Invoicing Pro Bono Work

[MNicolai]

I've had problems lately with a certain local non-profit who mistook my willingness to take initiative as an excuse to let me stumble through the dark while working on web development for them. In short, I asked for "things" and was ignored. Sometimes it was a request for PayPal HTML, details on an event, who was going to manage calendars if I setup a calendar through Gmail and embedded it into the web page (because right now whenever a time changes, they have to email the existing webmaster and wait for him to hand-code the changes into the HTML calendar).

The deadline on publishing the website came and went. I mean, it really went. Two months went.

And I was the bad guy. It was my fault that the website wasn't ready. My sister, who helps out at this non-profit as well became a villain by proxy and she was being harassed every time she walked into the building about why I hadn't finished the website yet, as if it was some conspiracy or evil plot.

Some unkind and remarkably witty Reply-All emails were exchanged, and long story short, I've ceased web development, dead-ended the URL that I purchased for them, and they removed their project manager from the business side of things, replacing him with my sister. They won't get a new website from me this year before their event, but I've left the door open to negotiations for next year's event.

I was fed up with my time not being valued. In some cases, I waited 10 days for someone to acknowledge I had asked a question regarding something they should've been able to get to me in 10 minutes that was otherwise preventing me from working on an entire page of the site.

Having played that game once, I've now decided that I'm going to invoice all of my pro bono work by the hour plus materials and expect a tax write-off in return.

It's less about the money, and more about them understanding that I only have so much time in a week. If they want to make it easy for me so that I'm only spending a small portion of my time navigating the bureaucracy, then they can get a lot of real work out of me. Conversely, they can "pay me" the same amount of money to make phone calls, play email tag, drive to meetings that don't pertain to my work, and have little to no work out of me.

This also helps the schools I work with to track their budgets so that if I begin to be less charitable, be it for lack of initiative, time, or I fall off of the face of the planet, they then understand how much money they'd have to spend to fill in the newly created gaps, which are most often the maintenance tasks that I typically do for free, like dimmer rack cleaning, equipment/cable repairs.

Anyone try this before?

 

[derekleffew]

...Having played that game once, I've now decided that I'm going to invoice all of my pro bono work by the hour plus materials and expect a tax write-off in return. ...

The IRS may object to your decision.
Is pro-bono work tax deductible? - Yahoo! Small Business
Pro-bono work and tax breaks - FreelanceSwitch Forum

 

[MNicolai]

Well that idea's out the window. Still, I'll probably invoice materials and time, but discount all time. So I spend $80 on stuff and do $200 of work, I'd "charge" $280, but discount the $200 so the net is only $80. That keeps it in the forefront of their minds that my time is finite and has value, because of that I can choose to put them at the top of my priorities list or at the bottom, and paying work will almost always take priority over pro bono work.

 

[MNicolai]

Additional food for thought on the topic from here.

Taking Advantage: How to Work Pro-Bono for Fun and Profit

I have worked with a wide range of non-profits, from the very small to the very big. These are organizations (especially the small ones) that often have little or no money to pay for your services, yet need the help of someone with your talents. It’s not hard to find them.

You may be asked to work pro bono.

Quick definition: “done for the public good without compensation.”

There are great reasons to do pro bono work for non-profits. You can pad your portfolio. You can give back to your community. You can develop quality relationships that pay off down the road. It’s a great chance to try new things and push your skills without risking a big budget project.

While it sounds great on the surface, there are major problems with working for free (aside from not getting paid for your time).

Benefits

Portfolio
Networking
Skills development – try new things
Altruism – you’re doing a good thing, achieving a higher purpose
Special Note

Taxes. You can’t get a tax benefit for donating your time. You can only deduct any out of pocket expenses. Ask any qualified accountant for advice. They’ll all tell you that you can’t save on your taxes by donating time.

Risks

There are a lot of risks that go with giving your time away. Let’s go through these one by one.

Free means no value.
When people get something for free, they tend to treat it as if it has little value. When they’re paying an expensive consultant, they listen up because it’s going to cost them a ton. But because you’re donating your time, your client may take you for granted. There are a few ways to overcome this.

