This is the second part of the post on outsourcing. Part one includes the 4 types of tasks nonprofits outsource and the 5 key benefits of outsourcing them, you can read that post here.
Questions to Ask When Outsourcing
Successfully outsourcing a few core business functions requires that a nonprofit carefully determine its own needs and the contractor’s capacities. You will likely solicit proposals from prospective vendors and conduct a rigorous vetting process.
When you meet with prospective contractors, a few questions to ask in this process include:
Will we pay a flat amount each month or by the hour?
Paying a flat amount each month helps with budgeting and often with cash flow, but it also limits the additional tasks you can ask a contractor to perform without having to renegotiate a contract.
What is the specific scope of services?
A clearly outlined scope of services will eliminate the possibility of many future disagreements. If a prospective contractor says “I will manage all of your grant writing”, ask for clarity on what tasks are involved. Does this include the grant calendar? Attending RFP conferences? Writing the proposal? Assembling the final proposal? Sending the proposal to the funder? Writing thank you letters? Tracking funder deadlines? Writing grant reports? Etc.
Who else have you done this work for?
It’s best to find a consultant or contractor with more than just nonprofit experience but experience within the organization’s field. As part of this question, be certain to obtain and check references.
What relationships will you bring to our organization?
Each contractor is an opportunity to expand your organization’s relationships with funders, vendors, constituents, and even other organizations. Ask who they may know and how you can leverage the relationship.
What happens when you . . .
Take a vacation? Retire? Experience a significant demand for work? Specifically, the nonprofit needs to feel comfortable that they will have continuity and consistency. Often a firm can provide this level of continuity but a sole practitioner with a strong network can provide a similar assurance of continuity.
What steps do you take to meet the legal definition of a 1099 contractor? *
The Federal Department of Labor and many state departments of labor have been cracking down on employers that incorrectly classify individuals as contractors. While this article isn’t designed to offer legal or accounting advice, be certain that the firm or contractor meets the legal definition of a contractor, and ask a pro bono attorney who specializes in employment law to review the contract and verify that it meets the criteria.
For additional guidance, I have attached a template with suggested questions to ask your potential contractor:
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