How the Numbers are Calculated
The value of volunteer time is based on the hourly earnings (approximated from yearly values) of all production and non-supervisory workers on private non-farm payrolls average (based on yearly earnings provided by the Bureau of Labor Statistics) for the national average. The national average is increased by 12 percent to estimate for fringe benefits. Independent Sector, in partnership with IMPLAN, indexes this figure to determine state values.
Charitable organizations most frequently use the value of volunteer time for recognition events or communications to show the amount of community support an organization receives from its volunteers.
According to the Financial Accounting Standards Board (FASB), the value of volunteer services can also be used on financial statements –- including statements for internal and external purposes, grant proposals, and annual reports –- only if a volunteer is performing a specialized skill for a nonprofit. The general rule to follow when determining if contributed services meet the FASB criteria for financial forms is to determine whether the organization would have purchased the services if they had not been donated. Accounting specialists may visit FASB’s website for regulations on use of the value of volunteer time on financial forms.
It is very difficult to put a dollar value on volunteer time. Volunteers provide many intangibles that cannot be easily quantified. For example, volunteers demonstrate the amount of support an organization has within a community, provide work for short periods of time, and provide support on a wide range of projects.
The value of volunteer time presented here is the average wage of non-management, non-agricultural workers. This is only a tool and only one way to show the immense value volunteers provide to an organization. The Bureau of Labor Statistics does have hourly wages by occupation that can be used to determine the value of a specialized skill.
It is important to remember that when a doctor, lawyer, craftsman, or anyone with a specialized skill volunteers, the value of his or her work is based on his or her volunteer work, not his or her earning power. In other words, volunteers must be performing their special skill as volunteer work. If a doctor is painting a fence or a lawyer is sorting groceries, he or she is not performing his or her specialized skill for the nonprofit, and their volunteer hour value would not be higher.
About the State Values
The earliest attempt at estimating the average hourly rate of volunteer time was made by Harold Wolozin in The Value of Volunteer Services in the United States (September 1976) using a marketplace value basis. His 1974 rate of $4.76 was 12 percent more than the 1974 average hourly earnings of nonagricultural employees.
All subsequent value for volunteer time released by Independent Sector have been based on the average hourly earning of workers on private nonfarm payrolls (BLS data) and increased by 12 percent to estimate for fringe benefits. This method however, only provides a national rate for volunteer time and does not take into account differences in labor conditions among states. To correct for these differences, a comparative wage measure, available on a state basis was considered. The average hourly rate for employees in private industry was obtained for the entire U.S. and each state. The ratio between the national and state rate was computed for and the same ratio was applied to the national nonagricultural hourly earnings to calculate an individual rate for each of the states. These numbers provide the public the option of using the national dollar value of volunteer time or the dollar value specific to the state they operate in.
This method was recommended by BLS economist John Stinson.