• Donate only what it will take to do the job. When you agree to accept a pro bono project, quote it out as you would any paying project. Once you know how much time/money it would take for a normal client, donate that much for the project. If you want to pad an extra 10% to account for overruns, that’s fine. The point is to set a limit to your commitment.
• Invoice the client as you normally would, but zero things out. If you’re donating $10,000 of your time, track your time (as usual) and bill against the total. This helps you with your own accountability, too. That way you don’t end up over-involved.
• Finish up strong. At the end of the project, deliver an invoice that lays out how much you donated. This reinforces the value you provided, and creates an endpoint for your project. If they need additional help, you have an opportunity to re-negotiate the terms of the arrangement.

Once you start, you can’t stop
It’s easy to get sucked in. Many of these organizations are in desperate need of top talent. They do such great things that you have hard time saying no.

It’s just business. If you have to walk away, it should be a polite “I’m sorry, but my business simply can’t afford to continue donating this much time.” There are thousands of non-profits that tug at your heart strings. That’s how they raise money. Approach the relationship as a partner and you can maintain a more professional perspective.

There is no future paycheck coming!
Be careful about the old carrot-and-stick routine. Some clients may try to get free service now by suggesting there will be money down the road. Sometimes there’s the possibility of work with related groups. Or that they’re just waiting on a big influx of cash before they can pay you back later.

The money isn’t coming. Even if money does come in later or there are projects, they likely can’t promise these things to you. If they’re tight on money, there are always other bills that take precedence. You should only agree to take a project if you’re willing to do it for free. If more comes out of it later, that’s great. But chances are, you have to be happy with the pro bono arrangement from the beginning.

Put it Together
The next time you have an opportunity to work with a not-for-profit, give it a serious chance. But remember that you’re trying to build your own business as well. Manage your project like any normal project, and don’t let yourself get too personally attached. You’ll find it’s possible to do a good thing for free and still come out on top.

 

[Anvilx]

Invoice them! One strategy is to invoice them as you normally would and then on the bottom line put some sort of discount that brings the grand total to nothing, it shows them exactly how much your time costs and how generous you are being. Just do that, my dad had some one invoice him in such a fashion and he always says that it was an important lesson in business for him.

Ok, so after writing this i read your additional link.

 

[Mim]

As a freelance LD I've run into similar issues with local not for profit performing groups. Part of the issue was that I was hired as technical director of a community center venue they all hold performances in. My job description as TD makes it clear that LD is not part of my job - but many of the groups 'expected' me to do LD tasks for them. I have done something pro-bono for each of them, presenting to them at our first meeting my rate sheets and standard contracts so that they clearly understood at the time that I do this freelance and am a professional. Some of them whined, but I just stand my ground

 

[WDS]

One thing I have seen done with non-profits is invoice them in full then turn around and donate a percentage back, that way they get the reality of writing the big check and you get a tax write off. FYI, I've never seen this done with 100% so I don't know how the taxes would work with that amount.

 

[JChenault]

One thing I have seen done with non-profits is invoice them in full then turn around and donate a percentage back, that way they get the reality of writing the big check and you get a tax write off. FYI, I've never seen this done with 100% so I don't know how the taxes would work with that amount.

If what you are proposing is 'You invoice the non-profit. Non-profit writes you a check - you make a donation to the non-profit' you will not (as far as I understand, and I have looked into it) realize any tax advantages.

If the non-profit cuts you a check as a non-employee for more than $600 a year, they are required to file a form 1099 with the government. You will be taxed on what the non-profit reports. You can deduct the amount you give to the non-profit if you itemize your expenses, but if your total income is large, part of this deduction is phased out. IE you get a percentage of it.

 

[WDS]

If what you are proposing is 'You invoice the non-profit. Non-profit writes you a check - you make a donation to the non-profit' you will not (as far as I understand, and I have looked into it) realize any tax advantages.

If the non-profit cuts you a check as a non-employee for more than $600 a year, they are required to file a form 1099 with the government. You will be taxed on what the non-profit reports. You can deduct the amount you give to the non-profit if you itemize your expenses, but if your total income is large, part of this deduction is phased out. IE you get a percentage of it.

One company I worked with in the past would do this for several of there large non profit clients, but never more than 25%. So this might work well more as a Thank You" rather than a viable pro bono plan.

 

[TimmyP1955]

Send a letter to each member of the board detailing your information requests and the untimeliness of the responses (when you got responses). Let it be known in no uncertain terms who is responsible for the problems. (In live sound we call this "letting them suck out loud").