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This post discusses commission-based compensation for grant writers. It is one of an ongoing series on Grant Writing as a Career. Earlier posts discussed hourly fees and flat fees, consultant retainer fees and prospect research fees, proposal review and editing fees, ordinary and general consulting business expenses, and contingency fees.

 

As previously noted, the odds of a given proposal being funded vary with the program, the funder, and the competition at the time of application. They vary with the applicant’s experience as a grant seeker, its track record in managing prior grant awards, and the merits of its problem-solving strategies. Seldom is a proposal’s positive outcome a certainty.

 

Commission-Based Compensation:

Contrasted with zero-sum contingency fees, another type of arrangement for deferred compensation pays the consultant a modest upfront fee, such as $2,500 or so per proposal. The client then agrees to pay a further commission upon notification or receipt of funding – either as a fixed sum or as a percentage of the amount of a grant award.

 

Consultants may state their deferred payment options on their websites. One consultant’s schedule – discoverable online – combined a fee with a commission in this way:

  • 60% of estimated fees due in advance (and)
  • 8% of awards over $75,000
  • 10% of awards between $25,000 and $74,999
  • 12% of awards between $10,000 and $24,999
  • 15% of awards between $500 and $9,999

 

In addition to the ‘estimated base fees,’ at the minimum points in each range, this option would amount to surcharges of:

  • $6,000 (at 8% of $75,000)
  • $2,500 (at 10% of $25,000)
  • $1,200 (at 12% of $10,000)
  • $75 (at 15% of $500)

 

With larger grants (such as those of $100,000 or more per year), percentage-based commissions more typically range from 1% to 5% of the total grant awarded.

 

Problems and Pitfalls of Commissions:

A budget is ‘padded’ when a line item is calculated at a higher amount than it should be or is introduced in its entirety when it is not necessary. Commission-based deferred payment arrangements may tempt proposal developers to pad their budget requests so that their pay-offs become that much larger. In the illustration above, from 8% to 15% of each dollar of padding would benefit the consultant, not the client.

 

Such padding goes beyond representing a cushion to account for annual cost inflation in certain items in a multiyear proposal (e.g., in salaries and fringe benefits). It also goes beyond realistic uncertainties in the future costs of certain requested products or services (e.g., those of computers or of airfares).

 

From the start, padding may be evasive or deceptive in its origins and its intent. At best it may be merely naïve. A client with severely limited financial resources may be more tempted than others to pad its grant budgets in order to pay a consultant’s commission. Whether naïve or deliberate, it is a bad practice since grant makers hold padded budgets in universal contempt.

 

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