06 Oct How to Budget for an External Evaluator by AGS Grant Staff

You know that you need an external evaluator. Maybe your organization doesn’t have the internal expertise or time to conduct a program evaluation yourself, or a grant funder requires a third-party evaluation. Many programs—and organizations—feel that they can’t afford an external evaluation, and funders don’t always pay for program evaluations. However, if you can convince donors and funders that your program is effective and efficient, you’ll be more competitive for future funding. A strong evaluation provides valuable information for data-based decision-making to inform program refinements and continuous improvement. Funders have a limited amount of dollars to award and, therefore, want to fund effective projects.

Factors Affecting Evaluation Costs

The types and scopes of external evaluations vary widely. As a result, evaluation costs fluctuate, and the conventional guidance to devote 10% of the program budget to evaluation isn’t always accurate, at least for federal grant programs. There are three primary factors that influence the evaluation budget: program, evaluation design, and reporting/dissemination.

Program: Program factors include challenges collecting data on the population that you serve, the number of program sites, and the number of site visits necessary to collect data. For example, if focus groups are facilitated at nine sites rather than one, the costs will increase. If your nonprofit only serves clients once, data collection is much more difficult and will require more time to address that challenge in the design.

Evaluation Design: The type of design, data collection strategies, data analysis and interpretation strategies, your current evaluation capacity (i.e., the data collection and storage systems already in place), and level of team engagement all affect evaluation costs. More complicated evaluation designs—such as those that use control or comparison groups—take more time and are more expensive. The types of data collection strategies and instruments affect the budget. Surveys tend to be costly to construct, test, and execute, while existing data sets can provide tremendous cost savings. However, existing surveys and focus groups can be more cost-effective than conducting interviews.

Similarly, the types of data analysis affect costs. Complicated statistical methods—such as analysis of variance (ANOVA) or chi-square test—require advanced expertise that will increase costs. Finally, if the project team and/or stakeholders want to be closely involved throughout the planning and implementation stages or with the plan to include evaluation capacity building in the process, the evaluator will spend more time preparing for and leading meetings, increasing costs. However, high engagement among the team and other stakeholders increases understanding about the program and evaluation and improves buy-in.

Reporting and Dissemination: As reporting and dissemination requirements increase, so do costs, as evaluators spend significantly more time and resources documenting results and/or findings in reports, presentations, or other deliverables. Evaluators will need to work with the project team to ensure that deliverables present information in a meaningful way for internal groups to use to inform decision-making or for external communications, such as lessons learned.

Average Cost of External Evaluations

There is little information available about the average cost of an external evaluation because evaluations—and their respective budgets—vary widely according to the nature, scope, and design. However, the Corporation for National and Community Service (CNCS) has gathered information about evaluation costs from federal grant programs that can start a discussion about evaluation costs in general. CNCS found that the average evaluation budget was 16% of the program budget, with a 13% median evaluation-to-program budget ratio. What this means is that the traditional guidance of 10% of the program budget is inadequate. Rather, the percentage of the program budget dedicated to evaluation work should minimally be 13-15% and optimally be 20% for both non-experimental (i.e., no control or comparison group) and quasi-experimental (i.e., existing control group) designs. For experimental designs (i.e., randomly assigned control group), the percentage should be closer to 25%.

Keep in mind that evaluation costs are likely to decrease over time due to increased evaluation capacity and sustainability. For example, as data collection methods are developed, instruments can be reused, and historical datasets are available, costs decrease. External evaluation work can be viewed as an investment in systems and processes that will be sustained over time, with small recurring maintenance costs to adjust for programmatic changes.

Drafting the Evaluation Budget

Your first step in drafting an evaluation budget is to consult with finance staff and program staff. Finance staff familiar with contracts and procurement may be able to pass along cost-cutting information. Program staff can share the systems and instruments currently in practice, determine which need to be created, and how data might be best collected. Next, publish a request for proposals and talk to evaluators early to get several quotes about what the evaluation will cost and the number of hours/days that the evaluator will need to complete the work. Lastly, create one budget using a high estimate and another using a low estimate; the actual costs will likely be an average of the two. Be prepared to make adjustments and plan for contingencies. Keep in mind that there are several components of the evaluation budget: external evaluator labor, travel, and other direct costs.

External Evaluator Labor: Estimate the number of hours/days that evaluators will need to complete the evaluation work. Evaluator time may include evaluation planning, project management, selecting or creating and testing data collection instruments, obtaining institutional review board (IRB) approval (if applicable), collecting data, analyzing data, and creating deliverables for reporting and/or dissemination.

Travel: Some evaluations may require travel on-site to meet with program staff or to collect data. Include a line item each for airfare, ground transportation, lodging/meals, and incidentals.

Other Direct Costs: This budget category often includes high-cost items, such as costs to purchase and/or mail surveys or to purchase data collection platforms.

Additionally, program staff may need to spend significant time dedicated to implementing and monitoring the evaluation, especially in instances when you seek lower-cost external evaluators. Program staff may need to regularly meet with the evaluator, connect the evaluator with other staff within the program or organization, build data systems, store data, and review deliverables and processes created by the evaluator. This cost may or may not be reflected on your evaluation budget, depending on your organization, but it does need to be discussed with both program staff and the leadership team during the initial evaluation planning stages.

How to Find Supplemental Evaluation Funding

If you have trouble funding an evaluation, you may need to get creative about how to find supplemental funding. First, consider approaching program partners, collaborators, or local groups by telling them how they might benefit from your evaluation results and findings. Programs that offer similar services might be able to partner on an evaluation, creating a larger dataset that is required for more rigorous designs. Within your organization, advocate for unrestricted dollars from fundraising events, private gifts, or corporate/foundation grants to be allocated for program evaluation. Finally, some foundations—such as Annie E. Casey Foundation, WT Grant Foundation, and Brady Education Foundation—will award restricted funds for program evaluation.

You can find other blog posts in this series here. AGS also offers several on-demand webinars on a variety of topics to support the full grant cycle, including several Evaluation Training topics! Check out our website to learn more and sign up for our training newsletter.

If you are interested in grant services, training, or federal review services, or are interested in our career opportunities,  Julie Assel, CGMS, GPC, President/CEO will be happy to talk with you about this opportunity and provide you with a quote for grant services.

AGS blogs, funding alerts, and trainings are aligned with the Grant Professional Certification Institute’s Competencies and Skills.

• Competency #4: Knowledge of how to craft, construct, and submit an effective grant application. Skill 4.11: Identify evaluation models and components appropriate to grant applications.
• Competency #8: Knowledge of methods and strategies that cultivate and maintain relationships between fund-seeking and recipient organizations and funders. Skill 8.4: Identify methods for collaborative efforts among the grant manager, program manager, and support staff during funder site visits and site evaluations.
• Competency #5: Knowledge of post-award grant management practices sufficient to inform effective grant design and development. Skill 5.4: Identify methods of establishing transitions to post-award implementation that fulfill project applications (e.g., document transfer, accuracy in post-award fiscal and activity reporting).