How to Invoice Nonprofits and Government Agencies

Nonprofits and government buyers pay reliably when the paperwork matches their process. That usually means PO numbers, vendor registration, a Form W-9 or local equivalent, and sometimes several approval steps. Treat their accounts payable requirements as part of the scope of the job, not as a delay.

Before you invoice

Vendor setup

Complete registration in their system early. If you are not set up as a vendor, the client may be unable to pay even when the work is done. US clients will usually ask for your Form W-9 first.

Purchase orders

Don't start billable work without a PO or signed award when their policy requires one. Put the PO number on every invoice, which matters most when several projects or grants carry separate codes.

Tax exemption

Some nonprofit and government buyers are exempt from sales tax on some purchases, depending on the state and the purchase. If the client claims exemption, collect the certificate it gives you and keep it on file; see invoice tax compliance.

What invoices must include

Beyond the basics in how to write an invoice, add:

• Grant or program code, if the client gives you one
• Contractor or classification statements, when their contract requires them
• Milestone or deliverable references for milestone-based engagements
• The PO or award number, on every invoice

Timing and patience

Nonprofit and public-sector accounts payable can run longer than the terms on your invoice, especially when payment depends on several approvals or on grant drawdowns. Plan your cash flow for that, print a specific due date, and use polite, predictable follow-up. The free payment reminder templates give you wording. On Pro, InvoiceQuickly can send scheduled reminders before and after the due date when the automation trigger runs.

Transparency and records

Invoices sent to a government agency may be subject to public-records requests, and grant-funded spending can be audited. Keep the language factual and professional, and keep an audit trail for any budget amendments.

1099 reporting for nonprofit clients

The IRS says nonprofit organizations are considered to be engaged in a trade or business for information reporting. So a nonprofit that pays you $2,000 or more for services in a year, for payments made after December 31, 2025, files Form 1099-NEC, the same as any business client (IRS Instructions for Forms 1099-MISC and 1099-NEC, accessed October 28, 2026). It will usually ask for your W-9 before the first payment.

Discounts, pro bono work and donations

Do not confuse a charitable donation acknowledgment with a service invoice. If you charge fees, invoice normally. If you give a nonprofit discount, show it openly and say it is a nonprofit rate.

The tax point many guides get wrong: the IRS says "you can't deduct the value of your time or services" given to a charity (Publication 526 (2025), Charitable Contributions, accessed October 28, 2026). That covers a discount too: the fee you did not charge is not a deduction. You may be able to deduct some unreimbursed out-of-pocket expenses directly connected with donated services, such as driving to and from the place you volunteer. Ask a tax adviser about your situation.

Worked example: a nonprofit discount

A designer's normal fee for a brand identity is $5,000, and they offer nonprofits 20% off. In InvoiceQuickly, enter the $5,000 line and a 20% discount on the invoice: $5,000 × 20% = $1,000 off, so the client owes $4,000. The designer reports $4,000 of income. The $1,000 they did not charge is not a charitable deduction.

Grant-funded work nuances

When a grant caps administrative costs, label lines in ways the approver recognizes and avoid vague "management fee" lines. Talk to the program officer before rebilling categories that may need re-approval. If you split invoices across funding sources, mirror the split in your own project codes. Keep volunteer and paid work clearly apart, and keep expense receipts especially carefully, because pass-through costs are a common focus of grant reviews.

Two rules matter if you write grants. The Grant Professionals Association's Code of Ethics says members must not accept a finder's fee, commission or percentage compensation based on grants, so bill an hourly rate or a flat fee. And for federal awards, 2 CFR 200.460 says proposal costs normally should be treated as indirect costs, so check the funder's rules before writing your fee into a grant budget. The grant writer invoice template is laid out for this kind of work.

Step-by-step: invoicing nonprofit clients

Step 1: Confirm the client's status and requirements

Ask what the client needs from you: W-9, vendor form, certificate of insurance, PO. If you want to check a US organization's exempt status, the IRS Tax Exempt Organization Search lists organizations eligible to receive tax-deductible contributions.

Step 2: Agree the rate in writing

State the normal rate and any nonprofit discount in the contract, so the invoice repeats something already agreed. For pro bono work, still write a scope, deliverables and timeline.

Step 3: Set payment terms you can live with

Agree the terms (for example Net 30) before work starts, and plan for the client's approval process. Some grant-funded clients ask for longer terms such as Net 60.

Step 4: Itemize for grant compliance

If the work is funded by a specific grant, match the invoice to the grant's budget lines, for example "Web development per Grant ABC-123, Section 4 Communications budget: $5,000". The client's grants staff need this for funder reports.

Step 5: Issue separate invoices for separate funding sources

If several grants fund different parts of your work, ask whether the client wants a separate invoice for each. Separate invoices simplify their accounting and audit trail.

Common scenarios

• Designer doing pro bono work for a local nonprofit: the designer may send a letter or a $0 invoice listing the work and its normal $3,000 value for the client's records. There is no charitable deduction for the $3,000, though some out-of-pocket costs may be deductible.
• Consultant paid from a government grant: Net 60 from the invoice date, one line per grant budget section, submitted through the client's vendor portal with any timesheets or deliverable sign-offs the grant requires.
• Fundraising consultant on retainer: a monthly retainer for fundraising strategy, invoiced like any service. If the consultant is a GPA member writing grants, the fee is not tied to a percentage of money raised from grants.
• Discounted services: see the worked example above.

Closing checklist

• Before key funders' fiscal year-ends, send statements of open invoices.
• Check grant end dates against work you are still billing.
• Renew certificates of insurance before they block payments.
• Record any volunteer time separately from billable lines.
• For cross-border NGOs, see international invoicing.
• Escalate portal problems through your procurement contact, not only accounts payable.
• Ask for a sample paid invoice from the client and follow its structure.

For more on how nonprofits themselves invoice sponsors and members, see InvoiceQuickly for nonprofit organizations. This page is general information, not tax or legal advice. Last reviewed October 28, 2026.

Frequently asked questions

Can I deduct pro bono services as a charitable contribution?

No. IRS Publication 526 says you can't deduct the value of your time or services contributed to a charity. You may be able to deduct some unreimbursed out-of-pocket expenses directly connected with the services, such as travel to and from the place you volunteer. Ask a tax adviser.

Is a nonprofit discount tax-deductible?

No. A discount is the value of services you did not charge for, which Publication 526 says you can't deduct. Report the amount you were actually paid as income.

Will a nonprofit send me a 1099?

Generally yes, if it pays you $2,000 or more for services in a year for payments made after December 31, 2025. The IRS treats nonprofits as engaged in a trade or business for information reporting, so the usual Form 1099-NEC rules apply.

What's the right discount for nonprofit work?

There is no standard. Some businesses charge nonprofits their full rate, some give a fixed percentage off, and some do occasional pro bono projects. Choose what your business can sustain, and put it in writing.

Do I need a contract for pro bono work?

Yes, it helps. Pro bono work is still a service relationship, so document the scope, deliverables, IP ownership and timeline.

Can a grant writer charge a percentage of the grant?

The Grant Professionals Association's Code of Ethics says members must not accept a finder's fee, commission or percentage compensation based on grants. Bill an hourly rate or a flat fee instead.

Should I invoice differently for government grants?

Yes. Follow the grant's requirements: itemize by grant budget line, include the grant or award number, and submit through the client's process with any supporting documents the grant requires.

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