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Fundraising Agencies: 6 Questions to Ask Before Hiring One

Published by Nathan Hill

Whether you’re looking to grow your digital fundraising, online channels, or direct mail – hiring a fundraising agency is rarely the best first step.

Fundraising agencies can make it challenging to see your return on investment. They may offer advice you’re not able to act on. It’s exceptionally difficult to know who to trust. And real success often comes from a long-term investment.

Plus, many strategies that a typical fundraising agency suggests can be found online for free – or at a much lower cost than agency fees.

Before you sign a big contract and shell out valuable donor dollars on a fundraising agency, ask yourself the 6 questions below.

These questions will help you assess if you are really ready to bring on a fundraising agency to help you grow. And they’ll set you up to have a better engagement if you choose to work with an agency.

Question #1: What outcomes are you expecting from an agency?

There’s no right or wrong answer to this question. But you need to know what outcomes you expect from an agency before you start a conversation.

You don’t need to know the specific strategies, tactics, or tools. But you’ll have a lot more success if you know how you’re going to hold your agency accountable.

There are at least 3 common outcomes that an agency might help you with.

Growing Your Revenue

Most fundraisers looking to hire an agency need some help improving key metrics. These could include:

  • Acquiring new donors
  • Improving life-time value of a donor
  • Reactivating lapsed donors
  • Optimizing donation rates online

Be sure to have key metrics outlined before you engage an agency. That way you can clearly measure their performance and hold them accountable.

Improving Your Efficiency

Maybe you already have strategies that are working to grow your fundraising, but you don’t have enough people to scale your program.

It can be a big risk – and a tremendous amount of work – to expand the size of your team. An agency can help mitigate that risk and help you scale up faster.

This may let you offload work from your internal team and allow you to spend more time on even more important tasks.

Expanding Your Expertise

Many fundraisers wear a few different hats. When you are responsible for several different areas that all require unique skills, it can be difficult to develop a deep level of expertise in any one area.

That’s why some fundraisers look to an agency to expand their expertise. The right agency can help you figure out critical strategies like:

  • Establishing and growing a direct mail program
  • Building out your online fundraising tech stack
  • Setting up tracking and analytics for all your campaigns
  • Grant writing, peer-to-peer fundraising, major gift solicitation, and more.

If you haven’t clearly defined what outcomes you expect, I’d recommend taking a step back and getting clarity before diving into conversations with an agency.

Question #2: Can you actually afford the cost?

When you’re considering the cost of an agency, the decision should never be as simple as, “This agency will fit within our budget.” There are a number of questions you should ask to understand the true cost.

Are you a small nonprofit? (i.e. under $1M in revenue)

If so, the odds of a major agency leading you to a positive ROI in the short-term are slim. A good rule of thumb is that you should be near break-even within 12 months. That’s not a hard-and-fast rule, but it’s a good benchmark.

Additionally, any reliable fundraising agency is going to recommend strategies and tactics that have costs beyond your retainer or agency fees. Even if you can afford the retainer, you must be willing to make additional investments to see real growth.

You may be better off finding free resources and using your agency budget to pay for advertising and execution.

Have you considered your potential ROI?

The amount you spend on your fundraising agency should not eclipse what you’re able to generate in donations. At NextAfter, we see too many nonprofits that are spinning their wheels with a well-meaning fundraising agency. They pay a significant retainer, and they invest in the recommended strategies.

But the new revenue generated doesn’t always surpass the costs of the agency. In many cases, you could see a much greater ROI by skipping the agency fees and running fundraising growth strategies in house.

If your potential fundraising agency doesn’t give you clear ROI projections (based on your existing data) before they start charging you a monthly retainer, you shouldn’t hire them.

Question #3: Are you ready to execute on the advice your fundraising agency gives?

There could be a whole number of reasons that you might not be ready to execute on the strategies suggested by your agency. Here are 3 common challenges you might face.

Do you have extra budget to pay for advertising and projects?

