You have received quite a bit of good advice. The only thing I would ad is that you make ABSOLUTELY POSITIVE that you make the best of the situation as far as promotion goes, if you are going to do it for free. Make sure that as much contact information is attached to the work displayed. For instance, I have a public registry of the artists that donate their work to my project and I will be making that information available each and every time that artwork is displayed so that they receive proper credit and can generate business from the contribution. If they don't offer you, at the very least, noted credit for your work, I would think twice before you lend your work.
i have recieved two emails in the last couple of days, one from a lady asking if she "could use" my clyde city building picture in a geanology piece she is doing, and another from the city manager of clyde, ohio asking if they could use this image for the city's christmas cards next year. although flattered, neither of these mentioned payment for my work. how do i handle this?