Paying for fundraising help: grant writer, consultant or volunteer?

This guide is for small charities that are thinking about getting help with fundraising: someone to write grant applications, plan a campaign or ask donors for money. Maybe a consultant has offered to work "for a percentage of what I raise", or a board member has suggested hiring a grant writer. After reading, you'll know the four main options, what each one costs you in money and time, why paying a percentage of gifts is widely seen as a red flag, when state law makes a paid fundraiser register before working for you, and how fundraising fees show up on your Form 990.

This is general information, not legal advice. Fundraising rules are set state by state, so check with your state's charity regulator before you sign anything.

The four options at a glance

Doing it yourself

No one can describe your work as well as the people who do it. Funders read applications from small charities all the time and don't expect polished prose. They expect a clear program, honest numbers and instructions followed. Our grant writing basics guide walks through a first application step by step.

Doing it yourself also builds skills and funder relationships that stay with your charity, rather than leaving with a consultant.

A skilled volunteer

A volunteer with fundraising experience can review a draft, coach you through your first proposal, or help you build a list of likely funders. This works best when the task is small and specific: "review our draft proposal to the community foundation and suggest changes by the 15th" gets a yes much more often than "help us with fundraising."

Our guide to asking for skilled help explains how to scope a request, and the scope of work template helps you write it down. A volunteer's help is a gift of time, so don't pay them a fee or a share of what they help raise. That would make them a paid fundraiser, with the rules below.

A paid grant writer or consultant

When you have more funders to approach than hours to write, paying a grant writer or fundraising consultant can make sense. Good practice:

• Pay for the work, not the result. An hourly rate or a fixed fee per proposal is the norm. A funder decides whether to give; a writer can't promise it.
• Use a written contract. Say what will be delivered, by when, for what fee, who owns the drafts, and that the writer won't contact funders in your name without permission.
• Keep the relationships. Ask for the funder list, the drafts and any notes, so the knowledge stays with you if the writer moves on.
• Handle the tax paperwork. A writer who works for themselves is usually an independent contractor. The IRS says you report payments to a non-employee for services on Form 1099-NEC once they total $600 in a year, or $2,000 for payments made after December 31, 2025. Our employee or contractor guide explains how to tell the difference.
• Check whether they need to register in your state (see below).

Why percentage pay is a red flag

The offer sounds low-risk: "I'll only take 10% of what I bring in." But the Association of Fundraising Professionals (AFP), whose Code of Ethical Standards binds its members, says members shall "not accept compensation or enter into a contract that is based on a percentage of contributions; nor shall members accept finder's fees or contingent fees." The Code also says members shall "not pay finder's fees, commissions or percentage compensation based on contributions." Bonuses are allowed only if they follow normal practice in the organization and "are not based on a percentage of contributions."

Some reasons this matters for a small charity:

• Donors give to your mission, not to a consultant's commission. Some may be upset to learn part of their gift paid one.
• A grant may not cover it. Check each funder's rules before promising anyone a share of a grant; if the grant can't pay the commission, you'll have to pay it from other money.
• It rewards the wrong things: quick, large asks over relationships that last, and taking credit for gifts that would have come anyway.

If a consultant only works on a percentage basis, treat that as a reason to keep looking.

When state registration kicks in

Some states regulate people and firms that are paid to help charities raise money, and the definitions can be broader than you might expect. New York and California are two examples; your state's rules may differ.

• Professional fund raiser. New York Executive Law § 171-a covers anyone who, under a contract, plans, manages or carries out a charitable solicitation, or hires others to ask people in the state for donations. A charity's own directors, officers, volunteers and employees are not professional fund raisers.
• Professional solicitor. Someone paid by a professional fund raiser to ask for donations.
• Fund raising counsel. Someone paid to plan, manage, advise or assist a charity with fundraising in the state, who doesn't solicit and doesn't handle the money. The law excludes a charity's own officers, volunteers and employees, its lawyer, a person hired only to draft applications for funding from a government agency, and 501(c)(3) organizations.

Under § 173, professional fund raisers and fund raising counsel must register with the Attorney General before acting for a charity that has to register, renew every year, and pay an annual fee of $800 with each application. Professional fund raisers must also file a $10,000 bond. Under § 173-a, they need a written contract with the charity, must file a certified copy with the Attorney General within ten days of signing, and must deposit money raised in a bank account under the charity's exclusive control within five days of receiving it.

In New York, then, a consultant who advises on your fundraising campaign could count as fund raising counsel, while someone hired only to write government grant applications does not.

California is another example. Its Attorney General says a commercial fundraiser is a person or company a charity pays to solicit money or property for it, and that "registration is required before soliciting any funds in California for charitable purposes." Registration is renewed every year, with a $500 annual fee and a $25,000 bond or cash deposit, and charities may not hire a commercial fundraiser that isn't registered with the Attorney General.

Other states draw these lines differently. Before you hire anyone, ask whether they're registered where you raise money, and check with your state regulator. Our state fundraising registration guide explains how to find yours, and using a paid fundraiser can also affect whether your charity itself must register.

Fundraising fees on your Form 990

If your charity files the full Form 990, fees for fundraising help have their own line. The IRS instructions say to report on Part IX, line 11e, "amounts paid for professional fundraising services, including solicitation campaigns," and "advice or other consulting services supporting in-house fundraising campaigns." Costs such as printing and postage go on line 24 if you can separate them; if you can't, report everything on line 11e.

If the total on lines 6 and 11e is more than $15,000, Form 990 asks you to complete Schedule G, Part I. There you list the 10 highest-paid fundraisers who were each paid at least $5,000, whether each had custody or control of contributions, and the fees paid to or withheld by each. The Schedule G instructions say "Form 990-EZ filers aren't required to complete Part I." Your accountant or tax preparer can help you classify the payments.

How to decide

1. Name the gap. Is it time, skill or confidence? A volunteer coach helps with confidence; a paid writer helps with time.
2. Start small. Try one proposal or one review before committing to a long contract.
3. Agree a fee for the work, not a share of the gifts.
4. Put it in writing, including who owns drafts and funder relationships.
5. Check state registration for anyone you pay to plan, manage or carry out fundraising.
6. Tell the board and record the decision in the minutes.

Your checklist

• We know whether we need time, skill or coaching
• We've asked whether a skilled volunteer could do the first piece
• Any paid helper is paid by the hour or a fixed fee, not a percentage
• We have a written contract covering deliverables, fees and ownership of drafts
• We've checked whether the helper must register in our state, and whether that affects our own registration
• Donations go straight to the charity's own account
• We collect a Form W-9 and file a Form 1099-NEC when required
• Fundraising fees are recorded so they can be reported on our Form 990 if we file one