One More Chance is a 13‐year‐old program that believes we all need one more chance to get it right. It works with children ages 10–13 years old from low‐income homes who have had a brush with the law. These young people may have been accomplices in a robbery, or caught with drugs, or repeatedly truant from school. Their crimes are not violent and are often the result of poor judgment or peer pressure. One More Chance runs free summer camps that aim to help these children gain confidence and social skills, learn how to deal with peer pressure, and reflect on what kind of adults they want to become. Graduating from the program is rewarded with having police records expunged. The program is very successful and highly regarded, but three years ago, the organization's state funding was cut dramatically. Despite a valiant effort, it was not able to raise the money it needed to continue its programs from private sources.

One More Chance had been approached several times by more affluent parents who wanted their children to attend the camp, but the organization's mission to serve children from low‐income families had excluded them. Grateful parents had sometimes made donations and, although those donations had been appreciated and put to work, no one had ever followed up with the donors. Under the dire circumstances in which they now found themselves, One More Chance decided to ask all parents to pay something for their children's camp experience. In a letter to all the parents, they explained that the true cost of the camp was $4,500 per camper, but that parents or guardians were asked to give just $50—or more if they could. The camp also decided to expand their roster to include seven children from more affluent households who had also been in trouble with the law for each group of 20 campers. Once the program was open to anyone regardless of income, more guidance counselors and juvenile courts referred students to the camp and the organization needed to add an extra camp session and hire more counselors to accommodate the additional requests for spots. Most parents donated $50 to $500, but some donated the $4,500 cost of the program, and a few donated more. No one objected to the new policy, and many parents expressed delight in being able to donate as a way to set an example for their children.

With this voluntary fee‐for‐service program in place, the camp developed more mixed‐race and mixed‐class groups of campers, and the behavioral results in the graduates were even better than before. More parents became involved in the camp as volunteers, and students became more likely to brag about having graduated from a One More Chance camp. Best of all from a fundraising point of view, One More Chance began operating in the black, with a diversity of funding, including some restored state funding, the fees for service, and gifts from individual donors not involved with the camp.

The experience of this organization is repeated over and over as organizations reluctantly start to impose fees for service, only to discover that many of the constituents prefer to pay and that others who don't qualify for the free program would happily pay. More and more organizations are realizing that giving services away perpetuates a patronizing system in which some people are seen as needy and others as those who meet needs. Further, when people pay what they can, they feel empowered to demand better services or to ask questions of their service provider. These responses strengthen the organization providing the service, as they begin to get accurate feedback on their work. From a fundraising viewpoint, fees can also provide an income stream that helps keep an organization afloat.

Many nonprofit organizations have mandatory fees. They charge below the “market rate” for their service, but one benefiting from the service has to pay a fixed price or a fee determined by some criteria, such as income or reimbursement from insurance. There is nothing wrong with mandatory fees; health clubs, counseling services, job training and placement services, public swimming pools and recreation areas, national and state parks—many of these have mandatory fees.

WHAT TO CHARGE FOR

There are two questions to ask when thinking about creating a voluntary fee for service income stream:

• Is there anything we do for free for one group of people that other people would be willing to pay for, such as in the preceding example of One More Chance?
• What evidence do we have that we cannot charge something, especially as a voluntary donation, for the services we are providing for free right now?

We often think that providing something for free makes it most accessible to people who need it, but that is not always true. Some people, embarrassed to accept services for free, will forgo the service. Others are conscious that they can pay something, but cannot pay market rate, so they also forgo the service. By creating a system in which people pay what they can, you meet people where they are.

VOLUNTARY FEES

You can charge voluntary fees in one of two ways: you can still provide services for free but request money to help cover the cost; or you can ask that people pay an amount they choose for the service, with whatever they pay being acceptable.

Which system you use depends on the nature of the service you provide. Organizations serving homeless people will generally not require a contribution. Cultural organizations, agencies serving the working poor, mental health providers, and so on may opt to require some payment.

You can also mix the two methods. For example, one homeless shelter provides shelter, showers, and clothing for free, but it has a suggested voluntary donation of $0.50 for meals and a mandatory processing fee of $10 for job placement (collected after the person receives their first paycheck). This agency now receives donations from clients for almost 70% of its meals served, with many people giving $1, and a collection rate of 80% on its job fee. More important, they have had a 25% increase in the number of people eating meals at the shelter and a similar increase in the number of people looking for job placement opportunities through them.

Museums, theaters, and other cultural facilities will often have a mandatory fee, but their schedule will also include a day or evening when admission is free, or they may waive the fee or offer a discount to a resident of the city or someone under 16 years old or a senior. Corporations will sometimes underwrite a day at an art museum or botanical garden in exchange for the publicity it brings. The organization then advertises that its facility is free to everyone on that day, thanks to the generous underwriting of the corporation.

STAYING LEGAL

Charging fees is perfectly legal, but you should check with a lawyer or your accountant to make sure you don't need to pay a tax called UBIT (unrelated business income tax). UBIT applies when you charge for a service or a product that is not within your mission. For a fuller explanation, see https://www.councilofnonprofits.org/tools-resources/unrelated-business-income-taxation.

With voluntary fees for service, you must make sure that the fee you seek is given entirely voluntarily. No coercive measures can be used to collect voluntary fees. A coercive action would be one that makes a person feel the service was not really free, that they were the only ones asking for free service, or some other method of seeming to intimidate a person into paying something or more than they want to. Behavior that is coercive can be a matter of perception, but you must go out of your way to avoid anything that a reasonable person could experience as coercive.

