I agree that it is possible to do things for no charge, but if you want to go that route, find a well-known nonprofit and offer to do some work in exchange for credit or using your name as one of their sponsors.
It helps get your name out there, you'll look even better to have a probono in helping a nonprofit and because your name will be out there, you may get more work for the larger amount of exposure.
I do agree on creating fake work too. It keeps your design skills sharp and you do it whenever you have time and you're not really out any money or having to deal with a cheap client.
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