The 2023 Nonprofit Consultant Survey offers insights into revenue performance, project budgets, work hours, and trends in the nonprofit consulting industry.
In early 2023, Prosal surveyed 165 consultants and professional service agencies focusing on the nonprofit sector. In partnership with Consultants for Good and Philanthroforce, Prosal created a survey to better understand the budding nonprofit consulting sector of the overall U.S. consulting industry. While plenty of research and market reports suggest a sizable and growing $330 billion U.S. consulting industry, more research into the subsector of nonprofit consulting is needed.
Our 36-question survey fielded between January - February 2023 gathered valuable insights into this under-researched industry. The results below offer valuable insights into the industry, including consultant demographics, areas of expertise, working patterns, RFP responses, and revenue performance.
The survey pool predominantly self-identified as women; over half of the respondents had a graduate degree or higher. Respondents' ages varied from early 20s to late 60s, but most were between 30 and 49. Companies had an average age of 7 years, with 30% founded between 2020 and 2022.
Our very first question asked how survey respondents identified themselves so Prosal and others could better speak about the communities they serve. Most respondents, 73% in all, identified themselves as consultants, while 16% identified as agencies, 7% as freelancers, and 4% as vendors.
92% owned their businesses, while the rest worked within a larger company. When asked for more details, only 88% said their business was legally incorporated as an LLC, C-Corp, S-Corp, or other legal entity. The minor discrepancy in these results indicates that it is a question we will ask with greater specificity in future surveys to determine the advantages of each type of business.
The average age of a business that responded to our survey was about seven years. More notable was that one-third of respondents have worked in their current roles for less than two years, suggesting a tremendous growth rate in the nonprofit consulting industry since the onset of the Covid-19 pandemic. This rise in nonprofit consultants during the pandemic can be partially attributed to two different trends.
The first was the general rise in unemployment and record unemployment numbers in March 2020, especially in the nonprofit sector, when the pandemic began. The second was the “Great Resignation,” which led to record numbers of workers quitting their jobs and many electing to start their businesses out of a desire for remote work freedom and the ability to choose with whom they worked.
We asked respondents for their primary areas of expertise, which revealed significant concentration in certain areas while others appeared wanting.
Most consultants specialize in support roles such as strategic planning and organizational development. More specialized roles in communications, fundraising and development, and marketing followed. However, when we broke the responses down by demographic data, consultants who identified as Black, Indigenous, Asian, Hispanic, or Latino were likely to specialize in racial justice work, coaching, and organizational development.
Just over a quarter of respondents shared areas not initially listed in the survey as their areas of expertise. We bucketed write-in responses from “Other” into existing or new categories during our response coding. Future surveys will better provide more comprehensive job roles in design technology, project management, and human resources.
The project cost within these roles is one of the most valuable yet underreported information. We asked respondents about their minimum budgets to engage in a project. Responses were incredibly varied, not only in price but also in the project's design, with minimums offered for hourly, monthly, and project rates.
Although 26% of agencies noted no minimum budget to engage in a project, we aggregated the data across all areas of expertise to better understand the cost of hiring an agency for a specific project. Below are the average project minimums for an agency based on their industry:
It is important to note that this is the average project minimum for an agency in these industries. Because they are averages, different agencies have higher and lower minimums. Furthermore, nearly half of all agencies reported no minimum project to engage with a client. Future surveys will explore the nuances of budget minimums, agency rates, and client engagements.
The average work week for consultants was 38 hours, with 63% of this time spent on billable client hours and 19% on business development. Respondents at companies with more than two founders or principals reported working 41 hours per week on average.
Most consultants work just under a 40-hour work week, with the average reported time spent working in 2022 as 38 hours. However, responses ranged widely, with some respondents reporting just 10 hours per week working total, suggesting their consulting might be a part-time role or side hustle, whereas others reported 80+ hours per week.
We only found minor differences when we analyzed the data by demographic identity and workplace settings. While women averaged the same 38 hours per week, BIPOC consultants averaged 39 hours per week, and respondents at companies with more than two founders worked 41 hours.
Breaking down the data further, respondents averaged 63% of their time spent on billable hours and 19% on business development, specifically searching for new business leads. Given responses to the initial questions on whether people own their businesses, this represents the distribution of hours for executive-level roles or founders at a consulting agency. Due to a missing chunk of hours, about 18%, that goes unrepresented in our analysis, future survey questions will do a better job of understanding if this time is spent on other client work, business development needs, admin tasks, pseudo work, or something else we’re not considering.
