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Why Accounting For the Value of Volunteer Time Is Crucial in 2024

Did you have trouble tracking the value of volunteer time in the past year? If you're a volunteer manager for a nonprofit or community organization, you may struggle to track the time and account for the dollar value of volunteer time and efforts.

While volunteer rates are still recovering from the pandemic, volunteers are also essential to your operation.

But with so much to do and so few hands on deck, you may have put figuring volunteer time tracking and management on the back burner.

However, tracking the value of volunteer time is more important than you think and should be a priority in 2024.

Why It's Important To Track Volunteer Time

People volunteer for organizations like yours for several reasons. Often, they're deeply invested in your mission. But they also may be looking for an activity to feel their time. Sometimes, they may be looking to socialize and meet new people in addition to helping out. And in some cases, they may need to complete a certain number of community service hours to fulfill a work, educational, or legal requirement.

If volunteers come to you with a community service requirement, accurate time tracking is important to ensure they've met their quota. But it's also important to keep track of volunteer hours to help recognize individuals who have invested a lot of time in your organization.

Volunteers don't expect to get paid. But bestowing benefits, such as certificates, branded merchandise, and other tokens of appreciation, on those who have spent a lot of time volunteering for your organization will let people know you recognize and value their efforts. It will help inspire them to keep contributing and help you recruit and retain more volunteers.

And volunteer retention is more important than ever. The number of adults volunteering in the U.S. has declined from 65 percent in 2013 to 56 percent in 2021. That makes the independent value of volunteer time more important than ever. 

Moreover, volunteers make up some of an organization's most loyal donors. Keeping volunteers satisfied with the time they spend with your organization is crucial.

When You Need To Account for the Value of Volunteer Time

There's another reason why tracking the hourly value of volunteer time is critical...

Many organizations must report certain volunteer activities in their financial statements. According to Financial Accounting Standards Board (FASB) Standard No. 116, volunteer services that require specific qualifications, which the organization would have purchased had a volunteer not stepped up, needs to be accounted for.

For example, suppose your organization solicits a volunteer CPA to prepare its annual financial statements. In that case, a volunteer CPA who does must account for the monetary value of their volunteer time on those statements. Similarly, if doctors, engineers, and others in similarly skilled professions volunteer their time in those capacities, you must account for the value of their volunteer time in your financial statements.

As per FASB 116, you also must account for the monetary value of volunteer time if your volunteers enhance the value of a physical asset. So if your volunteer electrician improves and upgrades your building's electrical system, increasing its market value, you must indicate the dollar value of volunteer time on your financial statements.

Why Disclosing The Value of Volunteer Time Can Be Helpful

While you may not be required to track the hourly value of volunteer time, your volunteers spend stuffing envelopes, picking up trash, or performing other nonspecialized tasks, doing so has other benefits.

Today, consistently tracking the value of volunteer time, whether it includes skilled or unskilled work, throughout your organization is typically performed through volunteer management software.

By identifying and deploying the right all-in-one solution, you can ensure that you capture all volunteer hours and minimize the risk of missing volunteer hours that you must disclose on financial statements.

But beyond greater financial controls, tracking and accounting for the value of volunteer time can offer another benefit: financial transparency.

You build credibility with your stakeholders by disclosing the monetary value of volunteer time in your annual reports, fundraising material, and other public documents. They see exactly how your organization operates and may feel more confident about volunteering their time or donating to your cause.

Full disclosure can also help you build credibility with third-party validators. Organizations like Charity Navigator, GiveWell, Candid, and others assess charities and volunteer organizations based on their effectiveness. They carefully scrutinize financial documents and other relevant information about each organization's cost-effectiveness.

Disclosing information like the dollar value of volunteer time can go a long way toward earning a favorable rating with these assessment organizations and help you obtain more funding and volunteers in the future.

Further, understanding the dollar value of volunteer time can help you make a compelling case for more funding with donors, grantmaking organizations, and other funding entities. For example, say you run a not-for-profit with two full-time staffers that the local government partially funds. And you typically have thirty volunteers a year, but that number varies by month, and you're looking to be less reliant on their efforts.

Understanding the dollar value of their volunteer time might help you estimate how much additional funding you might need to hire adequate full-time staff to be less reliant on your volunteer base or offer more services.

How to Calculate the Value of Volunteer Time

Some nonprofit leaders may not think that the dollar value of their volunteers is all that high. Consequently, they may not feel the need to add another administrative task to their plate.

But chances are, the monetary value of volunteer time at their organization is more than they think. Today, the value of volunteer time is nearly $30 per hour, according to a study by Independent Sector.

Understanding the value of volunteer time at your organization can make a world of difference. And some tools can help you calculate the value of volunteer time easily.

Galaxy Digital offers a complete set of volunteer management tools, including a volunteer hours log, within its Get Connected platform.

With Get Connected, you can not only track, account for and calculate the volunteer time, but you can also easily recruit and engage volunteers, and build tailored fundraising appeals to your volunteer base.

The Get Connected platform is easy to use and customizable for your organization's mission.

Contact us to schedule a free demo and take the first step to track your volunteers' hard work this year.

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