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The University of Texas at Austin

Lyndon B. Johnson School of Public Affairs

The Investigator #4: Placing a Value on Volunteer Time

The Investigator #4: Placing a Value on Volunteer Time

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The information below is a supplement to the fourth issue of the Investigator series.

In this issue of The Investigator, we introduce five different methods for measuring the value of volunteers. In addition to reading the fourth issue of The Investigator, we encourage you to learn more about these methods by browsing through some of the resources we have listed below.

Average Wage Method:

The Average Wage method is easy to use and provides a standardized way to assign a value for volunteers' work. By applying the average wage paid to an American worker at a national, state, or city level, this approach estimates a value for a volunteer's time. Its weakness, however, is that it does not distinguish between the work performed, nor between the skill levels of the people performing the work.

Resources on how to calculate the Average Wage:

The Independent Sector
A coalition of more than 500 organizations, the Independent Sector is committed to providing resources to the staff and volunteers at charities, foundations, and corporate giving programs. This includes research on topics in the charitable and philanthropic sector as well as public policy advocacy. In 2004, the Independent Sector estimated that the value of a volunteer hour had reached $17.55 per hour. In addition, they estimated that the total value of hours volunteered in 2004 was equivalent to approximately $272 billion of contributed service. More information related to volunteer management tools can be found on their website.

Current Employment Statistics (CES)
Housed at the U.S. Department of Labor's Bureau of Labor Statistics, the CES is a monthly survey of about 160,000 employers, representing approximately 400,000 individual worksites, in order to provide detailed industry data on employment, hours, and earnings of workers on non-farm payrolls.

Replacement Wage Method:

The Replacement Wage method differs from the Average Wage method by taking into account the type of job that a volunteer performs. Stated more simply, the value of the volunteer's time equals the amount that it would cost the organization to pay someone to complete the same task.

Resources on how to calculate the Replacement Wage:

The Financial Accounting Standards Board has developed a means of recording the value of volunteer service on nonprofit organizations' financial statements.

Occupational Employment Statistics (OES): Collected by the U.S. Department of Labor's Bureau of Labor Statistics, the OES provides estimates of wages for over 800 occupations at national, state, and metropolitan levels.

Article:
Karn, G. Neil. 1982-83. Money talks: A guide to establishing the true dollar value of volunteer time (Parts I & 2). Journal of Volunteer Administration. 1 (2&3).

Opportunity Cost

The Opportunity Cost method for calculating the value of a volunteer takes into consideration the qualifications of the person who is volunteering. In other words, it assigns a value to volunteer time by estimating the salary that the individual volunteer would have made at his or her regular job during the time that she or he is volunteering. A discussion of this method can be found in the following article:

Cnaan, R., Handy, F., and Wadsworth M. 1996. Defining Who Is a Volunteer: Conceptual and Empirical Considerations. Nonprofit and Voluntary Sector Quarterly, vol. 25, no. 3 (pp. 354-383).

Social Benefits & Value to Volunteer

Although two separate approaches for placing a value on volunteer time, the Social Benefits and Value to Volunteer methods are both more subjective than the methods presented above since they do not necessarily calculate a quantifiable figure for volunteer time. Instead, they highlight what the United Nation's 2003 Handbook on Non-Profits Institutions in the System of National Accounts identifies as the “outputs” – or the goods and services- that volunteers produce. In the case of the Social Benefits method, these outputs can relate to how volunteers improve beneficiaries' lives or even how they improve a community where the beneficiaries live. For the Value to Volunteer method, the output value looks at how the volunteers themselves benefit from their work.

Resources for the Social Benefits and Value to Volunteer Methods:

Quarter, J., Mook, L., and Richmond, B.J. What Counts: Social Accounting for Nonprofits and Cooperatives. Prentice Hall: New Jersey, 2002.

Pocock, M. Working for Nothing? Classroom Parent Volunteers. Working Paper, 2005.

General Resources:

Energize Inc.
Founded by renowned volunteerism specialist, Susan Ellis, Energize Inc. is an international training, consulting and publishing firm specializing in volunteerism. The website contains a wealth of information on volunteer management and also lists additional resources for assigning a dollar value to volunteer time. One key resource is the Ellis' own book on volunteer management:

“The Dollar Value of Volunteers.” Chapter 11 in From the Top Down: The Executive Role in Volunteer Program Success (Author: Susan J. Ellis, 1996)

E-Volunteerism:
Cervantes, Esther. 2002. Time Dollars and the Money is Value Metaphor. E-Volunteerism. 2(4), July-September 2002.

Journal of Volunteer Administration:
Anderson, Paula M. and Mary E. Zimmerer. 2003. Dollar Value Of Volunteer Time: A Review Of Five Estimation Methods. Journal of Volunteer Administration. 21 (2).

Smith, Justin Davis and Angela Ellis. 2003. Valuing Volunteerism. Journal of Volunteer Administration. 21 (2).

United Nations Department of Economic and Social Affairs
2003 Handbook on Non-Profits Institutions in the System of National Accounts

The Foundation Center:
Under Frequently Asked Questions, the Foundation Center responds to the matter of assigning a monetary value to volunteer team.

A selection of the recommended literature for valuing volunteers from the Foundation Center:

Handy, Femida and Narasimhan Srinivasan. "Valuing Volunteers: An Economic Evaluation of the Net Benefits of Hospital Volunteers." Nonprofit and Voluntary Sector Quarterly 33 (March 2004) p. 28-54.

Mook, Laurie, Jorge Sousa, Susan Elgie, and Jack Quarter. "Accounting for the Value of Volunteer Contributions." Nonprofit Management & Leadership 15 (Summer 2005) p. 401-15.

NonprofitsCan
A public information portal for Canadian nonprofit organizations, NonprofitsCan produced a list of eight calculations to measure the economic value of volunteer activity. The publication is entitled Measuring the Economic Value of Volunteer Activity and is part of the International Year of Volunteers Research Program.

Knowledge Development Centre's Canada Volunteerism Initiative:
Most appropriate for Canadian nonprofit organization, the Volunteerism Initiative addresses the Benefits and Value of Volunteering with a list of resources that includes the following tools: