Featured blog post as presented by the Chronicle of Philanthropy.
Time Is Money: How to Measure the Value of Volunteers
By Diane Knoepke
Volunteers are a vital part of many nonprofit groups. But whether and how nonprofits measure the value of those volunteers varies widely.
According to the International Labour Organization’s Manual on the Measurement of Volunteer Work, people are far more generous with their time than with their money: The total amount of time people give to nonprofits globally is worth double what they give in cash donations. Volunteers are such an integral part of the labor market that without a good grasp of the value of their work, charities have a limited understanding of this important resource and may not make the most of it. As the manual states, “What is not counted cannot be effectively managed.”
The three most common ways to measure the value of volunteer time, as outlined by the RGK Center for Philanthropy and Community Service at the University of Texas at Austin, are:
- Multiply the number of volunteer hours by the average hourly wage for a worker based on local or national statistics.
- Calculate how much it would cost to hire paid employees to do the volunteer task.
- Calculate how much the volunteer would be paid at his or her regular job for the number of hours contributed.
Of those, the second comes closest to figuring the actual value to the organization. For example, if a charity planning a fundraising marathon can secure emergency medical volunteers, the value of their time to the organization is the amount it would cost to hire medical staff for the event.
To determine that value, consider the following:
- What portion of the donated time would the organization replace with paid staff members if the volunteers weren’t there? We recently analyzed annual volunteer time for a hospital and found that it equaled the annual work time of 65 full-time employees. But the organization wouldn’t have hired 65 workers if it hadn’t had those volunteers, so the value of their time was lower. Even though those volunteers were very important and deeply appreciated, their time could not be considered as valuable as cash.
- Of the time volunteers put in that would not be replaced by employees, how much is it worth to the organization? Each organization has to decide that for itself, but here are some questions to consider:
- How much would a particular service have to be discounted for the organization to be willing to pay for it?
- What is the tipping point at which the organization would pay for staff to do this job?
- How big is the supply of current or prospective volunteers able and willing to play a given role?
- Do volunteers filling this role need special skills? Are volunteers who are qualified to do the work hard to come by?
Typically, volunteers with special skills will be in smaller supply than generalists, but that’s not always the case. Early in my career, I was part of a three-person staff that planned Chicago’s Thanksgiving Day Parade. We recruited about 1,000 volunteers each year, but the 25 or so “pooper scooper” equestrian volunteer positions were hardest to fill. These clean-up volunteers needed no special training (unlike the balloon handlers) and didn’t have to wear cutesy costumes (unlike the banner carriers).
But the supply of scooper volunteers was low and their value very high to the organization, as the city required us to keep the street clean. While we would not have paid the full replacement cost to hire staff for the job, the time these individuals donated was likely worth 90 cents on the dollar to us.
This determination is part art, part science. But as a rule of thumb, the replacement cost is 10 to 50 percent. For nice-to-have (or even superfluous) work provided by volunteers who are relatively easy to replace, discount the replacement cost by 50 percent. For highly valued or hard-to-recruit volunteers, discount the replacement cost by 10 percent. The rest should fall somewhere in between.
- What is the value of the staff time spent on volunteer management? Volunteers typically need supervision and direction, and volunteer management often requires staff time.
So to determine the net value of volunteers’ time, take the figure you found from steps 1 and 2, and then subtract what you spend on staff time to supervise them.
This is only one slice of a much bigger picture of the volunteer-measurement discussion. I’ll be continuing that discussion over the coming months in future blog posts.
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About The Author
Steve Edelman is a Partner and President of Connect360. He is a leading expert on the measurement, valuation, and financial reporting of Public Service Announcements by not-for-profit organizations.
About Connect 360
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