72% of respondents reported writing a proposal for an RFP in 2022, winning an average of 38% of the RFPs for which they bid. Agencies average between four and five proposals to an RFP every month. This doesn’t count any bids submitted for projects that did not come to an RFP. Survey respondents also noted averaging between three and five hours per proposal, meaning that about 20 hours per month were spent, either collectively or individually, by an agency responding to an RFP. We’ve heard in our interviews that many agency owners have a high degree of management, if not possession, in the business development process. We are curious whether these hours were primarily spent by the agency owners or employees, which we’ll follow up on in future surveys.
Regarding win rates, which we define as the proportion of opportunities won from RFPs relative to the total number of RFPs responded to, rates varied widely. Some firms averaged a 100% win rate, which, though difficult to believe, is possible with incredible selectivity in the RFP qualification and response process. Many more reported 0%, which is tragically believable given the competitive nature, information asymmetry, and lack of transparency we’ve written about before.
When we broke down the data demographically, we noticed that more BIPOC-led agencies often responded to RFPs, 83%, compared to the average of 72%. However, they submitted fewer proposals on average, between three and four per month, with a much lower win rate of just 24%. This indicates that BIPOC consultants were more likely to respond but were more selective. Additionally, there was likely a higher concentration of responses in a small number of non-BIPOC agencies.
Additionally, 80% of companies with more than two founders responded to an RFP in 2022, averaging between three and four RFPs per month. We believe that, despite the added capacity, companies with two or more founders aren’t necessarily seeking more opportunities via the RFP and likely look to other sources of business, especially given what we found for revenue performance in the next section of the survey. Lastly, 75% of survey respondents who identified as women replied to an RFP in 2022, averaging between three and four proposals per month at a 38% win rate.
The average nonprofit consultant worked with just over a dozen clients in 2022. Agencies averaged nearly seven new clients in 2022, indicating a year of growth for most businesses that responded. We understand there is some bias in our results as nonprofit consultants that did not succeed or closed shop were unlikely to report their performance. Our team also wonders if this growth will continue to sustain itself given current macroeconomic conditions, especially in the nonprofit sector.
Nearly two-thirds of survey respondents shared their company’s revenue for FY 2022. Based on our survey, nonprofit consulting businesses averaged $654,768 in revenue. When removing outlier companies that earned $15 million, nonprofit consulting businesses averaged $220,879 in revenue. Companies with two or more founders averaged $2.3 million in revenue in 2022.
Breaking down the data demographically, women-owned agencies averaged $403,526 in revenue, about 40% less than the average. When we looked at BIPOC-owned agencies, we were surprised that they averaged just $128,437, more than 80% less than the average for all businesses.
When working with other consultants, respondents were diverse in their styles. 66% reported hiring a subcontractor for a project, and 67% reported being hired as a subcontractor for another consultant or agency.
Most people who hired a subcontractor, about 50%, paid them an hourly rate, while a third paid subcontractors a fixed project rate. Less common but still observed was paying a percentage of the contract, with about 8% of respondents noting they did so. The remaining ~9% replied that their payment terms depended on the project and were negotiated based on the scope, with most saying it could go hourly or fixed.
Overall, nonprofit consultants were very satisfied with all facets of their work, including their companies' services, work-life balance, and the clients they elected to work with. Compensation was the one with the least satisfaction, with over a third less than satisfied with the amount they are compensated. Moreover, about 10% of respondents across each category were neutral or dissatisfied with their services, work-life balance, and clients.
Peer and professional groups and email listservs were among the most popular ways for consultants to stay updated and informed about industry trends. About 80% of all nonprofit consultants are part of a professional group. When we asked what groups they were members of, the most popular included Consultants for Good, Philanthforce, Progressive Exchange, the Nonprofit Technology Enterprise Network, the Communications Network, and TechSoup. Because our pool of respondents relied heavily on the Consultants for Good and Philanthroforce networks, we recognize that this question exhibits heavy bias in selecting responses.
Other popular methods of staying informed about topics and trends included LinkedIn, newsletters, events, and podcasts. The responses did not note other forms of social media, such as Facebook and Twitter. Regarding events, just over half of respondents, about 53%, said they attended a conference, workshop, or seminar related to nonprofits or consulting in 2022. Our team is curious if this number will increase in 2023 as COVID-19 restrictions continue to recede. Additionally, we’re curious what this breakdown will look like when compared between in-person and virtual events. One surprising finding was that respondents from companies with two or more founders were less likely to be part of a professional group, attend conferences, or engage in extracurriculars than their solo-founder counterparts.
We’re thrilled with the results of Prosal’s first Nonprofit Consultant Survey, which provides valuable insights into the current state of the industry, including demographics, areas of expertise, working patterns, RFP responses, and revenue performance. The findings could not have been possible without the partnership of Consultants for Good, Philanthroforce, and Rebecca Andruszka from Do Better Consulting, who also conducts an annual nonprofit consultant salary survey. We hope these findings inform future strategies and support the nonprofit consulting community better.