Are “Free” Services Putting Your Organization At Risk?

OLYMPUS DIGITAL CAMERAAccording to the Taproot Foundation, US professionals donate more than $15 billion in pro bono services to nonprofits each year. Although that fact is laudable and can dramatically expand the reach of important services and support in communities, freebies and discounts on professional services pose significant nonprofit risk management issues. This post notes why.

The story is common. Jennifer is a partner in a law firm. She sits on the board of a local charity. The charity needs legal services. Jennifer volunteers the services of her firm. As common as this is, such circumstances may raise troubling concerns:

1. Volunteer professionals may delegate to subordinates. Jennifer may be busy on other projects – in fact, presumably she is, if she is a senior member of her firm.

2. Volunteer professionals may place pro bono services behind other – paying – projects. Lawyers and other professionals have professional rules and standards that prohibit or at least discourage such conduct, but anyone who knows the dynamics of firm practice knows that paying clients sometimes get priority.

3. Professionals may volunteer for projects that are outside their area of expertise. If Jennifer is a trial attorney, for example, she may be terrible at drafting or reviewing contracts or reviewing an organization’s labor and employment issues.

4. The expertise dynamic may differ. Ordinarily, the nonprofit would train and supervise a volunteer, and presumably the nonprofit is well-versed in its core areas of activity. The volunteer in professional engagements, however, likely knows far more about the subject area at issue than the relevant client personnel. The client may have no basis for assessing whether Jennifer’s advice is solid.

5. There is little practical recourse for shoddy work. Without the policing power of a contract and payment, the pro bono client may find its important work is delayed or hindered because the professional who cannot be bothered to perform the work also cannot be policed effectively. In extreme cases, malpractice or its equivalent may be available, but that sort of policing requires additional resources – resources the organization did not want to expend in the first place.

Although I use the example of legal services, clients and connections have horror stories about “free” or discounted legal advice, financial and investment advice, website development, web hosting, IT services, marketing, and many other areas. These risks – and the stories and scars behind them – suggest two important rules of thumb:

> “Free” is rarely without costs. If a project is strategically or operationally important, pay for it. Use the discipline of the market in your favor.

 

> If you can’t afford to pay for critical services, this may be a signal that you are providing services beyond the boundaries of responsible risk. Reconsider your resource allocation.  Any other choice endangers your organization.

Have you faced these issues? Let us know. We’d like to hear your stories. Also, please share this post if you found it useful. We are out to change how organizations think about risk management, and we need your help.

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