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Attributing Monetary Values to Volunteer Contributions

This paper discusses two primary methods for attributing monetary values to volunteer contributions in nonprofit organizations: opportunity costs and replacement costs. Opportunity costs consider the value of time spent volunteering from the volunteer's perspective, recognizing the potential income foregone. Replacement costs evaluate the monetary value of the volunteer's work within the organization, calculated based on market rates for similar roles. Various approaches to measuring these costs, including generalist and specialist methods, are explored to ensure accurate valuation for efficient resource allocation in nonprofits.

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Attributing Monetary Values to Volunteer Contributions

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  1. Attributing Monetary Values to Volunteer Contributions Jack Quarter Laurie Mook October 18, 2004

  2. Two Primary Methods • Opportunity costs • Replacement costs SOCIAL ACCOUNTING FOR NON-PROFITS

  3. Opportunity Costs • Looks at value from the perspective of the volunteer • The cost of volunteering is time that could have been spent in other ways • What is an hour’s time worth to the volunteer? SOCIAL ACCOUNTING FOR NON-PROFITS

  4. Opportunity Costs: Problems • Mismatch between volunteer’s “worth” and task • Bill Gates vs. an unemployed person volunteering at a food bank • Variable rate for same task SOCIAL ACCOUNTING FOR NON-PROFITS

  5. Brown’s Approach • One half to sixth sevenths of the average hourly wage • With adjustments for mismatches SOCIAL ACCOUNTING FOR NON-PROFITS

  6. Other Approaches • Wolfe et al. ask volunteers what they would have received if they had worked additional hours for pay • Handy and Srinivasan ask volunteers to estimate how much their tasks were worth • They bridge the gap between replacement and opportunity costs SOCIAL ACCOUNTING FOR NON-PROFITS

  7. Replacement Costs • Volunteer value from the perspective of the organization • paying the market rate for such a service • Volunteers could be replaced by wage earners as perfect substitutes • in terms of skills and productivity SOCIAL ACCOUNTING FOR NON-PROFITS

  8. Replacement Costs: Different Approaches • Generalist • Specialist • Modified Specialist SOCIAL ACCOUNTING FOR NON-PROFITS

  9. Generalist Approach • One rate for all tasks; i.e., gross average • Average hourly wage for nonagricultural workers plus 12 percent for fringe benefits (Independent Sector) • 2002: $16.74 ($9.10 – $24.75 by state) • 2003: $17.19 SOCIAL ACCOUNTING FOR NON-PROFITS

  10. Specialist Approach • Targets rate to the task • Choice of profession for comparison crucial SOCIAL ACCOUNTING FOR NON-PROFITS

  11. Junior Achievement of Rochester • U.S. Department of Labor, National Compensation Survey plus 12 percent • board of directors, hourly rate for “executives, administrators, managers” —$31.30 • company coordinators hourly wage rate for “managers in service organizations, not elsewhere classified”—$26.85 SOCIAL ACCOUNTING FOR NON-PROFITS

  12. Junior Achievement of Rochester • Teachers of the Junior Achievement curricula hourly rate for “teachers, not elsewhere classified” —$25.86 • Special event volunteers hourly rate for “administrative support occupations,” not elsewhere classified —$12.22 SOCIAL ACCOUNTING FOR NON-PROFITS

  13. Modified Specialist Approach • Targets rate to organization and its skill level • NAICS • Paid staff wage scales • More practical than specialized approach SOCIAL ACCOUNTING FOR NON-PROFITS

  14. North American Industry Classification System (NAICS) • Jointly developed by statistics agencies • Canada, United States, and Mexico • Jane/Finch Community and Family • NAICS subsector 624, social assistance—$13.38 SOCIAL ACCOUNTING FOR NON-PROFITS

  15. Canadian Breast Cancer Foundation • NAICS subsector 813 “grant-making, civic, professional and similar organizations” • Rates were assigned based on the task skills • Hourly rate in Ontario—$14.51(runners) • Salaried rate—$19.72 (event planners) • Midpoint—$17.11(clerical) SOCIAL ACCOUNTING FOR NON-PROFITS

  16. Canadian Breast Cancer Foundation • Board of Directors • Human Resources Development Canada (HDRC) • http://lmi-imt.hrdc-drhc.gc.ca • Senior managers of health, education, social services (Code 0014)—$35.56 SOCIAL ACCOUNTING FOR NON-PROFITS

  17. NAICS 2003 rates (Ontario) SOCIAL ACCOUNTING FOR NON-PROFITS

  18. Issues to consider if using replacement costs • Volunteers may be less productive than paid labour; therefore, • volunteer value could be overestimated • Replacement rates might not evaluate properly the contribution of volunteers • might bring higher levels of skill than the volunteer task requires • Should there be an amount added for fringe benefits? SOCIAL ACCOUNTING FOR NON-PROFITS

  19. Recent survey of nonprofits (Mook et al. 2004)

  20. References Brown, Eleanor. 1999, May. Assessing the value of volunteer activity. Nonprofit and Voluntary Sector Quarterly 28 (1): 3–17. Handy, Femida, and Hans Srinivasan. 2002. Volunteers in hospitals: Scope and value. Toronto: York University. Wolfe, Nancy, Burton Weisbrod, and Edward Bird. 1993. The supply of volunteer labor: The case of hospitals. Nonprofit Management and Leadership 4 (1): 23–45.

  21. Manual Mook, Laurie & Jack Quarter (2003). How to assign a monetary value to volunteer contributions. Toronto: CCP. Available at: http://www.kdc-cdc.ca/attachments/Quarter_final_eng.pdf

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