Money Matters: Making a Living as an International Development Consultant

It is possible to make a decent living as a consultant in international development. If you’re reading this, and work in the international development field, you are probably someone who did not choose a career because of the money. But we all need to earn a living. We all have to eat.  Indeed, a lot of our work centers on helping people in low-income countries earn more, increase their job opportunities, or lower their living costs.  Today’s blog post is a series of observations on money, mostly aimed at consultants working in international development, who are maybe trying to navigate the earnings map and find their place on it.

Most international consulting jobs pay by the day. Like many others in today’s economy, a lot of international development consultants rely on short-term assignments. They may prefer them, as I do. Short-term jobs give you a lot of flexibility and don’t involve extended overseas stays, which can last for months. I know some consultants who spend as much as a year abroad, leaving their family at home. But that’s not for me. Typically, the short-term jobs will be contracted based on a specific number of days at a given rate. I’ve had contracts for as little as 5 days and as much as 150 days, but most fall in the 30-60 day range.

You can negotiate your daily rate.* In most cases, you can negotiate your daily rate just as you would negotiate a salary when you are offered a full-time job. Once you have been selected for the assignment, you will be offered a rate. You can either accept it or ask for more. If the offer is less than you earned previously, you can share contracts you’ve had with other organizations, they can be used as a reference point. Maybe you have misgivings about negotiating for yourself in a field you entered because you want to serve the greater good? I suggest you still try to earn what you think you are worth, and give away the surplus to a worthy cause.

Most organizations have fee structures. A lot of firms and development organizations such as the World Bank, IMF (and the US Government) have a fee structure. The structure usually has broad bands and is not necessarily rigid. The fee structure may factor in your years of work experience, sector, position (team leader, specialist, researcher), professional background, and education. The World Bank has a four-tier system, based on years worked, and each tier encompasses a fairly wide range, which includes a minimum, maximum, and market reference point. The number of years of experience seems to trump everything else.  Even in development work, financial sector assignments seem to pay more, reflecting the market for these skills. (Whether finance jobs should pay more is another topic. My suspicion is that it is merely the ability of finance people to organize their work around commissions, which are easily calculated as a percentage of a deal or an investment, unlike most professionals.)

Fees can vary widely by organization and assignment. Don’t count on earning the same daily rate for every assignment. Your daily fee may vary substantially between organizations, by as much as 50%. Some organizations have salary caps which apply to contractors (as is the case for USAID contractors, which topped out at about $655 in 2016 [update – in 2020 the maximum was set at 698.08]). Exchange rate fluctuations can make a big difference. The US dollar went from $1.59 to the euro in 2008 to below $1.05 in 2016, which meant that working for European firms became less attractive for Americans over this period, and vice versa.

How much can consultants earn? As an established consultant, you should be able to earn the same as, if not more than, full-time staff at the international development organizations you engage with. Many staff have posted their salaries on glassdoor. Of course, you won’t receive any standard benefits. The main benefits of this work come from the satisfaction of doing good work, making a difference in people’s lives (hopefully a positive one), meeting new people, and exploring new countries. That means you should make sure that you can provide your own benefits out of your fee. That applies especially for health insurance and retirement savings. However, remember that your work is not worth less than that of salaried employees. To increase your rate significantly with the same organization may involve moving to a different level (based on years of experience or responsibility).

In theory, your rate should broadly reflect what the market will bear. Keep in mind that the market is different in different countries, and obviously exchange rate fluctuations can have a big impact. As noted above, when the euro was strong, working for a European entity was a better deal than working for American organizations. Within the last few years, the situation has reversed. This is by way of pointing out that one can operate in different markets, and must take that into account. In some markets you will find you are worth more than others.

Expenses are normally accounted for separately. In international development work, expenses are almost always budgeted and paid for separately. You receive your fee as milestones are met, and then submit receipts for any travel and accommodation expenses, unless the organization pays for it directly. Almost always, there is a per diem for meals and incidentals for which you don’t need to produce receipts. You should never have to pay for your expenses out of your fees. Some contracts are lump sum. You cover your own travel, accommodation, meals and incidentals and don’t submit any receipts.

Your present determines your future. By this I mean that whatever rate you agree on today will be the basis for future rate, at this and other organizations. So even if it is just a 20-day contract, and that $20 difference isn’t so important, your next contract may be 100 days, and it will be based on your previous contract. And most organizations will take into account what you earn elsewhere.

Does your rate seem high? Don’t forget – as a freelance consultant, you have to cover all your own benefits, and any enforced vacations from work. Essentially you are trading off benefits for freedom. You need to take into account taxes and benefits when considering your rate.  Depending on your nationality and who your contract is with, you may or may not need to pay taxes. In contrast to full-time employees, you will also need to cover your own benefits, especially health insurance and retirement. Plow part of your earnings every year into a low-fee 401k. Warren Buffet suggests Vanguard S&P index funds and I agree with his advice. If you have a partner with an employee health insurance plan, get on that.

You can work overtime. Obviously, if you take on more contracts and work weekends your earnings will rise. Some organizations allow you to bill for a 7-day work week others for a 6-day work week while on site (i.e. working in country) or ‘on mission’ as it referred to by some organizations, as if international development professionals were modern-day secular missionaries preaching the gospel of improved living standards. Just make sure you do top quality work. Don’t double bill by charging different organizations twice. Be results-oriented and be ethical.

Your annual earnings will fluctuate. Ups and downs in earnings are  inevitable for non-salaried workers. Over time you will, however, see an upward trend in your income as you get more work, add years of experience, and become better at negotiating your rate.

The daily rate isn’t everything. Despite the above, you may find yourself willing to accept a lower rate for a variety of reasons. Maybe you are trying to get your foot in the door, or you like the assignment, or the work conditions. Perhaps you are willing to earn less on this assignment because you’ll be working in a country you’ve always wanted to go to.

Some resources to consult

• Glassdoor. Review the salary ranges on their website, glassdoor.com, which aggregates salaries for different positions, by organization. The data is based on what people have posted themselves.
• Fellow consultants. The best source or information on what you can expect to earn is probably other consultants who work, or have worked in the field. (Don’t necessarily ask them about their own rates, however. Talking about one’s salary in the US remains an even bigger taboo than talking about one’s sex life!)
• Fee structure matrices. These may or may not be accessible to consultants for all organizations. But it never hurts to ask around. They will give you a benchmark.
• Devex. This organization describes itself as the “media platform for the development community.” It caters to organizations, companies and individuals working in international development. There is a monthly individual membership fee (starting at $9.50 at the time of this writing) and you can post your CV and look at job postings. Members have access to articles, including “Foreign aid salary spotlights,” which describes international development jobs and rates in a selection of countries.

* For more on negotiating your daily rate, see: How to negotiate your fee as a consultant: Figuring out what matters (footnote added July 30, 2019)