I have worked for free.
I convinced myself that, when I had nothing else lined up, it was important for me to keep busy and invest my time in something real. I have worked on a few free freelancing projects but one in particular sticks out.
I was once working on a project where a lady was working on a new business venture. She wanted logo and pack designs done for her new beauty products. With a name already decided upon, we worked for days in her kitchen establishing a logo design and how it might work on packaging and other elements. When we came to presenting our ideas to her marketing guru, he looked at what we had done and in response googled the name of the brand and highlighted the first image and said, "well, how about you do something like that?". Perhaps he should have hired google image to design his logo for him then.
They didn't value our work and they didn't value us as designers. By saying that you don't require payment you are saying your work isn't good enough to be paid for and this is a dangerous element to have in someone's mind when they're looking at your work. They don't respect you. When I knew he thought an image search was more productive than my hours spent on designs for that logo, I knew I wasn't being appreciated.
A friend had a similar experience when she had a placement at a major packaging design agency. Because she wasn't being paid, the work she was given reflected that fact. She explained that they almost didn't care what she did because they weren't paying for her to be there. If you are paid, even just a little, they put you on an actual project that a client will see, your efforts are valued.
In addition to this, I recently took advice from a freelancer at an agency I was interning with, that you should never do mates rates. You should either do work for friends for free or for full rate, (whatever that is as an intern). By working for free, you can do it in your own time, at your own pace and they are grateful for your efforts. By charging them, they almost feel they can get more out of you than if you did it for free and may demand you spend more time on it, etc. With other commitments likely to overshadow this work, I decided that I would do it for free - espescially if it is only your Mac skills they really want.
I am happy to do work for friends for free, but where agencies are concerned, I am not a charity and if you're making money on the work that I do; then I should too. If you don't value your own work, then who will?