The costs of being “free”
FREE!! The first thought that comes to mind when I see the word “free” is “Ooh lalala.” I usually get a euphoric feeling especially if the good or service is something I value. As a consumer, I get to save money and it allows the opportunity to take that money and use it for something else. That’s great!
But who really pays for it to be “free”? Usually when something is marketed as “free”, it is the consumer who receives it for free. Someone still has to pay to provide that service or create the good. So that service or good may be free for the consumer, but the business still has to pay for it.
For instance, nonprofits provide valuable free tax preparation services to the community. These services are free to the community, but it costs money for nonprofits to offer this valuable service.
The delivery of free tax preparation services are usually financially supported by various funders that may include government, foundations, corporations, financial institutions, or individuals. Funders are interested in the cost of preparing a tax return because this is another measure of the money given back to the community. A nonprofit that can accurately validate how much it costs to prepare a return can demonstrate to the funder its value to the community. This is absolutely critical for continued support by funders and a tax program’s sustainability.
The Cost Per Return Tool is a standardized method community tax programs can use to: a) categorize the 12-month costs associated with return preparation operations, b) obtain a consistently calculated unit cost, and c) compare local results to field benchmarks.
Find out how much it costs to prepare a free tax return (please login to website or an error will occur) for your community.
By Catherine Ro Schumer, Project Manager, NCTC