In order to reach new audiences to find potential donors, you’re going to need additional budget for media spend. For growing more traditional channels, this could mean additional spend on direct mail.

If your agency is forward thinking and focused on digital-first fundraising, they’ll likely suggest using online advertising to target likely new donors.

In either case, you will need to spend more money beyond your normal agency costs.

Is your staff equipped to take on new tasks?

If you’re planning to rely on your staff to execute any of the strategies your agency suggests, you need to make sure they’re equipped for the work.

In order for your staff to take on the execution work that’s needed for fundraising growth in the digital era – you need a team of full-stack digital marketers. These are people who can:

  • Set up emails
  • Create automation sequences
  • Quickly analyze data and results
  • Write copy for emails, landing pages, etc.
  • Compile quick graphics in photoshop
  • Manage data and lists across multiple platforms
  • And more

If your fundraising staff doesn’t have this type of skillset, you may be better off investing in staff who can do this type of digital-first marketing and fundraising work.

Can you get copy and design approved in a reasonable time?

The biggest obstacle in getting new strategies and initiatives launched often has nothing to do with your agency. It has everything to do with how your organization operates internally.

When new copy is written for direct mail appeals, emails, donations pages, and more – you need to be able to get copy approved in 24-48 hours. Any longer, and you may miss critical opportunities.

Plus, if your organization takes several days or more to approve new copy and design, you’re paying your agency to twiddle their thumbs until you’re ready.

Do you have the right tech and tools in place?

No CRM, email marketing platform, donation page widget, analytics tracking, or any other tool is going to solve your fundraising problems on its own. But a tool might be the means to implementing the right strategies.

While any good fundraising agency will certainly make recommendations on tools and technology, if you don’t have quality tools in place already, you may end up wasting a bunch of time paying an agency’s retainer while you look for the tools to implement their strategy recommendations.

Before you enter into an engagement with an agency, you’ll want to make sure you have some of the core tools to enable effective strategies. Here are a few you might explore:

CRMs
Email Platforms
Donation Page Tools/Widgets

Question #4: Are you sure your fundraising agency is an expert and not a fraud?

It’s sad that this needs to be a question. But there are a lot of so-called “fundraising experts” that will put on a good show, but not deliver results. Most of them are well-meaning, but often end up over-selling and over-promising just to win your business.

Here are a couple ways to make sure your potential agency isn’t a dud.

Have you verified that your agency’s previous results are real?

Everyone wants to make themselves look good, especially when they have a service to sell. Your potential agency is going to show you their best-of-the-best case studies to convince you that they can achieve meaningful results.

However, an agency’s interpretation of success is often different than a nonprofit’s interpretation of success.

When your potential agency shows you a case study, reach out to the nonprofit they worked with to hear about the experience first-hand. This will help you get straight to the source and see if the results are both real and valuable.

Does your potential agency prove their results with data?

Every fundraising agency claims to be the best, but the only agencies you should trust are the ones that can prove it with data. But be careful here…

“If you torture the data long enough, it will confess.” – Ronald H. Coase

There are some essential rules to keep in mind to ensure that the data your fundraising agency is showing you actually means what they’re telling you it means.

Our CTO breaks down 7 guidelines for telling a story with data in a NIO Summit session here. Use these guidelines as a filter when vetting the data your agency shares with you.

Does your agency use A/B testing to demonstrate new learnings?

The other main way to know that you can trust your agency is if they’re actively learning what works to increase results. And one of the primary ways learn what works is to use A/B testing.

When I say “A/B testing”, I don’t simply mean that they try new strategies and look at the results.

True a/b testing puts 2 different ideas to the test at the same time with the same type of audience. It uses data and statistical analysis to prove what really works to grow your fundraising.

Few fundraising agencies actually do true a/b testing. And even fewer do it well.

If your potential agency can’t prove their results, how can you possibly trust them to grow yours?

Question #5: Are you ready to make a long-term investment?

