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RAISING FUNDS?

What You Should Know

About Hiring a Professional

I f your nonprofit organization is planning a fundraising campaign, you may be considering hiring a professional to do the work. Professional fundraisers conduct 

campaigns for a fee; often, it’s a percentage of the money they collect.

Because the fundraiser will be representing your organization to potential donors, the Federal 

Trade Commission (FTC), the nation’s consumer protection agency, says it’s important to 

investigate every firm you’re considering hiring. Inappropriate behavior by a fundraiser can 

result in negative publicity for your organization, fewer or smaller donations, and possible 

legal action involving you and the firm in the case of legal violations. 

Choosing a Fundraiser

A little research could help ensure that you’re working with a reputable fundraiser. Contact 

other nonprofit groups in your area for information and referrals — especially colleges, 

hospitals, and cultural organizations. You also may want to contact your local community 

fund or association of professional fundraisers.

Once you’ve compiled a list of potential fundraisers, call them for background information. 

Get written information about each, including a blank contract. Then, schedule interviews 

and ask how they would conduct your campaign: 

• Would they solicit by phone, mail, e-mail, door-to-door, or by several approaches?

• Would they solicit money only — or would they sell products or tickets to events?
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• What portion of the donation would come 

to your organization — and what portion 

will the fundraiser take? Stay away 

from companies that promise something 

for nothing or “easy money” for your 

organization.

• Would subcontractors be used for any part of 

the campaign?

• How would the fundraiser make sure its 

telephone solicitors follow approved scripts? 

Would it record calls? Would monitors listen 

in on calls? 

When you’re interviewing, be clear that while 

the fundraiser would conduct the campaign, you 

would maintain overall control and expect the 

company to provide periodic financial reports. 

Ask to see financial data from other campaigns to 

get a picture of their successes.

Ask what procedures are in place to make sure 

that the company complies with the FTC’s 

Telemarketing Sales Rule. The Rule applies 

to telemarketers hired to conduct inter-state 

solicitations of charitable contributions by phone. 

Fundraisers and any subcontractors must comply 

with the following requirements:

• telemarketing must be done between the 

hours of 8 a.m. and 9 p.m.;

• telemarketers must promptly identify the 

charitable organization they represent and 

disclose that the purpose of their call is to 

ask for a contribution;

• telemarketers must not make misleading 

statements during their pitch to induce a 

donation; and

• if a person asks to be placed on a “do not 

call” list, the telemarketer must honor the 

request. Any further calls to that person may 

subject the telemarketer to a fine of up to 

$51,744*. 

Many states also have regulations regarding 

charitable solicitations. Ask whether the 

telemarketer understands these requirements and 

how they plan to follow them. Include a statement 

about adhering to state regulations and federal law 

in your written contract. In addition, make sure 

that the materials used by the fundraiser comply 

with any state “do not call” laws. Some states 

require paid fundraisers to identify themselves as 

such and to name the charity for which they are 

soliciting. Ask whether the company is registered 

and bonded — a requirement in many states. You 

can learn more about your state laws by contacting 

the state’s charity regulator. For a list of state 

offices, visit the National Association of State 

Charity Officials at www.nasconet.org/agencies. 

Ask for references and contact them about their 

experiences with the company, and whether they 

have suggestions based on their experience. Check 

out the company with your state Attorney General 

(www.naag.org), local consumer protection 

agency (www.consumeraction.gov), or the Better 

Business Bureau (BBB) (www.bbb.org). These 

organizations can tell you whether they have 

received consumer complaints about the company. 

The absence of complaints doesn’t necessarily 

mean the company is legitimate. Unscrupulous 

companies may settle complaints, change their 

names, or move to avoid detection. 

Finally, get bids. Some state laws require nonprofit 

managers to get competitive bids.

A reasonable bid is determined by many factors: 

the time and type of labor involved, the nature and 

duration of the relationship between fund-raiser 

and client, and the ability and experience of the 

fundraising firm, to name a few. 

