Working with paid consultants

This guide is for directors and boards thinking about paying an outside expert: a grant writer, an accountant to clean up the books, a web designer, an evaluator, a fundraising adviser, a strategic planning facilitator. A good consultant can do in weeks what would take a small team months. A badly scoped one can eat the budget and leave little behind. After reading, you'll know when a consultant makes sense, how to scope and choose one, what belongs in the contract, who owns the work, and the tax and state rules to watch.

If the help is free, see getting the most from a pro bono or volunteer expert. If you're not sure whether someone is a contractor or really an employee, read employee, contractor or volunteer? first.

When a consultant makes sense

• A defined project with an end, such as a database migration, a strategic plan or a first audit preparation.
• Expertise you need only now and then, such as legal, HR or evaluation advice.
• An outside view, where a neutral facilitator helps the board or staff work through something hard.

It makes less sense for ongoing core work that someone does every week under your direction. That may be a job, not a contract, and treating it as a contract can be misclassification.

Scope the job first

Before you talk to anyone, write a one-page scope:

• The goal, in one sentence: what will be different when this is done.
• Deliverables: what you'll receive, such as a report, a trained team or a working website.
• What's not included.
• What you'll provide: documents, access, staff time and a single contact person.
• Timeline and budget, including whether the budget is fixed.
• How you'll judge success.

Our scope of work template works for paid projects too.

Choose fairly

• Talk to more than one consultant for anything significant. Ask each for a short proposal against the same scope.
• Check references, ideally from small charities like yours.
• Ask who will do the work. The person who pitches isn't always the person who delivers.
• Watch for conflicts of interest. If the consultant is a board member, a staff member's relative or a business they own, the board must handle it under your conflict of interest policy, and the pay must be reasonable. See paying people fairly.
• Look at the whole cost: fees, expenses, and your own staff time.

The contract

Get every paid engagement in writing, even small ones. Our consultant agreement checklist lists what to cover, including scope, fees, schedule, confidentiality, data, ownership of the work, insurance and how either side can end the agreement. Have a lawyer review any significant contract before you sign.

Who owns the work

This matters for reports, logos, photos, websites, curricula and software. Under federal copyright law, copyright belongs at first to the author (17 U.S.C. § 201). A work made by an outside contractor is a "work made for hire," owned by the charity, only if it falls into one of a short list of categories, such as a contribution to a collective work, a translation or an instructional text, and both sides "expressly agree in a written instrument signed by them" (17 U.S.C. § 101). Much consultant work, such as a logo or a website, may not fit those categories. So the safest route is a written assignment of copyright to the charity. A transfer of copyright "is not valid unless" it is in writing and signed by the owner (17 U.S.C. § 204). At the very least, make sure you have a license to use, change and share the work as you need.

Paying consultants and the IRS

• Collect Form W-9 from each consultant before you pay them, so you have their taxpayer identification number.
• Form 1099-NEC. The 2025 tax law (Public Law 119-21, section 70433) raised the reporting threshold from $600 to $2,000 for payments made after December 31, 2025, and indexes it for inflation for calendar years after 2026. The IRS instructions (revised 12/2026) say that for tax years beginning after 2025 you report nonemployee compensation "of $2,000 or more" in box 1a, and that the threshold "may be adjusted for inflation beginning in calendar year 2027." Check the current instructions each year. Attorneys' fees go in box 1a at the same threshold, but gross proceeds paid to an attorney, such as a settlement, go in box 10 of Form 1099-MISC at $600 or more.
• Form 990. Part VII, Section B of the Form 990 lists your five highest-paid independent contractors that received more than $100,000 for services. Part IV asks whether professional fundraising fees topped $15,000, which triggers Schedule G.
• Classification. If the consultant works only for you, on your schedule, using your equipment, under your direction, ask whether they are really an employee. See employee, contractor or volunteer?.

Fundraising consultants: extra rules

States regulate people paid to help you raise money. The California Attorney General's guide, for example, distinguishes commercial fundraisers, generally paid to solicit donations or to receive or control the money raised, from fundraising counsel, paid to advise, plan, manage or prepare fundraising materials without soliciting or handling donations, and says both are regulated and must register with the Registry of Charities and Fundraisers. Other states have their own registration and contract rules. Check before you sign, and see our guide to charitable solicitation registration.

Managing the work

• Hold a kickoff to agree the scope, the contacts, the first deliverable and how you'll communicate.
• Meet on a regular rhythm, for example every two weeks, with a short written update.
• Approve changes in writing. If the scope grows, agree the extra cost before the work starts.
• Review each deliverable before paying for it.
• Plan the handover: files, passwords, training and documentation, so you're not dependent on the consultant afterward.
• Close well: a final meeting, a short evaluation, and feedback both ways.

Consultant checklist

• We wrote a one-page scope before talking to consultants
• We compared more than one proposal for significant work
• Conflicts of interest were declared and handled by the board
• The contract is in writing and was reviewed by a lawyer if significant
• The charity owns, or has a written license to use, the work product
• We collected Form W-9 and will issue Form 1099-NEC if required
• Fundraising consultants are registered where our state requires it
• Payments are tied to deliverables, and we have a handover plan