HN Explorer

Ask HN: Should SaaS charge a non-profit?

15 points by michaeloblak ↗ HN
What are good examples of companies helping non-profits?

What non-profits thinks about companies helping them and about those which are charging them (no free service for non-profits)?

How to make such help good for both sides?

How to check if someone is really using my service for non-profit purposes?

21 comments

[ 3.2 ms ] story [ 53.0 ms ] thread
herbst
I dont see why non profits should be free. Isnt even FIFA a non profit on paper? If it fits your company i would just mention somewhere that you offer discounts for non profits and decide from case to case.
partisan
Check the pay for the top executives at non-profits. Then decide whether you should forgo your profit for theirs.
gus_massa
Do you like the activity that they do? Would you donate $5 to them?
mankash666
Unfortunately, most non-profits are notorious for money-laundering and illegal activity. I believe you should consider waving fees on a case-by-case basis, if you can spend money to evaluate, but if you can't, I'd err on the side of caution and not waive fees.
mankash666
I understand that this is an unpopular thing to say, but I say it From research I did on building a "transparent accounting" software for non profits. I found out during the course that most of them didn't want to be transparent.

If you don't believe me, check transparency international's research on the same.

browseatwork
I've never heard about this, and it's interesting. Have you seen any evidence beyond your interactions with non-profits, such as a study? Ideally indicating how widespread this practice is, the degree, or the motivations / why it happens.
NameNickHN
> Unfortunately, most non-profits are notorious for money-laundering and illegal activity

That's quite a claim you make. Can you support that with facts?

codegeek
They may be Non-Profit but you are probably not. If you really like their cause, you can offer them a small discount. I don't usually know if my subscriber is non-profit but when they do mention it, i happily say that we offer a <insert random> percent discount and give it to them.

Don't bother checking if they really use your service for non-profit. Check if they are abiding by your TOS and that's it.

giaour
If you're going to have a policy, I would caution against having one that requires a case-by-case evaluation. That will not scale well and can lead some to allege bias.

As an example of a reasonble, scalable policy: Salesforce used to (and still might) offer any 501(c)3 non-profit organization 10 free licenses. The IRS makes a judgment call when issuing or renewing 501(c)3 status, and you can save yourself some time by relying on their evaluation. If an organization is big enough to require more than a small number of licenses, then they're big enough to pay for them.

bruce_one
There's a number of SaaS offerings I've considered suggesting for non-profit organisations (technically charities), however being Australian based, rules like this can be tricky/off-putting because it's explicitly a US requirement.

(With hindsight, I feel like maybe I should've emailed with a "hey we're not US based, but we have the Australian equivalent, see: ..."; but the explicit-ness of the wording made me feel like it wouldn't work... (I assumed there was a reason for needing the official status...))

I do agree with the suggestion that case-by-case may not scale; although I'm not sure I've ever considered the bias side, but don't know how I would ever "notice" the bias as a consumer.

Back to the question itself:

I've been on the consumer side of non-profits/charities using SaaS offerings before (both through probono project at work, and side projects) and think it's awesome for the non-profit/charity (and have been incredibly thankful for the services we've received), but also think it can be good for the SaaS too (there are at least 3 SaaS offerings I now actively advocate to use in future projects because I used them first in a non-profit/charity context, and I can do it with hands on experience too). Doing probono or side-projects in this context allows for far more flexibility (IME) and hence I'm much more likely to investigate and consider a SaaS than I am in a normal project for a customer (working at consulting/SI shop).

It's also meant that a lot of the other people involved in the non-profit/charity now know about XYZ now too, and can suggest it in other contexts. (It's not a direct example (but it comes to mind): we used Mailchimp for a Scout thing, and now about 4 (that I know of) of my friends have started using Mailchimp at their workplaces because they now know that it exists; what it is; and how to use it (and they're unlikely to consider competitors because they already know Mailchimp and use it).

giaour
You can always say "501c3 (or the equivalent in the country where you are located)." Most jurisdictions have an official tax designation for charitable/non-profit organizations (Salesforce has a list of them at http://www.salesforce.org/nonprofit/power-of-us/eligibility-...), so you don't have to restrict the program to US-based organizations.

