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Social Entrepreneurs, It’s Time to Start Charging

June 28, 2011

It is hardly news that social enterprise is hot right now. So hot, in fact, that if you are a successful social entrepreneur, you can expect celebrity status at university lectures, meetings and international conferences.  The more successful your model, the more popular you will be as a social entrepreneur, and the more others will want to connect with you.

This ultimately adds up to a lot of external requests for your time. It’s a good thing! People who know you and those who don’t will want to meet with you to discuss partnering with your enterprise, to ask your advice, to bring you to speak to their class or educational program, to seek an internship, to gain an understanding of the sector in order to write an article or start a competing enterprise, and possibly, to consider funding your work.  But suddenly, your time is even scarcer than it was before.  This means it is increasingly valuable too.  One way to make sure that those who are requesting your time are respecting the value of your time as much as you are is to inform those who would request your time that there will be a fee involved.

That’s right, I am suggesting that successful social entrepreneurs consider charging for their time.  After all, there are plenty of consultants who charge hundreds of dollars per hour to offer their knowledge, insight and advice to others.  CEOs of traditional businesses are selective about time they spend giving feedback and information to others when there is no articulable benefit for the company.  Why should the time of social entrepreneurs, and the wisdom they have gained in this emerging field be any less valued?

The Legal Issues for For-Profits

There is certainly no reason why you cannot charge for your time if you are a for-profit.  One issue to watch out for, though, is who should receive the income for your time: you or your company.  As a general rule, if you are using time that you would otherwise spend on your company to consult with someone who has agreed to pay for your time, it is your company that should invoice for your time, rather than you personally.   If, however, you are meeting with someone during time that is your own – if it’s a night or a weekend, this is probably at least supposed to be your own time – then you can invoice the person using your own personal letterhead, and receive payment personally.

The Legal Issues for Non-Profits

If you are a non-profit, and the time you are charging for belongs to your nonprofit, you will need to consider the legal issues this entails.  Typically, consulting services are the province of for-profit companies.  If carried out on a regular basis, the type of consulting services discussed in this article would probably result in tax liability, as they would result in unrelated business income.  By itself, this is fine – even with the tax, charging for your time can leave your organization with extra income.  What’s more important is that you refrain from spending so much of your time on income-generating consulting services that these activities become “substantial” in relation to your exempt purpose.   (See here for a discussion of when unrelated business activities become “substantial.”)

When it Doesn’t Make Sense

Of course, there will be times when charging for your time doesn’t make sense.  Some social entrepreneurs have expressed apprehension that they will offend would-be contacts by asking them to pay for their time.  Such policies should be enforced with care.  It helps to explain the reason why you are charging for your time.  You can also offer that the person who wants to meet with you can first meet with another representative of your organization to see if his or her questions could be answered without the need to meet with you individually.  I have noticed that CEOs and Executive Directors are often contacted personally not because there is no one else in an enterprise capable of answering the questions and discussing the issues, but because these are just the first people anyone thinks of when they seek out an organization.

Finally, instituting a consulting fee policy doesn’t mean you have to enforce it.  You can always waive this policy for someone you truly want to meet, or where there is a potential funder or partner involved.  But simply having a policy may give you as a social entrepreneur the comfort of knowing you can use it when giving your time to others is not profitable for you.

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