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Appendix C: Ascribing Value to Volunteer Contributions
We conducted an
environmental scan of the published literature and Internet sources in an
effort to understand how volunteer-based organizations quantify or demonstrate
the value of volunteers' time and services. Our findings reveal that many
organizations do not ascribe value to volunteer efforts at all. For those
organizations that do, numerous methods are used depending on the type of
organization; there is no single, universally accepted or preferred strategy. The
literature emphasized the importance of accounting for the value of volunteer
activities in the organization's budgets and reports, noting that it is a good
way to evaluate programs and provide current and potential sponsors with
information on the organization's impact on and thus value to the community.
This is especially important for charitable groups whose primary mission is
social rather than commercial, since critical inputs and outputs may not be
accounted for in traditional financial statements.
Although there is some
consensus on the need to valuate volunteer contributions, there is considerable
controversy over how this should be done: is it possible to place a dollar
value on volunteer labor? Would doing so capture the whole of volunteers' efforts,
or must one account for the societal effects of volunteer labor on the
community as well?
According to the literature,
there are essentially two ways for charitable organizations to ascribe value to
volunteer activities: they can either assign a "replacement value" to volunteer
hours or they can do this and also ascribe value to the organization's social
outputs through a method called "social accounting."
Replacement Value Method
In the replacement value
method, an organization ascribes hourly wages to volunteers; in other words,
the organization determines the fair market value of the work performed by the
volunteers by calculating what they might make if they were paid. As one
organization put it, assigning hourly wages to volunteers is used to estimate
their "avoided costs." It's critical to remember that the value of the
volunteer's time should be based on the type of volunteer work that he or she
performs and not his or her earning power.
There are numerous ways to
determine the hourly wage. The easiest approach is to assign one wage to all
volunteers, such as the Federal minimum wage, a localized average wage, or the
Independent Sector wage. The Federal minimum wage is the simplest to apply, but
it is usually the least reflective of the true value of volunteer activities
because it assumes that all volunteers perform simple, homogenous tasks. The Independent
Sector wage is one of the most frequently cited measures and represents an
average hourly wage of all production and nonsupervisory workers on private
nonfarm payrolls, provided annually by the U.S. Bureau of Labor Statistics, to
which a 12% increase is added for benefits.10 Localized
average wages are typically modeled after the Independent Sector wage but they use
local versus national data and therefore represent a good option for
organizations to use.
A more sophisticated
approach to the replacement value method applies variable hourly wages to
volunteers, depending on the type of work they perform. Under this approach,
the wage is determined by the hourly wages of persons doing comparable work in
the marketplace. Although this approach often leads to more accurate estimates
of the value of volunteer contributions, it may not be practical for many
non-profits, since determining each volunteer's comparable market value hourly
wage is time and resource intensive. Moreover, when applied to organizations such
as the MRC where volunteers' roles and responsibilities may change frequently,
this method would be exceedingly difficult to maintain.
While many contend that the
replacement value method only partially estimates the value of volunteer
contributions since it does not attempt to account for the social impact of
volunteer activities, this method is generally viewed as the easiest way for non-profits
to ascribe value to volunteer efforts. This "ease of use" is important, since many
charitable organizations cite a lack of resources as a primary reason for not
assigning value to volunteer activities. However, because most charitable
organizations have a social mission, accounting for the impact that they have
on the people and communities around them is also important.
In contrast to the
replacement value method, social accounting attempts to consider the social impact
of volunteers' service in addition to simply calculating their hours worked. In
other words, this method attempts to quantify or measure the outputs produced
by the volunteers' work. When an organization accounts for both the financial value
of volunteer labor and the social outputs of volunteer activities, it creates
what is often referred to as an Expanded Value-Added Statement (EVAS). In contrast
to a financial statement, which only accounts for inputs and outputs with an
established monetary value, the EVAS calculates an organization's "total
value-added" by subtracting purchased goods and services from total outputs
(both financial and social). It indicates the organization's return on
investment where the stakeholders are the clients as well as the community
affected by the entity's outputs.
Though cursory and
estimative, there are a number of ways to account for the impact of non-profit
outputs on society that are attributable to volunteers. As with the replacement
value method, a monetary value based on the social output's estimated value in
the marketplace is assigned to each output. Simple examples of social outputs
include goods and services that are provided free of charge to the community
(e.g., free immunizations), as well as out-of-pocket expenses that volunteers
do not list as in-kind donations. Less tangible outputs can be assigned a
monetary value as well, though it is helpful to divide them into primary, secondary,
and tertiary outputs. Primary outputs directly affect the client, secondary
outputs indirectly affect the client, and tertiary outputs affect groups other
than the client. Under this theoretical framework, a primary output might be
the salary of a person who found employment due to an organization having provided
him or her with training on how to find a job. In this example, a tertiary
output might be the savings to the community when the person no longer needs
income support from the community.
