The following QA post is courtesy of guest blogger Terrie Temkin, Ph.D. Terrie is an internationally-recognized governance and planning expert.  She is a founding principal of CoreStrategies for Nonprofits, Inc., which interweaves governance, board development, fund development, PR/marketing and public policy to strengthen organizational capacity.  You can read more from Terrie on CoreStrategies’ website and blog.

I am on the board of a nonprofit organization specializing in the placement of assistance dogs, matching them to people with multiple disabilities. Currently we breed, train and place our dogs, as well as provide lifetime follow-up and support, at no cost to carefully vetted recipients. The process requires a great deal of time and expertise. Recently, we’ve been approached to provide our training services to dog owners who wish to turn their personal pets into service animals. This is a costly proposition. We cannot even consider offering this service to the public without being able to charge for it.

Question: can we charge people who may have a genuine need for a service dog but who are not our clients or for some reason are not client-eligible? We don’t want to risk jeopardizing our nonprofit status.

I believe from what I have read, that this should not be a problem as long as the fee that we charge the public is below market value and that any “profits” we make support our organization’s primary mission. Is this true?

Answer:  There are actually several approaches you could take to accomplish your goal. I will share two.

The first would have you working within your current nonprofit model, just charging a fee for the services you provide.  “Fee for service” is a revenue model that has been around for a long time. More and more organizations are turning to it today as a means of sustainability, charging even their traditional clients. In this case, you have non-traditional clients knocking on your door. These are people who may not have the multiple disabilities your traditional clients do, but whose reason for desiring a service animal is similar to that of your traditional clients. You can’t handle them without additional revenue. It’s perfectly legitimate to charge them for the services they are requesting but are not eligible for under your current guidelines.

The second approach is the adoption of a social enterprise model. This would allow you to accomplish what you want by adopting one of the hybrid structures that have been gaining popularity in recent years. For instance, you might go the route of a nonprofit that has a wholly owned for-profit business subsidiary.

In my follow up blog next week, I will provide a list of things to consider when considering  a fee for service model or establishing a for-profit business.  Keep reading for more.