Signing on with a fundraising agency is not a short-term growth strategy. Any quality agency is going to help you look to the future to see long-term growth. Anyone focused just on the short term doesn’t care about things that are critical to your nonprofit’s sustainability: donor retention, cultivation, or lifetime value.

Do you just need someone to execute a single campaign?

If yes, you might not need a fundraising agency.

You may be able to get your campaign launched with help from a freelancer, contract employee, or part-timer. You might even be able to use a service like Fiverr or Upwork to get some design, editing, copywriting, or other freelance help.

In fact, there are likely a bunch of tools you can use to make things easier for you and your staff to get more done. Here are 6 unexpected fundraising tools that you can use to help improve results and make your team more efficient.

Are you ready to invest in a digital-first fundraising approach?

A fundraising agency is a long-term commitment. And you need to be focused on what is going to lead to long-term growth.

We believe that digital is the most cost-effective way to grow and scale your fundraising because it:

  • Enables an organization to “micro-test” messages without significant up-front investments. 
  • Provides near-instant feedback that can guide every other investment you make. 
  • Is the most efficient pathway to growing multichannel donors, recurring giving, and donor retention.
  • Can boost the impact of all other forms of fundraising, from direct mail to recurring giving to major gifts and beyond.

While direct mail is far from dead and can play a huge role in your fundraising, the time is now to start shifting towards a digital-first fundraising approach.

Not convinced about digital-first? You can watch a quick session from Jeff Giddens (president of NextAfter) on why you should focus on digital-first fundraising.

Question #6: Can you get the strategies you need from free or inexpensive resources?

It’s no secret that there are ample free fundraising resources out there. And there is a steadily increasing amount of affordable fundraising training – including digital fundraising training.

The trick is knowing what resources to trust.

Have you already exhausted the tips from free fundraising blogs and webinars?

There are so many good blogs and webinars out there that can equip you with new ideas to grow your fundraising. If you haven’t explored free resources and tested their new ideas, then you’re likely not ready to take things to the next level with a fundraising agency.

I put together a post for you with 14 fundraising training resources to help you grow your online revenue. Check out those options if you’re looking for some new ideas.

And you can obviously keep using our free resources (data-driven blogs, webinars, tools, and templates) as well.

Have you already invested in fundraising and marketing training for your staff?

You can’t expect your fundraising and marketing staff to deliver results if you haven’t invested in their development and training. If this is the case, take a chunk of your fundraising agency budget and use it to send your staff to conferences and workshops that equip them with proven strategies and growth ideas.

Here are a few training options to help:

Do you still think you’re ready for a fundraising agency?

Option 1: No, I’ve decided I’m not ready yet.

Great! I couldn’t be happier for you. That means you’re going to save a lot of money and headaches – and hopefully get better results.

I mentioned a few different resources for you to explore throughout the post above, but I’ll summarize them for you here:

Hopefully these will equip you with new ideas, learnings, and tools that you can use to improve your fundraising even without an agency.

Option 2: Yes, I’m even more confident that I need a fundraising agency.

That’s great news! If you have honestly answered all these questions and still think you’re ready for an agency, you’re likely in a great position to see big results – even if it takes a long-term investment.

The next big question is, “Which agency should you work with?”

I’m not going to give you a heavy-handed sales pitch. But you should know that at NextAfter, we’re going put in the hard work to:

  1. Make sure you know exactly what your costs are, and how they will contribute to a positive ROI for your organization.
  2. Ensure you’re able to execute on strategies that are proven to lead to growth – before you get too deeply invested.
  3. Apply rigorous testing and optimization strategies to prove what really works to increase your revenue – and show you the results with meaningful data.
  4. Give you a comprehensive, 3-year roadmap so you know the long-term trajectory and ROI projections of your investment in a digital-first growth plan.
  5. Equip you and your staff with new fundraising resources, research, and training based on first-hand research and a/b testing.

Learn more about our process and see if you’re ready to invest in a digital-first approach.

Published by Nathan Hill

Nathan Hill is Vice President, NextAfter Institute.

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