Do You Give Discounts To Your Nonprofit Clients? I Don’t — Here’s Why.

Do You Give Discounts To Your Nonprofit Clients? I Don’t — Here’s Why.

Opinions expressed by Entrepreneur contributors are their own.

Let’s suppose you run a small-business .. A technology services firm with about 10 people. You’re doing well, but you work very hard to make it better. You’re serving hundreds of clients. Then a new client calls you. Except, this client is different: it’s a nonprofit organization. The executive director of this company is asking for a discount. “I know your hourly rate is $175,” she says. “But we’re nonprofit — hopefully you can give us lower rates? “

This happens to me a few time a year. Is this something you have experienced? If you own a small business, it is likely. What can you do?

You can be a charity person and offer a discount for the nonprofit. You can also be a grinch by refusing to do so. Are you really being a grinch or are you just being lazy? Are you really a bad person for not giving a discount to a non-profit? I don’t believe so. That is why I don’t go down that path. I never offer discounts just because a client is a nonprofit organization. Here are some reasons why.

Related: Don’t Offer Customers Discounts If You Want to Be Successful

For starters, giving a discount means giving a donation, and I donate money elsewhere. My wife runs a non-profit that helps kids without financial means learn to read. Our friends are very supportive and raise funds to support research that will save their daughter from a fatal lung condition. These are really good nonprofit organizations that are doing really good things. They are a proud cause that I support. But of course, one can only support so many nonprofits and charities. I have chosen the ones that I support. You choose yours. We can only do what we can.

I’m aware of other companies, usually large ones, that offer special discounts to nonprofits. They are doing a great job. But, I think this could open up a whole new world of possibilities. We live in very contentious times. People judge organizations based on the causes they support. I cannot just have a policy that gives discounts to all nonprofits. It means that I will do this for charities and nonprofit organizations that may be opposed to me or my employees, or both. No matter what my views may be, do I want my company to offer discounts to organizations that lobby for or support guns or abortion? Remember that nonprofits can be set up to support people and organizations with political agendas that are less than desirable. All that hassle is not something I want.

And, speaking of my business: I have my own cash flow problems. Giving a discount to nonprofits essentially means that I’m donating money to the nonprofit. It is literally reducing my profits to their benefit. It’s taking money from my bank account to support a cause that is not important to me. I have a business to run with overhead expenses to pay and payroll to cover. I don’t own a Mercedes or eat at fancy restaurants. I admit that I have spent a lot on Phillies tickets, but it’s not a big deal. My small business isn’t any different from a small nonprofit. I don’t see why I should feel guilty about not giving discounts to my nonprofit.

Related: 5 Strategies for Selling to Nonprofit Organizations

Here’s another thing: Just being a nonprofit doesn’t mean the organization is poor or cash-strapped. Some of the biggest organizations in the world are nonprofits. The Salvation Army, The United Way and the Ford Foundation are just a few that come to mind. They are all doing amazing things. Do I have to offer them discounted rates if my company is ever hired? You’ll see that many of these nonprofits spend a lot of money on salaries, benefits, and other perks for their senior managers and employees. Big nonprofits are frequently criticized for spending too much of the money they raise on overhead and other costs not associated with their core missions. Whatever. They have their own operational and recruiting challenges. Is my small business supposed fund them by offering discounts?

Lastly, I don’t believe that simply being a nonprofit organization will automatically allow you to pay less for your services. Why do nonprofits need discounts? While I understand that they are trying to address a societal problem, don’t all businesses address societal issues in their own ways? Who is going to decide whether a nonprofit or a for-profit is better for the planet? Your organization isn’t more special because you are a nonprofit. Each of us contribute in our own ways.

I replied to the client that I was unable to offer a discount on our hourly rates. I appreciate all that you and your organization do to make the world a better place. My organization does many good things. I can assure you that we will do a great deal for you and provide services that will make your non-profit more productive and efficient for your donors. That should be enough.

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