Pro bono services are offered for free, or, sometimes, at cost, to benefit a cause or the general public. It is important to understand that pro bono services are not doing something for your next door neighbor for free, or volunteering to run the Girl Scout cookie station for an afternoon.
From a tax standpoint, pro bono services are donated to charitable organizations or causes. The IRS treats pro bono services and free or discounted services and volunteer services differently and uses separate guidelines that govern how you an deduct associated costs and expenses.
Pro bono services are sometimes offered "at cost." For example, a professional consultant may donate time and expertise, but ask for payment to cover traveling expenses. Volunteers for charitable organizations may also be able to deduct travel expenses - but with more restrictions and at a lower percentage rate than for true pro bono services.
What is Volunteer Work
Volunteers also offer time, knowledge, skills, and expertise for free to help other people or organizations. The IRS classifies volunteer services into two basic categories:
- Non-GAAP Volunteer Services: These services are not tax deductible for the individual donating their time and services; and
GAAP Volunteer Services: GAAP services, or, "professional" services are sometimes at least partially tax deductible.
The big difference between GAAP services (that may qualify as pro bono services) and non-GAAP volunteer services is simply this:
- Pro bono services are professional services that are donated that someone, or another business or organization would normally have to pay the donor for. The tangible expenses of providing pro bono services can be at least partially deducted on business tax returns.
Volunteer services come from individuals that would not normally charge for their time and skills they donate. Donations of non-GAAP time and services are not tax deductible, but you may be able to deduct some of the costs associated with volunteering.