When a nonprofit decides to bring in outside help for a hire, one of the first questions is how the search firm gets paid. It sounds like a contracting detail. In practice, it shapes how much risk your organization carries, and it is worth understanding before you sign anything.
The Two Main Models
Most search firms work on one of two models. In a retained search, the organization pays a fee up front, often in installments over the course of the search, and the fee is owed whether or not a hire is made. Retained fees are commonly set as a percentage of the role's first-year compensation.
In a contingency search, the organization pays nothing unless it hires a candidate the firm presents. The fee is also typically a percentage of first-year salary, but it is earned only on a successful placement.
Both models have their place. Large organizations hiring a CEO or conducting a highly public executive search often prefer a retained firm, with the dedicated team and formal process that comes with it. For many small and mid-sized nonprofits, though, contingency search is the better fit.
Why Contingency Works Well for Smaller Organizations
- The financial risk is minimal. No upfront payment means no money spent on a search that doesn't produce a hire. For an organization with a tight budget, that matters.
- It is easier to approve. A board is far more comfortable authorizing a fee that is paid only when a hire is made than committing funds in advance.
- The incentives are aligned. A contingency recruiter is paid only when the right person is hired and stays. That focuses the work on results, not activity.
- It fits the roles small organizations actually hire. Finance managers, development directors, and operations leads are critical hires, but rarely the kind of search that justifies a large retainer.
What to Look For in a Contingency Recruiter
Not every contingency firm works the same way. Some cast a wide net and send a large stack of resumes, hoping one sticks. That approach can create more work for your team, not less. The questions worth asking:
- Does the recruiter conduct a thorough intake to understand the role, the culture, and what success looks like?
- Do they reach passive candidates directly, or mostly repost your job description?
- Do they screen and interview candidates before presenting them, and how many do they typically present?
- Do they specialize in the nonprofit sector?
- What guarantee do they offer if a placement doesn't work out?
A good contingency recruiter should present a short slate of carefully vetted candidates, not a pile of resumes.
Understand the Guarantee
Most reputable firms offer a replacement guarantee: if a placed candidate leaves or is let go within a set period, the firm will find a replacement at no additional charge. Ours is 90 days. Read the terms carefully, and make sure you understand what triggers the guarantee and how long it lasts.
The Bottom Line
For most small and mid-sized nonprofits, the real cost of a search isn't the recruiter's fee. It's the months a critical role sits empty, the burden that shifts to an already stretched Executive Director, and the expense of a hire that doesn't work out. A contingency model lets an organization get specialized help on the hires that matter most, without paying for a result it never receives.