Volunteers Are Your Most Important Donors
Each volunteer hour is currently estimated to be worth $29.95.
A volunteer hour in the US is currently valued at $29.95, up 4.9% from 2020 to 2021, according to Independent Sector and the Do Good Institute’s most recent Value of Volunteer Time report, which was released on April 18, 2022. The value varies by state–in Florida, the current value of each volunteer hour is $27.68.
Why Calculate a Value of Volunteer Time?
Although quantifying volunteer hours will never do them justice, it is one way to acknowledge the contributions that people and organizations have made to our communities. The estimate serves as a tribute to the millions of people who invest their time, skills, and efforts toward changing the world.
Charitable organizations widely use this estimate to emphasize the immense value volunteers offer. Ask your accountant to include the value of volunteer hours donated along with in-kind donations in your financials. They will make your financial statement more robust and give a better indication of what your organization has accomplished.
How the Numbers are Calculated
The most common way charitable organizations demonstrate the level of community support they receive from their volunteers is through appreciation events or communications. Independent Sector has served as the principal repository for state and federal data on the importance of volunteerism in the United States for many years. Together with Nathan Dietz, Independent Sector has created the estimates (Do Good Institute, University of Maryland).
The value of volunteer work is based on the average wages of private sector workers, excluding those who work on farms or in managerial jobs, according to the main assumption for the 2020 state and national estimates. The same source data from previous years is used to generate Independent Sector’s estimates based on the non-seasonally adjusted annual average hourly wages for all production and non-supervisory workers on private non-farm payrolls. These annual earnings projections are based on data from the Bureau of Labor Statistics Current Employment Statistics (CES) database (BLS).
The fact that volunteers provide a wide range of services for organizations and communities nationwide justifies the use of sector-wide average compensation. The underlying presumption (which Independent Sector has historically used as the foundation for their estimations) is that these earnings represent the organization’s expense for employing paid personnel to perform these services. The assumption is based on the price (or value) of the services provided by the volunteers rather than how much they may make from their paid jobs. Many doctors, lawyers, and other professionals with specific talents work as volunteers, but not usually in jobs requiring their particular expertise.
The hourly earnings CES estimate for private non-farm and nonmanagerial occupations, plus a 15.7% increase for the value of fringe benefits, form the basis of the national estimate of the value of a volunteer hour. Contrary to Independent Sector’s previous practice, which involved raising the CES earnings estimate by 12%, the 15.7 percent fringe-benefit rate is a change. Harold Wolozin initially determined the 12 percent rate in a 1976 essay using salary information from the previous year. Non-wage benefits now account for 31.4% of total pay for private sector employees, according to statistics from the BLS National Compensation Survey.
However, according to data from the BLS National Income and Product Accounts (table 7.8), only 50% of these non-wage benefits accrue for each extra hour that an employee works; the value of the remaining 50% of these benefits (which include health insurance and other employer-paid expenses) does not rise with each extra hour worked. Therefore, (50 x 31.4 =) 15.7 percent is the proper fringe-benefit rate to apply to the 2020 projections of one hour of volunteer time.
The value of volunteer services can be included on financial statements, including those for internal and external purposes, grant proposals, and annual reports, according to the Financial Accounting Standards Board (FASB), but only if a volunteer is rendering specialized services to a nonprofit. Determine if the organization would have purchased the services if they hadn’t been donated as a general rule when considering whether contributed services satisfy the FASB requirements for financial forms. Accounting professionals can find rules on how to include the value of volunteer work on financial forms on the FASB website. The value of a specialized skill can be estimated using estimates of hourly wages by occupation that BLS also produces.
About the State Values
Although a trustworthy, up-to-date approach was used to create the 2020 national estimate of the hourly value of volunteer time, the national rate does not account for regional variations in labor market conditions and cost of living. The state estimates employ a technique that BLS economist John Stinson initially suggested accounting for these discrepancies. The state estimates are based on the average estimate of hourly wages for private sector workers in non-agricultural occupations and are equal to the national value of volunteer time multiplied by a state-specific “hourly earnings index.” Each state’s index value is determined by dividing the estimated state hourly earnings by the estimated national hourly earnings.
Learn more on Saturday, August 20th in the Sunshine Certificate in Nonprofit Management class covering Human Resources and Volunteers from 1 to 5 pm.
Source: Independentsector.org – https://independentsector.org/value-of-volunteer-time-2022/
Independent Sector is a 501c3 which brings together a diverse community of nonprofits, foundations, and corporate giving programs. Florida Nonprofits has been a member of Independent Sector since 1991 and they have been a trusted source for us and our members. They are a source for advocacy information and our advocacy program.