The subject of volunteers and the work they do on behalf of nonprofits is deep and complex, and is one of the most researched aspects of charitable behavior. Most nonprofits use volunteers in one form or another and estimates from 2009 put the total value of volunteer hours in the United States in the neighborhood of $169 billion (Corporation for National and Community Service. “Research Brief: Volunteering in America Research Highlights” 2010). So it seems strange to me that there is seemingly a widespread lack of awareness of how to account for this enormous contribution in a meaningful way in an organization’s budget and books.

Admittedly, this is anecdotal.  But I have had this discussion with literally dozens of nonprofit leaders over the past 10 years or so and found that on the whole, most of them either were not accounting for the value of their volunteers at all, or at most were tracking volunteer hours as a program metric. Very few were actually including the value of volunteers in their budgets, and even fewer were booking these hours in their accounting systems. This is troubling since there are some really good reasons to do so.

At the top of that list of reasons is that you really cannot measure what it costs to run your organization if you exclude the value of your volunteers. When you examine your financial statements, you only see a portion of the costs incurred to deliver on your mission. This is especially true of smaller organizations, where volunteers often comprise the majority of the staff. One young, growing organization I know of has basically two staff people, and seven volunteer interns, most of which are in the office as much as four days a week. The value of their contributions needs to be included in any meaningful examination of the organization’s operating expenses.

In addition, the value of volunteer hours can often be leveraged to increase the actual revenue of an organization, by using it as matching donations or cost-share with donors or grantors. This is entirely allowable, provided you have appropriate back up documentation and can make a case for the specific value of the work being done. For example, a volunteer bookkeeper who would normally charge $25 per hour for their time, can be used as a matching donation against a grant or gift requiring such a match, or as a cost-share contribution against a governmental grant with a similar requirement.

Finally, I think we have a moral and ethical reason to include volunteer hours in our budgets and financials. To do otherwise not only creates an inaccurate picture of how much we accomplish with our donors money, but also diminishes the value of the sacrifice these volunteers are making in service to others. We owe them more than just a thank you; we also need to treat their contributions with at least as much deference and respect as the gift that comes in the form of a check.

So given these incentives, how do we actually go about building the value of our volunteers into our financials? Basically, we treat them much the same as any other in-kind donation. From a budgetary standpoint, we need to include the full value of volunteer contributions both on the revenue side, to more accurately measure “income”, and on the expense side, to better measure the cost of delivering on our missions. These need to balance out, so the net effect on the bottom line is unaffected, but now we have a much better picture of the size of our budget and what our per unit cost is to run our programs.

On the accounting side, the same holds true.  We book the donations as non-cash gifts, and offset them with a non-cash expense. Any accountant should be able to help you figure this out as well as help properly value the time being given.  Often, this latter is done either by researching comparable salary costs for such work or by using a standardized value for such hours in your geographic region. Independent Sector, for instance put the “average” value of a volunteer hour in California in 2008 at $23.29, while the same hour in Montana was worth $14.26.

The Financial Standards Accounting Board has ruled that the value of volunteer hours can be included in financial statements and budgets for both internal and external use, so long as the work being performed meets some basic criteria, the most important being that the work is “specialized”. This is not meant to imply that a volunteer needs to have particular professional skills that qualify as “specialized”. Rather, the general test of this standard is whether or not the organization would have purchased the work had it not been donated. By this measurement, if you have a volunteer doing basic cleaning around your facility, for which you otherwise would have had to hire someone, you can include their work in your statements.

So if you’re not already doing so, I strongly urge you to take a good hard look at your volunteers, and see them in a different light. Acknowledge the work they do not just by saying thank you at the end of the year, but by recognizing that it has market value. You might be very surprised at how crucial these wonderful people are to your ability to deliver on your mission, and your Board of Directors and funders will appreciate that they are getting a complete and realistic picture of what it costs to do what you do.

Many of you have probably seen the recent news about Bill Gates and Warren Buffet's initiative to ask billionaires to commit a minimum of 50% of their wealth charitable purposes. Actually, in only a few months they have received commitments from 38 of their peers in that rarified group, most of which are planning to give much more than the threshold 50%. This is a laudable initiative, and has huge implications for the non-profit sector in the years to come, but it also raises a number of unanswered questions.