The Fundraising Contr

Once you’ve selected a professional fundraiser, 

describe the details of the campaign in the 

written contract to protect yourself as well as the 

fundraiser. Keep in mind that donors ordinarily 

expect that most of their contribution will go *[Note: Edited February 2023 to reflect Inflation-Adjusted 

Civil Penalty Maximums.]
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toward programs and services. The contract 

should:

• explain the services to be provided and the 

financial responsibilities of each party; 

• authorize or prohibit the use of subcontractors; 

• identify the compensation to be paid — a 

flat fee and/or a percentage of the money 

collected. Remember that some watchdog 

organizations have standards that limit overall 

fundraising costs; 

• require that the fundraiser use only material 

reviewed and approved by your organization 

when contacting the public, especially 

telemarketing scripts and printed materials 

mailed to donors. Descriptions of your 

organization and representations about the tax 

benefits of a donation must be accurate: make 

sure any description of how the money will 

be used is consistent with the organization’s 

current plans and objectives; 

• specify the contract period, including the 

closing and settlement dates; 

• require the fundraiser to agree to comply 

with the FTC’s Telemarketing Sales Rule and 

applicable state laws; 

• outline cancellation criteria for both parties; 

• require the fundraiser to provide detailed 

reporting of results throughout the campaign 

and at its end. All donor checks should 

be made out to your organization, not the 

solicitor. Do not allow the solicitor to endorse 

checks. Review sales and other financial 

records on a regular basis, perhaps weekly; 

and

• specify ownership of donor lists. Typically, 

lists belong to the nonprofit. If you retain 

ownership and decide to offer your lists for 

rental or exchange, consider the privacy of 

your donors. You may want to offer donors 

the opportunity to opt out of lists you furnish 

to outside mailers and phone solicitors. If the 

telemarketer owns the lists, you may wish 

to retain the right to obtain certain data to 

provide tax information to donors and reports 

to regulators. 

The Campaign

Even though you’ve hired a professional 

fundraiser to conduct a campaign, you’re 

responsible for the actions taken on your behalf. 

Maintaining regular contact with the firm 

throughout the campaign is a must. Here are some 

additional tips for quality control:

• If you’re conducting a telemarketing 

campaign, insist that the fundraiser institute 

a system for training and monitoring its 

operators to make sure they’re following the 

authorized script. One method is to call back 

donors at random to verify the conversation. 

Provide the telemarketer with answers for 

commonly asked questions. 

• Make sure that the fundraiser has a system in 

place to honor “do not call” requests. 

• Closely track complaints from the public. 

If a pattern develops, review the area that’s 

causing confusion or concern and discuss 

ways to resolve the issue with the fundraiser. 

• Keep tabs on the flow of money during the 

campaign. Make sure you get copies of 

original invoices as received, paid receipts as 

paid, bank statements, checks, and deposit 

slips. Monitor all expenses to be sure they 

are reasonable and ordinary. Immediately 

question any expenses that appear excessive 

or lack documentation. 

For More Information and to Repor

Several private nonprofit organizations promote 

standards in philanthropy to evaluate the 

performance of public service groups. These 

standards include guides about the use of 

professional fundraisers. For more information, 

contact:

BBB Wise Giving Alliance

4200 Wilson Boulevard, Suite 800

Arlington, VA 22203

(703) 276-0100

www.bbb.org/charity
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1-877-FTC-HELP FOR THE CONSUMER

FEDERAL TRADE COMMISSION ftc.gov

April 2019

Federal Trade Commission

Bureau of Consumer Protection

Division of Consumer and Business Education

American Institute of Philanthropy

3450 Lake Shore Drive, Suite 2802 E

Chicago, IL 60657

(773) 529-2300 

www.charitywatch.org

Charity Navigator

1200 MacArthur Boulevard 

Mahwah, NJ 07430 

(201) 818-1288 

www.charitynavigator.org

BoardSource

1828 L Street, N.W., Suite 900

Washington, DC 20036

(877) 89-BOARD (892-6273)

www.boardsource.org

If you believe an organization may not be 

operating for charitable purposes, is making 

misleading solicitations, or is ignoring requests 

to be placed on a “do not call” list, contact 

your state Attorney General (www.naag.org) 

or your local consumer protection agency 

(www.consumeraction.gov). You can get the 

phone numbers for these organizations in your 

phone book, through directory assistance, or 

through Web directories.

You also may file a complaint with the Federal 

Trade Commission. The FTC works for the 

consumer to prevent fraudulent, deceptive, and 

unfair business practices in the marketplace 

and to provide information to help consumers 

spot, stop, and avoid them. To file a complaint 

or to get free information on consumer issues, 

visit ftc.gov or call toll-free, 1-877-FTC-HELP 

(1-877-382-4357); TTY: 1-866-653-4261. 

The FTC enters consumer complaints into the 

Consumer Sentinel Network, a secure online 

database and investigative tool used by hundreds 

of civil and criminal law enforcement agencies in 

the U.S. and abroad.