Valuing Nonprofit Volunteer Hours

Valuing Volunteer Hours Assists Nonprofits with Compliance and Strategic Planning

According to a report by IndependentSector.org, a volunteer hour is worth just over $33, a 5.3% increase from 2022. According to AmeriCorps, an estimated 23% of Americans or more than 60.7 million people formally volunteered with organizations between September 2020 and 2021. In total, these volunteers served an estimated 4.1 billion hours with an economic value of $122.9 billion. This statistic, coupled with Financial Accounting Standards Board’s (“FASB’s”) ASU 2020-07 on Presentation and Disclosures by Not-for-Profit Entities for Contributed Nonfinancial Assets, begs the question, “how should our not-for-profit be handling valuation of volunteer hours?”

Recognizing nonprofit volunteer services under GAAP

Under generally accepted accounting principles (“GAAP”), services that are contributed by nonaffiliates of a not-for-profit organization generally should be recognized at fair value as contributions if they create or enhance a nonfinancial asset OR if they require specialized skills and are provided by individuals who possess those specialized skills and would need to be purchased if not contributed. Some examples include attorneys, CPAs, doctors, nurses…but what if you have volunteers that come in once a week to file papers or walk dogs or organize supplies? Although these type of volunteer hours are not recognized on the face of an organization’s financial statements, volunteer involvement demonstrates that the community is invested in the organization and its mission, and, as established in our first paragraph, volunteer hours hold great value!

What volunteer data should a nonprofit track?

For internal purposes, it is a best practice to have certain data on volunteers available including:

• • What have volunteers accomplished at your organization?
  • How many clients do they support?
  • How many activities do they lead?
  • What demographics are represented in your volunteer workforce and do they reflect the diversity of the community?
  • What do volunteers say about your organization?
  • How has involving volunteers created partnerships with other organizations whether not-for-profit, corporate or government?
  • How many volunteers are also financial contributors?
  • Have your volunteers come up with innovative ideas that your organization has implemented and have improved processes or services?
  • Have volunteers introduced you to new communities you weren’t reaching before?

Knowing the answers to these questions can help your nonprofit in its strategic planning to understand how crucial volunteers are to the success and operations of the organization itself, and if this is an area of emphasis for the organization that may warrant staffing specifically dedicated to volunteers, such as a volunteer coordinator.

How can your organization track volunteer hours?

Once your organization has identified the volunteer data you want to capture, you can use event reports, volunteer applications, surveys, social media analytics, and more as data points. For smaller organizations, an Excel spreadsheet might be sufficient for tracking volunteer data. Larger organizations may find volunteer tracking software a better solution for more customized reports. Volunteer management software options can be researched here.

In addition, your nonprofit should decide whether it should disclose, in the notes to its financial statements, annual report, website, newsletter, or other places, the number and estimated value of volunteer hours each year.

So the short story is that if you look at the face of a not-for-profit organization’s financial statements, you will not see the value of non-specialized volunteer hours in the numbers, but the long story is that the effect of those volunteer hours are in the numbers and the numbers are, in many organizations, very much affected by those non-specialized volunteer hours. Use your volunteers to help share your organization’s story, move your organization forward and pitch in when a need arises, and, don’t forget to appreciate them!

Questions on valuing not-for-profit volunteer hours for your organization? Contact your Opportunity Advisor or Email | Call: 804.747.0000. We are here to help.