I know what you mean about these programs being good for the SaaS. If it weren't for Salesforce's pro-bono license program, I never would have used it, programmed against it, or advocated adopting it at work.

sjs382
I don't get enough people asking for discounts to matter, but I usually give a discount to anyone who asks.

I do this a bit as a pay-it-forward thing. When I was in college, Github was offering their lowest plan (which included a few private repos) for free for educational use, if you emailed them. Well, I reached out to them, they gave me the free account without any verification. I had the account well past my time in school, though I lost it sometime in the last few years.

I'm happy to pay the same sort of thing forward to anyone who asks.

davismwfl
Set up a policy and not a case by case evaluation as giaour pointed out.

Personally, differentiate between charity and non-profit. All charities are nonprofits but not all nonprofits are charities. I'd give a significant discount to charities upon proof of status, say 50% off, but not necessarily for non-profits. Think of it this way, your Home/Condo Owners Association is likely a non-profit, so are a number of exclusive country clubs etc, but they are not charities and shouldn't be seen as equal.

Also, having been an exec at a Charity, make sure you also talk to your own accountant as if you follow a set policy like this, and validate proof of status (annually) I believe you are entitled to some tax benefits as well.

3eto
>How to make such help good for both sides?

Convert the value of your service and reinvest it back into the nonprofit as unrestricted funds. Nonprofits are usually in need of unrestricted funds.

jasonkester
Only if it makes business sense to do so.

For a long time, I used to give out free Twiddla licenses to students and teachers. It generated a ton of good word of mouth referrals and established it as something that people use in the classroom. Now that I'm charging again for those licenses, I sell quite a bit more because of that positioning.

I occasionally get non-profits asking for free licenses too, and I always say no. There is no upside like there was with .edu, so it just amounts to giving things away for free.

A non-profit is an organization with a budget that they can spend on things like software. Your software has a price, so they get to pay it. Tell them as much and they will understand.

Mz
First, educate yourself about the NPO sector, example:

https://www.councilofnonprofits.org/myths-about-nonprofits

Second, look for articles like this:

http://thirdsectortoday.com/2014/08/19/10-benefits-only-nonp...

Not for profit organizations are not inherently more moral than for profit entities. They aren't inherently better run. They aren't inherently doing a better job of serving the greater good.

Some sorts of services work better under certain organization models than others, eg it is best to have a government run or volunteer or not for profit fire department that automatically responds to all fires, regardless of ability to pay. That simply works better than a for pay model because if you do not put out your neighbor's fire because they are poor and cannot pay, the fire can soon become your problem and, at that point, it can be a bigger problem that is harder to solve.

But that does not mean that a non profit model is inherently superior in all cases. Business done right is a force for good. It is a civilizing, peace promoting force. And, sometimes, NPOs are all kinds of fucked up and were created for all the wrong reasons.

nparsons08
Do you have overhead? If so, yes. A non-profit still generates a significant amount of revenue... especially since they don't have to pay the same tax as a normal company does.
matthewowen
I used to work for a digital agency that specialized in working with non-profits.

It's perfectly acceptable to charge non-profits for services, and non-profits expect to be charged. Getting free services and products is often a great way to get crap. Non-profits have budgets, and they're willing to spend them to achieve their goals.

It might be effective to offer discounts or limited free functionality to non-profits, but you should probably view this as a marketing strategy more than as a moral pursuit.

brudgers
I agree that nonprofits are legitimate customers. One way to subsidize goods and services for nonprofits is by normal donations to their fundraisers. Essentially, it becomes supporting the business of a customer. That way there's no excuse for shortcuts.

At scale, an established policy of charitable donations or a foundation makes sense.

saluki
I would offer them a discount and think about donating to them once a year a portion or all of their subscription if you like the cause.

Free accounts could become a burden over time and could lead to people just trying to sign up for a free ride.

Add a link to your pricing page that says Are you a 501(c)3 non-profit contact us for discounted pricing.

See how much interest you get. You can decide on the discount when the first email rolls in. (Setup a new contact page/form that indicates to you they are interested in non-profit pricing).

Make a difference.