If you’ve been in nonprofit consulting for more than 20 minutes, you’ve certainly heard the words “We don’t have a lot of money. You think you could just [insert your service here] to help us out?” If they don’t directly say it, they certainly imply that they want you to give your service to them for free. After all, they’re a nonprofit (they remind you).
The ability to employ non-paid labor (volunteers) and receive donations in exchange for a tax deduction are important assets to nearly any 501(c)3 registered nonprofit. They know it, and many aren’t shy about it.
Whether it’s put to you directly by your potential client, or whether you consider the question yourself before you connect with them, it’s important to know the answer to this question:
Where’s the line between consulting for a nonprofit, and simply volunteering your professional services?
You’re in your business to make money so you can feed your family or do other things that are important to you. Giving away your services doesn’t make sense in that context. That means there are a number of considerations…
- Is your rate of pay symbolic of the value that the organization puts in your services? If so, it’s easy to translate the words “can you volunteer to do that” as the organization greatly under-valuing your services. Is the person tasked with engaging a consultant thinking “if I can’t get them to donate the service, then I will do it myself. After all, how hard could it be?”
- The nonprofit might claim poverty. “We can’t afford it.” You can actually check that out. You can go to GuideStar.org to see their 990. With this, you might be able to determine whether they’re spending money in your area of expertise, if they hire outside contractors, and if nothing else, their total budget for the services they deliver and what portion of this budget is in administrative costs. You might find that their interest in your donating a service has nothing to do with whether they actually have the money to spend.
- “Think about the publicity you’ll get if you give this to us pro-bono!” If they have enough money to generate the amount of publicity that will justify your time without pay, then maybe they should just pay you.
- Depending on what service you’re offering, the nonprofit could see it as “non-essential” to their mission. That could leave you scratching your head. For example, to you and me, boosting fundraising is easily an “essential.” However, to the nonprofit client, anything that is not their “core” mission, like providing clothing to the poor, is not an “essential.” The more they keep fundraising costs down, the more money they have to clothe the poor (and yes, you can make the argument that with better fundraising you can clothe more, but then you show you miss their logic, however flawed.)
Maybe your answer is “no, pay me my rate.” That makes life simple. Yet rarely is life so simple. Ask yourself “When would I volunteer my work to a nonprofit, rather than as a paid consultant?”
- Do you have a prior relationship that includes volunteering? Maybe one of your children was/is involved with the organization or you benefitted from their work?
- Do you have a passion for their mission? It might simply be that you love what they do, and that getting paid is the least of your concerns as long as you see their mission successful.
- Do you need to build your portfolio? Establishing a legitimate track record is important in consulting, and volunteering your work to do so is a common way to do this. Most organizations that benefit from this are small, and would not otherwise be able to pay for your services anyway.
- Does a small job for free lead to a bigger one for pay? In my experience, no. The next time either never comes, or when it does they wonder why you can’t offer it the same way you did before – for free.
There could be other reasons too. Whatever your reasons to either volunteer your work or not, it’s important that you are clear with yourself about why you made the decision you did, and if you volunteer, you’re clear to the organization about why. You don’t want to set yourself up for the expectation that once you have volunteered, you may never charge them for work again.
Complicating the above, are the IRS rules on your ability to deduct the value of your time on your 1040 (know that I am not an attorney or accountant, but in my non-professional opinion it doesn’t look like you have much room to interpret this one.)
Check out IRS Publication 526: Charitable Contributions.
Publication 526 (2014), (http://www.irs.gov/pub/irs-pdf/p526.pdf) Under Section: Contributions You Cannot Deduct, Heading: Value of Time or Services. (p. 7) you’ll find:
“You cannot deduct the value of your time or services, including:
- Blood donations to the American Red Cross or to blood banks, and
- The value of income lost while you work as an unpaid volunteer for a qualified organization.” [my bold]
In a nutshell, the answer is “no.”
Should you volunteer? That’s up to you. Do you want to hear them say “thank you for volunteering your services”? You offer a valuable service that your clients would love to get for free. Just make sure, as Benjamin Franklin said, to “pay yourself first.” Last time I checked, I couldn’t volunteer for my electric company.
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