How will this new money reach the sector? Will there be a slew of new, well endowed foundations created or will these donors (as Buffet did with Gates) work with existing foundations? What areas of focus will these donors choose to target? There are, as far as I understand it, no restrictions being placed on the donors making the pledge; they are only being asked to make a moral commitment. Are the organizations on the ground ready for such an unprecedented infusion of cash? Most of us who have been around for a while have seen the unfortunate results when a small or mid-sized organization receives a large gift before they have the staff , policies or infrastructure in place to manage it well.

Additionally, there is the larger question of how this initiative will impact other givers in the US. The hope, I'm sure, is that such generosity will inspire others to consider more carefully what they could be doing to make a difference with their wealth, at whatever level. There is also a risk that smaller donors could interpret this as letting them off the hook, and it is small donors who have always made up the vast majority of charitable dollars given in this country. One possibility I have not heard mentioned is that such a movement could spread overseas. The US hardly has a monopoly on vast wealth, and there are areas of the world where the idea of giving away your fortune to make a difference is novel, to say the least.

I am very curious to see some of these questions answered in the coming years, and will look forward to seeing what comes out of this movement. My hope is that it will serve to reinvigorate the spirit of American philanthropy, especially as we slowly recover from this economic downturn and move once more into  the upslope of the business cycle. Regardless of the outcome, I applaud Mr. Gates and Mr. Buffet for the effort. The idea that great wealth comes inherent with great responsibility has been somewhat out of fashion in recent times, and it is good to see the two wealthiest Americans advocating for such a view.

Given that the Internet, in all its manifestations, has become such an integral part of life for post-modern American, it would seem natural that non-profits would use the virtual environment to better reach their constituencies.  Indeed, such would seem to be the case, at least at first glance. The rapid growth of online giving in the US, the development of such venues as Facebook causes, Network for Good, Kiva and DonorsChoose, and the use of common short codes to facilitate giving via text message all argue that electronic/virtual fundraising is here to stay. A closer look, however, reveals some troubling incongruities in the ways non-profits and their donors perceive such interactions and there is little evidence that non-profits are listening to what those donors are saying.

A recent (2009) study by The Chronicle of Philanthropy in which they surveyed 3500 “major donors” (defined as individuals who had made a gift of over $1000 to one organization and average giving of over $11,000/year) found the following:

• 80% had made donations online
• More than half cited a preference for online giving
• Slightly less than half expected their online giving to increase in the future

However, these same donors also stated that they largely (60%) felt that non-profits sent them too many emails, 81% found that emails with an “urgent tone” discouraged them from giving, and a significant majority wished they had more control over the volume of emails they receive from a particular charity, even one they actively support. Also telling was that 43% of those surveyed indicated that most of the electronic communications messages they received from non-profits lacked focus and clarity. Given that these are the kind of donors most organizations crave, it seems obvious that we should listen to what they have to say.

A 2005 study by Blackbaud states that the majority of online givers had little to no prior history with many of the organizations they supported online, which they interpreted to indicate that it was easier to gain a new donor than it was to convert an existing donor to online donations. Convio and Strategic One found in a 2007 study that offline givers who received electronic communications from a charity they support tended to give almost twice as much as offline givers who did not.

So, what can we learn from all this feedback and how can it inform our fund development strategies in the virtual environment? Several things seem obvious:

• Donors like the convenience of online giving
• They also appreciate getting electronic communications about the charities they support
• Donors expect such messages to be short, focused and clear, not desperate emotional appeals
• They also want control over how often they receive such communications
• Donors, especially major givers, expect to be listened to, and to have a venue to give feedback
• Limiting your online campaigns to existing donors misses the opportunity to gain new supporters
• Just because someone does not give online doesn’t mean they don’t want to hear from you via an electronic venue

I spoke to a client a couple of weeks ago about this, mentioning that it would be very helpful to do a brief online survey of their donors to periodically solicit feedback about the nature of their messages, the frequency of such communications and the ease with which a donor can make an online gift.  Two days later I received an email from the President of the organization forwarding a link to a webinar about constructing effective surveys as a means of better connecting with constituents. It would seem that such an approach might provide invaluable feedback to inform future campaigns.

So despite the huge growth in online giving, it seems we are still on the upslope of this particular learning curve.  There is still much to learn about how to properly reach out to new and existing donors, and we can get much of that information from the donors themselves. And while giving has always been characterized by its personal and relational nature and the internet has been known for its impersonal character, they are somehow now inextricably linked, to the benefit of all concerned.