Choosing the right partner for your annual fund

publication date: Oct 1, 2013
 | 
author/source: Leah Eustace

Many nonprofits issue RFPs, whether formal or informal. I know this because I’m on the receiving end of hundreds of them, and have responded to dozens. And most of those nonprofits aren’t going to get what they want because 90% of them are written in such a way that the proposals they receive are going to be like comparing apples to orangutans! leah eustace photo

So that you’re not among that disappointed 90%, I want to provide some tips that will ensure you’re comparing apples to apples. I think it behooves us to make sure that every relationship between a nonprofit and a service provider is built on trust, understanding and a really solid relationship. And that relationship starts as the nonprofit is reviewing proposals and choosing who they’ll work with.

So let’s get started.

1. Be clear

If you aren’t sure exactly what you need, then try to do a little research beforehand. This might mean having coffee or a phone call with a few agency or consultant types to brainstorm. (And they shouldn’t charge you for this!) It might mean speaking to colleagues at other nonprofits who do the kind of work you’re looking to do.  

If you aren’t clear, then the proposals you receive will all be from people making different assumptions, and there’s no way you’ll get apples to apples. Following this suggestion means it will take longer to get going, but it will lead to a better idea of what you need, and you will be farther along in the long-term.

Here’s a really solid RFP template that you can use to make sure that you’re covering all the essential points.

2. Be realistic 

Here’s an example. A few times a year, we receive an RFP that asks us to lay out an annual plan for a nonprofit’s direct marketing program, including details on campaign messaging, components, cost per piece, average gift, revenue, fees and cost per dollar raised. But that nonprofit doesn’t provide us with any sample packages, number of campaigns, past results, revenue or expenditure parameters, strategic goals, or number of donors on file.  They end up receiving projections that cannot possibly be even close to accurate.

That’s like asking someone to build you a home, but not telling them anything about what you want: some will give you a one-bedroom bungalow made of concrete blocks, others a 27-bedroom mansion made of log. It scares me that nonprofits might make a decision based on proposals prepared in an information vacuum. (And note that I’m planning another article on pulling numbers from your database that will help you analyze your program).

3. Be informed

It makes sense to ask the agency and/or consultant to send samples of their work, but remember that they’re going to choose their absolute best examples. That’s why following up on references is so important. It’s also why, just like with job applicants, you should get references from people who aren’t on the reference list (we’re only human: we’re going to choose to give you the names of people who speak most highly of us).

4. Set realistic timelines

Setting realistic timelines leads to better decision-making, and those timelines should be outlined in the RFP. Be clear about the submission deadline: give a date, time (and time zone) and indicate whether electronic and/or hard copy proposals are accepted.

When will you be inviting bidders to present their proposals to you (so we can block this time out in our calendars well in advance)? When do you expect to make a decision? Letting bidders know means they won’t start bugging you for a decision until after that date has passed. When do you expect to start work on the project, and is that timeline realistic? For example, if you’re looking for a full-service agency to run your annual giving program starting January 1st, please start your RFP process the preceding summer to give the agency time to do a really good job for you.

5. Test the relationship

Once you’ve narrowed down the proposals to three or four, invite those short-listed candidates to meet with you face to face. If they’re really excited about the prospect of working with you, they won’t hesitate to do this. This face to face meeting allows you to test the relationship. Ask them to present their proposal to you and pay careful attention. Do they look you in the eye? Do they really listen to what you have to say? Do they respect your opinion and thoughts, or are they know-it-alls?

Another pointer: Make sure they bring the person and/or people you’ll be working with on a daily basis to the meeting. I often hear complaints from nonprofits that they chose an agency based partly on how impressed they were with the people at the face-to-face meeting, only to never see or hear from those particular people again.

Finally, did the potential supplier reach out to you during the RFP process (if they’re allowed to: sometimes we’re only allowed to connect with the procurement officer)? Did they ask questions? Does the proposal they submitted read like they really thought through your particular situation and is it customized to you?

6. Be transparent, if possible

This is a tough one. There are many nonprofits that have a set schedule for going to RFP (every three years, for example). Others have already figured out who they want to work with, but have to go through the formality of issuing an RFP because that’s their policy. We, as agencies, get this. But, to be honest, submitting a proposal and presenting in person is a huge commitment (you may be surprised to learn that submitting and presenting a proposal costs us about $6,000 when we include staff time and travel).

If it’s at all possible to give us the heads-up that this is just a formality and we don’t actually have any chance of winning the bid, please let us know! Even if you just hint at it, we can probably figure it out (perhaps a statement in the RFP along the lines of “we’re perfectly happy with our current agency, but have a policy of going to RFP every three years.”).

7. Know what to look for in pricing

This is probably my biggest pet peeve. The vast majority of RFPs we respond to don’t ask the right questions about pricing. Agencies and consultants all price differently, so you need to know exactly what to look for in order to compare apples to apples.

Direct marketing proposals offer a good example: some agencies charge a flat fee per campaign, plus a mark-up of up to 20% on hard costs like printing (most agencies operate this way). For example, their campaign fee might be $3,000, but when you add the mark-up on production, it might end up being $10,000. Other agencies just charge a flat fee without any mark-up. Their campaign fee might be $8,000… and that’s it. But, if you don’t compare them carefully, you might only see that one agency is charging $3,000 and the other $8,000.

Be very clear in your RFP that all costs are to be included: retainer (if any); hourly fees (if any); travel; reporting; etc. Better yet, include some specs in your RFP and ask bidders to quote all-inclusive fees on that actual campaign.

Last but not least, beware of suppliers who offer to work for your nonprofit on commission. That’s considered highly unethical (you can read about it here).

8. After you've signed on the dotted line

Congratulations on a job well done! You’ve chosen your supplier and signed a contract, but that doesn’t mean we can all sit back and eat bonbons. Check out what Agents of Good has to say about “The 10 pillars of great relations between charities and consultants.” I couldn’t have said it better myself.

Those are my thoughts, but here are a few others sent along to me by nonprofit colleagues who’ve gone through the RFP process.

“I'm a fan of full disclosure RFPs including current program gross and net. I did one RFP where I got permission from all the bidders to let all of them know who was bidding, and I said I was happy to have either individual bids or they could do collaborative bids. Also I always do a section on ‘why you want this job.’ Part of the process is me pitching the cause: the vendor pitches their service and I pitch why they want to work with me. It has to be two-way.”

“Because we are a publicly funded institution we must complete formal RFPs for goods and services desired. Sometime there is a disconnect with Purchasing really understanding our specific needs since we are so different from any other department. We really do operate as a nonprofit. With this process sometimes you may be forced to work with a vendor based on a lower pricing score, although they may have not have the strongest overall submission, especially regarding creativity and strategic vision.”

What are your thoughts? What have you learned when going through an RFP process? What advice would you offer to others? I’d love to hear from you.

Leah Eustace is principal and managing partner with Good Works. A “fundraiser’s fundraiser” with a wide background in charitable fund development, she’s worked with clients including the Canadian Red Cross, the Canadian Breast Cancer Foundation, CARE Canada and the UN Refugee Agency Canada on social media, direct marketing, donor research and legacy marketing.

She’s Past President of the Ottawa Chapter of AFP, President-Elect of the AFP Foundation for Philanthropy-Canada, and a member of AHP, NTEN, the CMA and CAGP.

Contact her by email; follow @LeahEustace



Like this article?  Join our mailing list for more great information!


Copyright, Hilborn Stanois Inc., © 2011-Current. All rights reserved.

Free Fundraising Newsletter
Join Our Mailing List

CPA NFP Forum


 

Hilborn:ecs