In the final post of our series on ethics in grant writing, we'll explore different compensation models for contract grant writers and their implications, ensuring your nonprofit navigates this crucial process with integrity and foresight.

Defining Unethical Compensation Models

• Commission- or Percentage-Based Compensation: The grant writer receives a predetermined percentage of the total grant amount awarded. This model can potentially encourage grant writers to focus solely on grant size, rather than true alignment with the organization's mission, budget, and capacity.

• Contingency-Based Compensation: Here, payment to the grant writer is made only if the grant application is successful. This can lead to ethical concerns, as it may incentivize grant writers to prioritize personal gain over the best interests of the nonprofit.

The Ethical Implications

• Risk of Exploitation: This practice may lead grant writers to pursue ill-fitting grant opportunities, driven more by potential financial gains than by the needs or capacity of the nonprofit. Additionally, it can expose the organization to exploitation by individuals who might capitalize on the organization's vulnerabilities by purposely submitting numerous unsuccessful applications, only to offer costly “consulting” services later on.

• Misrepresentation and Mission Drift: Unethical compensation models can lead to situations where grant writers feel compelled to pursue opportunities that are poorly aligned with the organization’s mission, values, or strategic plan, misrepresent the organization's capabilities, or overstate, skew, or fabricate information to ensure funding success – all of which damage your nonprofit’s credibility and relationships with funders and the wider community.

• Professional Standards: Such compensation practices are at odds with the guidelines set by professional associations, including the Grant Professionals Association and the Association of Fundraising Professionals.

• GAAP Compliance and Financial Management: Many funders expect their grantees to align with Generally Accepted Accounting Principles for financial management. Commission and contingency payments, which are provided weeks or months after the grant writing service is provided, conflict with the GAAP standard of paying for services at the time they are rendered – which will lead to audit findings that jeopardize your ability to secure future funding.

• Grant Readiness: The ability to secure grants hinges on various external factors that are outside a grant writer's control, such as mission alignment, program impact, and organizational capacity. This makes the certainty of funding success unpredictable and challenges the fairness of compensation models based solely on grant outcomes.

• Funding Restrictions and Funder Perception: Grant funds are usually restricted to specific budget periods and are not meant to cover expenses incurred before the grant is awarded. Moreover, percentage-based compensation can lead funders to perceive the impact of their contribution as being diluted and result in smaller grant awards.

Ethical Compensation Models

In light of these implications, nonprofits are encouraged to adopt ethical compensation models when working with contract grant writers, which support the integrity of the grant writing process and build trust with funders.

• Retainer-Based Compensation: The consultant is paid a fixed amount regularly (usually monthly) for ongoing services. This is beneficial for long-term projects where consistent work is needed over an extended period.

• Project-Based Compensation: Payment is made for completing a specific project. The cost is agreed upon before the project starts, allowing nonprofits to budget effectively for a defined scope of work.

• Hourly Compensation: The consultant is paid based on the number of hours worked. This is practical for tasks that require a variable amount of time and is often used for specialized, short-term projects.

In practice, these models allow nonprofits to manage their budgets effectively while ensuring that grant writers are fairly compensated for their actual work, avoiding conflicts of interest inherent in commission- and contingency-based compensation models.

Adopting ethical compensation practices for grant writers is about more than following the rules; it's about preserving the integrity and trustworthiness of your nonprofit. By compensating grant writers fairly and transparently, your organization can maintain a focus on its mission and build lasting, trust-based relationships with funders.