Clamoring for Consultants

Demand for myriad services, including fund-raising and management advice, is on the rise

Crammed calendars are again the norm at the Center for Nonprofit Management, in Nashville.

After watching the number of nonprofit groups seeking management advice drop in 2001 and 2002, the

Center for Nonprofit Management saw its caseload explode in 2003 — a trend that has carried into the early months of the new year, says James R. Vaillancourt, the group’s executive director.

The center had 231 consulting engagements in 2003 — about three times the number it had in 2002.

Mr. Vaillancourt says the spike in demand is easy to trace. Nonprofit organizations slashed their budgets and laid off staff members during the recent economic downturn to save costs in the face of declining revenue. Now, with the economy starting to improve in many parts of the country, they are trying to step up their fund-raising activities and plan strategies for the future.

In many cases, he says, charities are relying on consultants, rather than hiring new employees. “With the types of cutbacks they’re going through, if they cut back their staff in 2002 and they didn’t build it back up in 2003, they have more of a tendency to look outside for help,” he says.

Fund-Raising Help Sought

Preliminary results of a national survey conducted in February by the Alliance for Nonprofit Management, in Washington, show that consultants across the country are seeing increased demand for nearly all their services. Demand is heaviest for consultants who specialize in helping nonprofit organizations manage their resources and raise funds.

The alliance found that fund-raising advice — a perennially hot area for consultants — has been in particularly high demand in recent months, as nearly 61 percent of the 198 consultants surveyed reported increased calls for fund-raising help.

Mr. Vaillancourt says his consulting practice has found that many nonprofit organizations are trying to find creative ways to recoup what they lost during the downturn and are turning to fund-raising consultants to accomplish that goal. Instead of looking to consultants simply to help them stay alive, charities are looking for advice to help them grow.

“It’s not frenetic,” he says. “It’s more thoughtful. It’s more organizations that have weathered the storm and dipped into their resources and they want to get back on track.”

But fund raising isn’t the only hot area for consultants, according to the alliance survey. Nearly half of respondents reported increased demand for board-development and governance services. Another 43 percent of consultants reported that more clients are seeking their help with leadership, and with finding mentors and management coaches.

Charities are also leaning heavily on consultants who are adept at strategic planning, can conduct searches for qualified executives, and can help ease leadership transitions.

“There weren’t any categories where demand was down,” says Heather Iliff, the alliance’s deputy director for education.

While demand is on the rise, so is competition. A preliminary review of the survey results shows that consultants across the country are facing additional competitors, largely because recent layoffs in the nonprofit world have pushed many former charity executives into independent consulting, Ms. Iliff says.

But many consulting groups are also finding that, even as more of their ranks are vying for clients, the pool of money available to pay consultants is also growing. Nearly half of the respondents in the alliance survey — 47 percent — said their revenue increased in 2003 compared with the previous year. Only 9 percent said their revenue dropped.

The increased competition and demand is also making it easier for those with substandard credentials to enter the consulting field, some consultants say. To date, there is no body that sets requirements or accredits the full spectrum of specialties covered by consultants who serve the nonprofit field.

As a result, charities are on their own when it comes to determining whether a consultant is qualified. But Ms. Iliff says her organization is conducting research on the topic and could someday create an accreditation system.

Stretching Dollars and People

Consultants nationwide say the recent boom in demand for their services is a predictable result of the economic downturn, which pushed many nonprofit groups to eliminate jobs they once deemed essential. Those changes are prompting many charities to look for new ways to provide their services and raise money.

“Given the pressure on performance that nonprofits are facing, they have to assure the greatest impact with their resources,” says Jeff Bradach, cofounder of the Bridgespan Group, in Boston, a consulting company that works with nonprofit clients. “So the demand is for the consultants who help them with that — how to think through their management and strategy issues in order to have the greatest impact.”

As a result of the need to get more from limited funds, consultants such as John Paul, a partner at Association Works, in Dallas, say they are getting fewer calls to conduct basic-skills training and more for help with governance and board development.

Many of Mr. Paul’s clients are working with smaller budgets and staffs than they were in the late 1990s and are now looking to stretch their smaller staffs to become more efficient.

To do that, an increasing number of clients are leaning on Mr. Paul’s firm to evaluate the role and performance of each employee to make sure they are being used properly by the organization.

