The Non-Profit Challenge

I get these calls all the time - "We're a non-profit..." which is usually proceeded by a request for a lower rate. I'm guessing you do too.

I'm not saying that you should never do pro bono work, or give back. However, don't let it be based upon who rings-you-up, but rather, after a period of reflection to decide for whom you would like to offer your services.

Understand, being a "non-profit", a.k.a. "Not-for-Profit" organization is a tax designation (IRS FAQs about Operating as an Exempt Organization), and, as such, allowing a tax structure designation to dictate the acceptability of a discount would mean that an LLC or a S-Corp, or a Sole Proprietor would all potentially enjoy different pricing.

I don't see the landlord cutting them a break, or the electric company, or the cost for a computer, or the cost of a case of copier paper, or.....you get the point. Why are we to discount our services?

(Continued after the Jump)

We're not!

A few words from the IRS' Exemption Requirements:

To be tax-exempt under section 501(c)(3) of the Internal Revenue Code...it may not be an action organization, i.e., it may not attempt to influence legislation as a substantial part of its activities and it may not participate in any campaign activity for or against political candidates....Organizations described in section 501(c)(3) are commonly referred to as charitable organizations. Organizations described in section 501(c)(3), other than testing for public safety organizations, are eligible to receive tax-deductible contributions in accordance with Code section 170....The organization must not be organized or operated for the benefit of private interests...Section 501(c)(3) organizations are restricted in how much political and legislative (lobbying) activities they may conduct.

This delineation would certainly reduce the number of valid claimants who suggest they are charitable/non-profit.

Further, when the organization has nice downtown office space, and their staff are paid competative wages with a 401k, and their event is in a nice hotel or downtown venue and they have quality floral arrangements, or, their executive you're doing a portrait of has a beautiful view of the city and dresses in high quality suits, why should you bear the brunt of cost-savings requests?

You shouldn't.

Don't think though, that you can deduct your services.

The IRS's Publication 526, which is a a publication discussing how to claim a deduction for charitable contributions, lists on Page 2:

Not Deductible As
Charitable Contributions

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Value of your time or services

back on February 10th (An Original Picasso for $50? That's what they say) I suggested "don't bother with the get paid then donate route...", but upon further review, if you want to be seen as a donor, and treated as such, it's not a bad idea.

When you're working for a charity, send them an estimate and then invoice for the full amount of your services, get paid, and agree that you will provide that amount back (less expenses, if that's your deal) by check, through their donation mechanism. This sets them up to recognize the true value of the work you do do. Further, you are then listed as a "donor" in their literature, and are extended an invitation to attend other events where a photographer may not be present, as a guest. While your donation may be in-kind, it places you on par with others who may have donated the same amount in cash.

So, while this won't help your tax status, since your donation and your income cancel each other out, it could be a good way to actually make a donation. and certainly affords you the ability to cover your expenses when the deal is a pro bono one.
(With thanks to a helpful SF ASMP member who posited this nugget of information, well worth expanding upon!)

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