Do you provide nonprofit discounts or do pro bono work for clients? If so, make sure that you’re doing so intentionally.
One of the great things about being an agency owner is that we have the flexibility to choose who we work for, including both paying clients and the discounted or free services we may offer.
Understanding the impact of this kind of work can maximize the good that you’re able to do while minimizing the drain on your agency’s profits.
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Does your agency provide non profit discounts? Do you do pro bono work for non profit clients? If so, let’s talk about how you do it to make sure you’re doing it most effectively. Hi, I’m Chip Griffin, the founder of SAGA, the Small Agency Growth Alliance, and today we’re going to be taking a look at a topic that is near and dear to the hearts of many agency owners and something I get asked about quite a lot by my clients who are really trying to understand how to do non profit work most effectively and how to treat people fairly with their pricing.
One of the great things about being an agency owner is that we have the flexibility to choose who we work for. We choose our paying clients. We choose our pro bono work. They should reflect the organizations that we are comfortable working with, whether we’re charging them full price, discounted price or giving away our services for free.
And so we need to think about how we’re going to structure our nonprofit and pro bono policies. We need to make sure that they are reflecting our own priorities and we need to make sure that we understand what the true cost of these relationships might be. So when I have an agency owner come to me and ask, Is it a good idea for me to offer this non profit a discount?
Or, to do pro bono work for some other organization? They’ll often tell me about all of the extra things and benefits that they might get from this work. They might be able to do some additional networking. They might get some community recognition. They might be able to have their support mentioned by this organization.
There’s all sorts of things that go along with pro bono or discounted work that might be appealing. But ultimately what I explained to agency owners that they should do is they should be thinking about this in terms of what is the true cost to your agency of this work. If you’re giving the work away, if you’re discounting it, how much is that?
How much in labor costs and other costs do you have to perform that work? And then take a look at that number and ask yourself, would I be willing to write a check to the organization in question for that amount? If the amount and the organization feel good to you, if it feels right, then it may be something that is worth doing.
Of course, you also need to be considering what the opportunity cost is of this work. You need to be thinking about whether or not you and your team’s time could be spent better on something else. Could you be out there generating new business? Could you be out there finding another client that would allow you to write an actual cash check to that organization instead of making an in kind contribution?
It’s not to say that one is better than the other. You simply need to evaluate your options so that you understand more correctly and more accurately what the impact is on your business. And of course, as an agency owner, because we have that flexibility to choose who we work for, we need to make sure that we’re taking advantage of that flexibility.
And we’re particularly thinking about our pro bono and non profit discounted work in terms of how can we use it most effectively to support the organizations and the causes that we care about. Ultimately, you need to be putting the services of your agency to work for those things that feel most important to you as the owner.
To your team, the people around you, you shouldn’t be doing it because you simply want a blanket policy. That’s how you get into trouble. That’s how you leak profitability without really having a conscious decision about how to use your pricing and how to use your pro bono work to advance your own causes, to achieve your own goals and to make a real difference.
If you’re looking to make a real difference, look at the actual hard data, understand the costs, be comfortable with those costs, and know the real value of the work that you’re providing to the organizations that you support. So, hopefully that gave you something to think about as you’re considering your own non profit discount policy, your own policies and practices around pro bono work.
And if you’d like to learn more about this, I would encourage you to visit the SAGA website at smallagencygrowth. com for lots of additional resources that will help you to figure out what the true cost of servicing a client is, as well as additional discussion around profit discounts and related topics.
Thanks for joining me. I’m Chip Griffin of SAGA.