candidates are reluctant to agree to share what they learn, Orosz says, “you know you are dealing with the wrong person.”

Meredith agrees.

Consultants “have to be willing to say” their work for the nonprofit belongs to the nonprofit, she says. “You own the website, the strategic plan, the program. They can be the consultant and partner in that work, but they have to allow the [nonprofit] organization to take credit for that.”

Making it work

Communication is critical to making a relationship with a consultant work.

“It’s like any other relationship,” Chandler says. “You need to communicate your expectations and your appreciation and your disappointment if something is not going right. It’s easier to turn the boat early on.”

Nonprofits should provide the consultant with “lots of good background on the organization so they understand their client,” she says.

Nonprofit also should assign a staff member to provide guidance to the consultant and keep communications flowing.

It also is important to “keep your antenna out for external relationships,” Chandler says.

As part of their contract, for example, consultants may conduct feasibility studies or talk to the nonprofit’s funders, partners or clients.

“A consultant may rub donors the wrong way or not have a professional demeanor, and that could reflect poorly on the organization,” she says. “So you need to do follow-ups with any external partners.”

That could include “open-ended questions to try to evaluate it to make sure the consultant is representing your nonprofit appropriately in the community,” she says.

Meredith says effective consultants become part of a nonprofit’s team.

“The goal,” she says, “really is to create a partnership between you and the consultant.”

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