Your SaaS Should Offer A Charity Discount

In the last several years, charities have become increasingly sophisticated in their use of technology - many now rely on Salesforce, run on Slack, deploy and manage cloud infrastructure, and are consumers of all of the related services. Smart companies, especially SaaS companies, have realized that they can easily contribute to the world by offering free or heavily discounted access to their services for charities. ‍

Most SaaS products cost next to nothing for the next marginal customer - software is practically free to duplicate and the cost of supporting additional customers is negligible. This is a huge benefit to charities that rely on modern tech stacks to deploy and monitor apps, engage on social media, manage sales and grant pipelines because many of these companies offer a free tier to charities. ‍

Offering a free tier for charities offers many advantages:

It’s an in-kind donation and a tax writeoff for the business. While this may not be significant for startups with plenty of other expenses, it does mean that financially donating a seat or a license to a charity isn’t costing you any velocity or revenue.
Charities are extremely cost-conscious, but willing to provide feedback. Many companies we’ve talked to appreciate that while charities don’t contribute as much financially, their feedback and willingness to beta test new features has been very valuable.
Your charitable tier can be an alpha release channel/cohort. When deploying new features, if you roll them out to low-paying customers first, you risk disrupting your paying customers while still getting real world feedback and metrics. Major companies often do this.
Gain brand recognition and long-term customers: the individuals that work at charities often go work other places and recommend the new places adopt the tools they’re already familiar with. You should make sure your tool is familiar to as many individuals as possible so that they can become internal champions for you when it comes time for them to pick a vendor.
Social Media mentions: Charities are often influential on social media and quick to offer words of support and promotion to the vendors that have in turn provided them with free services to support their mission.
Enables the charity to devote more resources towards their core mission: The people that work at charities chose to work at the charity; they’d rather spend money making the world better, distributing funds to those that need it more; and your free service enables them to do more good. ‍

Fortunately, offering a free or discounted tier for charities is easy. Many CharityAPI.org customers use our API simply to offer a free tier to charities. Here are the simplified steps to implement:

Ask the user if their organization is a U.S. Charity
If Yes, ask for the charities Tax ID Number or Employer Identification Number (EIN)
[optional] Use CharityAPI.org to lookup any nonprofits with that EIN and ask the user to confirm the correct one. Ensure you filter nonprofits to those where deductibility = 1, meaning donations are tax-deductible for your business.
If the EIN is a charity, you’re in the clear to offer them a free tier.
[strongly recommended] - periodically; maybe once every month, re-check that the EIN is still in good standing with the IRS using CharityAPI.org’s Public Charity Lookup endpoint. ‍

At CharityAPI.org, we’ve seen this implemented entirely manually on the backend by a staffer, or totally automated on the frontend as part of the user’s onboarding flow. Whichever suits your needs, you can use CharityAPI.org to see what data the IRS has about any given EIN.

Happy Building!

Photo by Richard Horvath on Unsplash