While many scholarly publications
discuss social accounting, it should be noted that there are few if any
instances of charitable organizations that actually do social accounting. In
light of the general lack of valuation of volunteer efforts by most non-profits,
and the increased complexity of social accounting compared to the replacement
value method, this is not surprising. Even the most sophisticated sources in
favor of social accounting recognize the method's limitations: it is nearly
impossible to ascribe a comparable market value to all of an organization's
social outputs, especially as one considers secondary and tertiary outputs that
become increasingly intangible and therefore have no complement in the market
Implications for the
Medical Reserve Corps
Our work with MRC units in
developing this evaluation training reveals that very few units are
consistently measuring the value of the volunteer labor or health care services
they provide. At the same time, many coordinators recognize that such
information can be a very powerful tool in cultivating partnerships and
demonstrating to current or potential sponsors the impact that their unit has
in the community. Most attempts to ascribe a value to the labor contributed by
MRC volunteers have tended to focus on the replacement value methodology, as
this is the least resource and time intensive. This is a good start and would
seem to make the most sense for units still in the initial organizational
development stages or those faced with very limited resources (financial or
manpower). For the reasons noted above, using a localized or job-specific
hourly wage for each volunteer would lead to the most accurate estimate of the
fair market value of the volunteer hours worked.
The social impact associated
with the work that MRC units are performing in communities all across the
country should not be discounted. Ultimately, MRC coordinators should strive to
reflect this social impact in their annual reports, and share this information
with partners and stakeholders. As an MRC unit matures and becomes more
established in the community, social accounting metrics may be applied to
estimate the value of its work output. Because there is no consensus on how to
do this, units will likely have to learn through trial and error which approach
is best for them. Throughout the process, MRC units are encouraged to work
closely with their partners and stakeholders (as they would during strategic
planning) and seek their input. They should also seek the guidance of other
established, volunteer-based organizations that may have already encountered
Additional Reading on Valuation of Volunteer Service
This appendix provides an
overview of the principal strategies or methods currently in use by
volunteer-based organizations to quantify or characterize the contributions
made by their volunteers. It is not intended to be a comprehensive analysis of
the current knowledge base in this area. For those seeking additional
information, provided below is a list of articles and Internet sources that may
"Placing a Value on Volunteer
Time," The Investigator, Volume 2, Issue 1 (Fall 2005); published by the
University of Texas, RGK Center for Philanthropy and Community Service, available
This paper briefly describes five methods that can be used to measure the value
of volunteers: average wage, replacement wage, opportunity cost, social
benefits, and value to volunteer. These methods be categorized into two broad
categories, input and output approaches. The paper also includes a useful table
that gives examples of each method.
Handy F, Mook L, and Quarter
J. "The Interchangeability of Paid Staff and Volunteers in Nonprofit
Organizations," University of Pennsylvania (2008); Available at http://repository.upenn.edu/cgi/viewcontent.cgi?article=1102&context=spp_papers.
The authors report on estimates and prevalence of interchangeability (also
called co-production) through a series of studies of Canadian
nonprofits. They conclude that "about two-thirds of the organizations in the
sample agreed that the interchangeability of tasks occurred, but the data
indicated that it was limited to about 12% of tasks" that were surveyed.
Richmond BJ, Mook L, and Quarter J. "Social Accounting for Nonprofits: Two Models." Nonprofit
Management & Leadership, Volume 13, No. 4, Summer 2003.
presents two models of social accounting for nonprofits: the community social
return on investment model and the expanded value-added statement. It offers
tables, examples, and a useful explanation of each method.
Goulbourne M. "Measuring the
Economic Value of Volunteer Activity." Canadian Centre for Philanthropy (2002);
Available at: http://nonprofitscan.imaginecanada.ca/files/en/iyv/goulbourne_fs_english.pdf.
This two-page guide provides a brief overview of
the various calculations that can be used to measure the value of volunteer
activity. It also provides sample calculations to assess volunteer program
Wage and Compensation
"Minimum Wage Laws in the
States—January 1, 2008;" available at: http://www.dol.gov/esa/minwage/america.htm.
This site offers a chart and user-friendly online map from the Department of
Labor showing State minimum wages and minimum wage laws.
Bureau of Labor Statistics, The National Compensation Survey (http://www.bls.gov/ncs/ocs/home.htm) provides comprehensive measures of occupational earnings. Detailed occupational
earnings are available for metropolitan and non-metropolitan areas, broad
geographic regions, and on a national basis.
Sector Web site publishes a frequently-cited annual estimate for the hourly
rate of volunteer time. According to the Web site, "Charitable organizations can
use this estimate to quantify the enormous value volunteers provide." The data
are available at: http://www.independentsector.org/programs/research/volunteer_time.html.
The Points of Light
Foundation has developed an Economic Impact of Volunteers Calculator that
estimates the appropriate wage rate for volunteer time based on what the person
does, [and] the value of specific tasks according to market conditions, as
reported by the U.S. Department of Labor." The calculator is available at: http://www.pointsoflight.org/resources/research/calculator.cfm.
Value Added" Web site (http://home.oise.utoronto.ca/~volunteer/evas.html) includes
a Microsoft® Word® worksheet and Excel® forms for creating an Expanded Value Added
template. The forms are user friendly and can be downloaded at no charge. The Web site
also hosts links to other resources on non-profit management.
10. The Independent Sector wage for 2007 was $19.51. This
wage, as well as the dollar value of a volunteer hour broken out by State, can be
found at: http://www.independentsector.org/programs/research/volunteer_time.html
Return to Contents
Current as of June 30, 2008
Assessment of Self-Evaluation Training for the Medical Reserve. Program Evaluation. June 2008. Agency for Healthcare Research and Quality, Rockville, MD. http://www.ahrq.gov/about/evaluations/medreserve/