How to successfully offer pro bono accounting services
Doing good things for the right people for the right reasons can be very rewarding. But, many accounting firms offering pro bono services fail to take a strategic and organized approach, opening themselves up to a host of potential challenges.
One reason firms fail to plan is that it’s difficult to decide how much to give away and to whom. Another challenge is that some clients don’t appreciate the value you’re giving them when you do offer pro bono services. This can create a host of other problems. As we consistently tell Practice Forward firms: make sure you’re articulating your value.
This blog offers insights into how to go about setting up a successful pro bono accounting services program, avoiding some of the most common pitfalls, and articulating your value to clients.
Planning ahead for your pro bono budget
It’s a great thing if you’re able to be compassionate and generous at your firm by offering pro bono services. But compassion does not need to be accompanied by impulsivity.
Pro bono endeavors require planning to establish the infrastructure — firm policy, guidelines, and budget — to support your efforts and ensure success. Otherwise, you may find these well-intentioned efforts drift beyond your initial scope and into an undesirable gray area where the lines between what is free of charge and what requires a fee are unclear.
One smart approach is to formally adopt an annual budget for pro bono services. This allows you to clearly quantify how much work you’re willing to do without monetary compensation. Then, throughout the year, you can dip into the pool of what you have set aside in your budget for advisory services.
If you exhaust those resources before the end of the year, you’ll have to determine if you budgeted incorrectly or if you need to make adjustments to your pro bono decision-making process.
Valuing your pro bono services appropriately
As mentioned above, it is crucial to quantify the value of the pro bono services you’re offering. If you can’t quantify the value, then you are just giving away services for free that you haven’t allocated properly. As a result, most clients won’t fully understand the value of the services they’re getting for free. This is not a good practice for any business.
One effective strategy would be to establish a “scholarship program” — a set amount of money for you to pull from to “cover” costs of services you are not passing along to clients. You can offer a program with discounted services to certain groups of clients, such as veterans, or provide completely free services on select cases. People understand the concept of a scholarship, so this framework is easy to communicate.
For example, you could tell a client (a veteran) that the services they’re requesting normally costs $5,000. However, because of the scholarship program, they will only be billed for $3,000 and the other $2,000 will come from the scholarship funds. In this scenario, you are clearly communicating the true value of what they’re getting: $5,000.
Detailed billing is essential
However, simply telling a client during a conversation about such a discount is not enough. If you’re going to give a client pro bono accounting services, you need to formalize those discounts as part of your billing process — and do it the right way. Be sure to send a bill outlining the full value of the services provided. Then, on the bill, show the deducted amount given pro bono so the client can clearly see the value of the services they’re getting for free. This is important to do, even if the total owed by the client is $0.
If you do not give them a bill, or you give them one without clearly outlining the normal cost for services and the deductions they’re receiving, the client may undervalue your services. This will lead many of these clients to abuse your kindness, whether they mean to or not, because they don’t have a good understanding of the value of your time and your services.
Avoiding misunderstandings with clients
It’s not just billing that is affected when you do pro bono work, but the surety of the client relationship. If you are unsure how to handle pro bono accounting services, the client may be unsure as well. And, if they do not understand your value, they certainly can’t provide effective referrals.
Confusion about costs can cause you to lose clients as well — or, at the very least, lead to uncomfortable conversations. If, for example, an accountant prepares the taxes for a client’s child as a courtesy and charges $0, the client may assume it will be free forever, even when the child enters adulthood. That’s why it is a best practice to show the price for the service and the discount given, rather than simply listing the cost as $0.
This approach can help you avoid future misunderstandings in which you may be expecting compensation and the client believes the services are complimentary. It’s better to tackle the billing and charges up front and be clear about what is free and what may not be in the future. If someone has an issue paying a certain fee, you want to know it before you start the work to make sure everyone is on the same page.
Make pro bono work part of your accounting firm’s broader business plan
It is great to be generous, if you’re able to be. Plus, if pro bono work is done in the right way, it has the added benefit of reflecting well on your firm.
But, it is essential to set your business up for success, which requires being compensated for your time. To do so, you must clearly communicate the value of your services to both paying and non-paying clients.
Have a plan for the amount of pro bono services you want to offer and set aside a budget in advance. Communicate thoroughly with clients about the value of any pro bono accounting services and any amounts they’re going to be charged. This will set you up for success now and in the future.
Are you prepared to lead your firm forward in the ever-changing landscape of the tax and accounting industry? Our in-depth white paper explores four crucial trends, including the importance of knowing your worth and embracing advisory services. Download now to gain actionable insights that will empower your firm to excel, whether in delivering pro bono services or offering value-driven advisory support.