Nonprofit groups are also looking for ways to cut costs responsibly. With that in mind, a growing number of organizations are hiring consultants who are experts in collaboration, says Hedy Helsell, executive director of the Center for Nonprofit Management, in Dallas.

“They are looking for ways to partner with other groups to share costs and resources, and are looking for ways to effectively merge parts of their operations,” Ms. Helsell says. “This is partly the result of the poor financial picture that is still greeting many nonprofit organizations.”

Leadership Transitions

The emphasis on doing more with less is also prompting many nonprofit organizations to become more deliberate when they hire new executives. As a result, the market is hot for consultants who manage executive transitions and who serve as interim executive directors.

As recently as three years ago, for example, CompassPoint Nonprofit Services, a consulting group in San Francisco, did not offer an interim executive director service. Today, says Mike Allison, CompassPoint’s director of consulting and research, it places as many as 40 interim executives per year, and maintains a pool of about 50 consultants in Northern California who are qualified to lead charities.

Charities “are taking a lot of time to make sure the fit is right when they hire,” says Mr. Paul. “For a long time, people would tolerate bad behavior if someone had talent. People are realizing now it’s worth the cost to get both.”

By hiring consultants to serve as interim executive directors, nonprofit organizations avoid rash decisions and instead focus on selecting the right person to lead their organizations for the long term, says Elizabeth M. Heath, founding executive director of the Nonprofit Center, in Tacoma, Wash. “Boards are getting smarter about that transition piece,” she says. “They aren’t just looking at getting someone in here in two weeks.”

The spike in demand for interim executive directors is also the result of radical changes in the industry. Executive directors are facing increased pressure to meet aggressive financial goals, says Mr. Allison. In turn, he says, more top executives are departing swiftly, and more boards of directors are faced with finding new leaders for struggling organizations. “Fast and dramatic changes are taking place — funding drops, and an executive director leaves,” Mr. Allison says. “It seems almost desperate. The threat of organization failure is such that an executive director’s performance is on the line.”

But while many organizations are hiring consultants to help them after the departure of their top executives, a growing number of nonprofit groups are turning to consultants before their executives leave.

Tom Adams, president of Transition Guides in Silver Spring, Md., specializes in helping charity boards and staffs plan for changes in leadership. He says he has seen demand for transition planning rise steadily in recent years and he expects that demand will continue to grow during the next decade, especially as a growing number of baby boomer executives prepare for retirement. “There are a number of long-time executives and founders who are looking to move on. There has not been a lot of attention on that in the past,” says Mr. Adams. “Transitions can be very stressful and very challenging. I’ve seen executives and boards burn goodwill because they have not properly planned for transitions.”

Exploiting Technology

Small- and medium-size nonprofit organizations are also relying more on consultants who can help groups exploit technology to become more efficient, says David VanAmburg, a management and technology consultant in Erie, Pa. Mr. VanAmburg’s company works with nonprofit clients to help them set up more productive Web-site and software management systems — demand for which, he says, is on the rise.

In addition, his company leans heavily on new technology to help streamline its traditional consulting services. As evidence, Mr. VanAmburg points to a recent strategic-planning process his company conducted for a nonprofit credit union. Rather than conducting days of meetings and interviews, as he’s done in the past, Mr. VanAmburg met with the organization’s board of directors for one hour, held a few in-person staff interviews, and is conducting the rest of the process online.

But while Mr. VanAmburg’s clients are looking for high-end technical help, some consultants thrive by focusing on more basic topics.

For example, Mr. Allison says more nonprofit workers are leaning on CompassPoint’s training-services department for help because they have new responsibilities due to layoffs within their organizations. “We’re seeing people come in like, ‘I’m a program manager, but we just laid off our financial manager and I need to file a 990. What is a 990?’” he says. (A 990 is the informational tax return that all nonprofit groups with revenue of $25,000 or more must file each year.)

Whether they provide basic-skills training or high-tech strategic-planning services, consultants — and the nonprofit organizations they serve — say they are again seeing signs of growth after several years of contraction.

“What we notice more than anything is that the psychology is changing,” says Mr. Vaillancourt. “People are feeling more positive. There may not be anything concrete to support it. But the feeling is there.”

Heather Joslyn and Cassie J. Moore contributed to this article.