Here's an example: one free‐meal program placed only those who had given a donation at tables with tablecloths and served them dessert. In another instance, admission to a class on how to prepare for job interviews was free, but the person registering people loudly announced each donation given so that someone sitting across from her could record it. Although thoughtless and probably unintentional, this practice caused some to pay more than they had wanted to; others simply left before reaching the registration table.

People tend to be embarrassed by any practice that makes them feel as though they don't have enough money. Any system that can embarrass someone may cause them to feel pressured to pay more than they want to or can afford; at that point the voluntary fee is no longer truly voluntary.

The second legal obligation is that your fee, whether voluntary or mandatory, be at or below what a for‐profit business would charge for the same or a similar service, and that the services be provided primarily to people who could not otherwise afford them. If you provide something that a for‐profit organization provides to the same intended audience for the same price, you are not really doing charitable work. The IRS may question or revoke your tax status or you may have to pay UBIT if it cannot tell the difference between your organization and a for‐profit company.

SETTING THE FEES

There are several ways to set your fees. The least effective, judged by the amount of money raised, although least intrusive, is to post a sign near a collection box that simply reads, “Donations,” or “Donations welcome,” or “Your gift ensures that we can continue to provide this service to others. Thank you.” With this system, you will tend to get only people's spare change; on the other hand, you will never be accused of forcing someone to give. This method can be a good way to introduce the idea of giving to people who are used to receiving the service for free and to any of your staff who are reluctant to charge a fee. It also reminds everyone who sees the sign that the service must be paid for somehow. This lesson can lead to serendipitous donations, such as the experience of a preschool program that needed a plumber. Coming for the job, the plumber saw the “suggested donation” board at the entrance to the school and later did a birthday Facebook fundraiser for that group, raising $1,200.

If all your services cost about the same amount, you may want to suggest a range for the voluntary contribution. You could post a sign that says, “The cost of providing our services ranges from $10 to $25. Any amount you can pay will ensure that we can continue to provide these services to all who need them. Thank you.” If you want, you can add an explanation: “The budget for the services you are receiving was previously provided by the government (or United Way or foundations), but these funds have been cut back. To make sure that we can continue to help people, we are asking everyone who uses our services to give what they can. Thank you.”

The most effective system is one similar to that used by the youth camp described earlier. They stated the true cost for each camper and people were asked to pay something toward that cost. If you have a variety of services, another method is to suggest an amount for each one. Here is an example of the range of donations suggested for various services from an organization serving immigrants:

• Translation of a document: $.10–$5 per page
• Help getting a green card or other documentation: $50–$500
• Accompaniment to an appointment (social service, medical): $10–$30
• Help enrolling your children in school: $5–$25 per child

Just as when fundraising from individuals, asking for a specific amount rather than leaving the amount up to the prospect will result in more people giving something, so suggesting specific amounts for services rendered will bring more donations overall and will show that you are serious about raising money and know what you are doing.

Many service providers have someone who staffs a desk by the front door. This person should be trained to ask for money, particularly if any of the people using the services cannot read a posted sign. The front‐desk person can add a sentence to whatever is normally told to people when entering: “The service is free, but if you want to make a donation, that helps us keep our doors open. The donation box is over there.” Many people will ask if there is a charge, which makes it easier to explain. For people accustomed to receiving the service for free, explain that you are still providing it for free but that you are asking people who can help to do so. If you hand out literature to your clients, include a card explaining your need and a return envelope. They can drop the envelope in the box provided or send it in later. When introducing voluntary fees, err on the side of being too low key rather than too assertive. Over time, as people have a chance to think about it and talk to each other, they will start to give more money.

INTRODUCING THE PROCESS OF COLLECTING FEES

At first, volunteers and staff will be uncomfortable with the process of asking clients for money, regardless of what process you use. In discussing the move to asking for money, validate everybody's feelings: yes, it is difficult to ask for money, and it may be more difficult to ask people who have very little. It would be a much better world if people did not have to pay for necessities—housing, health care, education, or food—and did not have to feel embarrassed about receiving them without paying. (Staff and volunteers can be encouraged to learn about and work for tax structures that help provide necessities through public funding.) Next, place the new policy in context: your organization has to keep on providing services, and your costs are going up while your ability to get government (and possibly other) grants is probably going down. Your clients would much rather you exist than watch you go out of business. They will help if they can and will feel good about helping. Obviously, don't start a voluntary fee for service program if you don't need it.

Once everyone has had a few experiences of asking for money and seeing people feel good about giving, their initial discomfort will go away.

WHEN SERVICE IS PROVIDED BY PHONE OR EMAIL

So far, we have concentrated on organizations that can collect fees at the door or at the time of service. But what if you provide service online, by telephone, or by mail/email? Your organization has a harder task. Certainly, you cannot ask someone calling a crisis hotline for a donation, even once they are past the crisis that spurred the call. However, if your information is not crisis‐related, after you have finished giving it, ask whether the caller would like to be on your email list. Every e‐newsletter should include a link to your website, where information about how to donate should be prominent. If the person doesn't have email, be prepared to send them a fact sheet or newsletter or other information by mail, and include a return envelope.

Make sure your website has a “Donate Now” button on each page (see Chapter Fifteen for more on online fundraising). People visiting your website are not all going to be financially strapped, and some may be happy to make a donation.

Setting up a voluntary system for collecting money from people you serve will create a steady income for you, and the amount you bring in may be greater than you imagine. Further, the system may inspire people who are former clients or people who appreciate your work to give. Many times, even volunteers who work with your organization are just as uninformed about how it is supported as anyone else. Once educated, volunteers often give regularly. Finally, asking people to pay a nominal fee for service may even generate more clients who feel better paying a little than receiving a service for free, and that will serve your broader mission.