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University of Pennsylvania
ScholarlyCommons
Departmental Papers (SPP) School of Social Policy and Practice
3-1-2007
When to Use Volunteer Labor Resources? An
Organizational Analysis for Nonprofit
Management
Femida Handy
University of Pennsylvania, fhandy@sp2.upenn.edu
Jeffrey L. Brudney
Cleveland State University
Postprint version. Published in Vrijwillige Inzet Onderzoch, Volume 4, supplement, March 2007, pages 91-100.
Publisher URL: http://www.movisie.nl/intranet/docs/VIOTragedyoftheCommons.pdf
This paper is posted at ScholarlyCommons. http://repository.upenn.edu/spp_papers/91
For more information, please contact repository@pobox.upenn.edu.
Handy, F., & J. Brudney. 2007. ‘When to Use Volunteer Labor Resources?
An Organizational Analysis for Nonprofit Management’. - Vrijwillige Inzet
Onderzocht (VIO, Netherlands) Jaargang 4, pp 91-100
When to Use Volunteer Labor Resources?
An Organizational Analysis for Nonprofit Management
Femida Handy, Ph.D. en Jeffrey L. Brudney, Ph.D.
Introduction
Volunteer labor is commonly used to produce many goods and services in our
economy. Many studies examine the supply of volunteer labor and determine why
and how individuals give their time without remuneration (Freeman, 1997; Menchik,
& Weisbrod, 1987; Smith, 1994; Vaillancourt & Payette, 1986 ). Fewer studies
examine the demand for and the use of volunteer labor by organizations that receive
it (Emanuele, 1996; Handy & Srinivasan, 2005). However, not surprisingly there
exists a strong demand for volunteer labor; given it’s relatively low cost and
individuals willing to supply unpaid labor. For example, 93% of volunteers are
engaged by 161,000 nonprofit organizations (NPOs) in Canada (Statistics Canada,
2004 b). In the United States, a national study found 80% of charities use
volunteers (Hager, 2004).
Volunteers are an integral part of the labor force for many NPOs, and are regarded
as co-producers alongside paid labor (Brudney, 1990, Ferris, 1984). Their
importance in the economy has been underscored in a number of national and
international studies (Weitzman, et al., 2002; Toppe, et al., 2002; Hall, 2000;
Independent Sector, 2001; Salamon & Anheier, 1997).
Why do some organizations rely on this labor? From an organizational perspective,
larger NPOs usually combine volunteer labor with paid labor and capital to produce a
desired output. As such, they receive the average unit of labor below market price;
this arrangement allows pricing output at lower than market prices. Other kinds of
donations, of money and in-kind goods and services, further allow the NPOs to sell
their output at below market prices, or give it away free. Examples of NPOs in
educational or health services or soup kitchens testify to this pricing.
From the perspective of volunteers, these individuals provide unpaid services and
receive non-monetary compensation in return. Volunteering can increase their
human and social capital; on-the-job training and social connections made while
volunteering can be profitable, augmenting their personal and professional status.
For example, a volunteer in a professional association garners prestige and status
from serving on the board. Survey research attests to the diversity and value of the
benefits received by volunteers (Brudney, 2005; Kirsch, et al., 2000; Toppe, et al.,
2002).
Several studies show support for volunteers learning specific job skills as well as
finding the opportunity to socialize (Schram and Dunsing, 1981;Vaillancourt and
Payette, 1986; Fitch, 1987; Menchik andWeisbrod, 1987; Brown and Zahrly, 1989).
Notwithstanding benefits, volunteers incur costs in providing volunteer labor,
ranging from the opportunity cost of forgone wages or leisure time to out of pocket
expenses such as childcare and transportation (Handy & Srinivasan, 2004; Chinman
& Wandersman, 1999).
From an organizational perspective, successful recruitment of volunteers requires
attention to what volunteers get in exchange for their labor. Different organizations
use volunteers differently, and thus the non-monetary rewards vary greatly by
organization and the type of services it provides, and the nature of the volunteer
work offered. Each type of volunteer duty is likely to attract a different kind of
volunteer. Hence, recruitment and retention must vary depending on volunteers’
incentives and contribution to the organization.
In this article we focus on volunteers and organizations that utilize them. A
recruitment strategy would be successful if the volunteer’s aspirations were met by
the organizational needs; demands of the organization are matched by the volunteer
labor supply. Volunteer labor is best used when the net-benefits of using volunteer
labor are positive to the organization, and the net-costs to the volunteer are
minimized. Although organizations do not produce detailed cost-benefit analyses of
using volunteers, studies show the benefit is positive. Similarly, although individuals
do not do an analysis of net-costs when deciding to volunteer, volunteering should
yield some benefits, albeit non-monetary. For example, hospitals using volunteers in
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Canada showed an average net return of a million dollars per hospital; volunteers
received an average of benefits $179 annually, while their estimated costs were just
under $1 per hour (Handy & Srinivasan, 2004). Similarly, Brudney and Duncombe
(1992) found that the return to using volunteers in New York fire departments was
positive when compared to the costs of volunteer administration.
Organizational Perspective
When does it make economic sense for NPOs to use volunteer labor? At the
minimum, their governance structure requires an unpaid board of directors, and at
the maximum, all their labor can be volunteer, as may be the case for a small
grassroots organization. In this article, we focus on larger NPOs that use a mix of
paid and volunteer labor in providing goods and services, as well as having a
volunteer board of trustees for governance of the organization.
For governance the organization does not have a choice as it does for producing
services. NPOs must choose a mix of paid and unpaid labor to produce services,
within the constraints of the legal environment. In some cases, services must be
supplied by professional staff due to issues of liability or labor unions contracts.
Volunteers may supplement but not substitute professional staff and help with tasks
not requiring specialized skills (Wheeler, Gorey & Greenblatt, 1998; Handy &
Srinivasan, 2004; Menchik and Weisbrod, 1987).
Let us assume for the sake of simplicity that a NPO relies on both voluntary and paid
labor in the production of its services. We can specify this function by the Cobb-
Douglas production function, Y = AKaL1-a, where A > 0 and 1 > a > 0. K represents
capital, L represents labor. This function is linear, homogeneous with constant
returns to scale. The parameter A is a scale factor and ‘a’ is a parameter
representing the share of output capital contributes. Diminishing marginal
productivity requires the first partial derivatives of Y with respect to K and L to be
positive, and the second derivatives to be negative. The Cobb-Douglas function
meets these conditions. In this case, the marginal product of L is MPL = (1-a) (Y/L);
the marginal product of capital is MPK = (a) (Y/K)
We specify that labor comprises paid [LP] and volunteer [LV] labor.
3
L = LP + mLV
The production function is
Y = AKa (LP + mLV ) 1-a, where A > 0 and 1 > a,
The marginal product of volunteer labor is MPV = (1-a) m [Y/ (LP + mLV )], and the
marginal product of paid labor is MPV = (1-a) [Y/ (LP + mLV)]
If volunteer labor is equally productive as paid labor, then m = 1; if less productive,
m<1; and if more productive, m >1.
The services provided by a volunteer can differ in fundamental ways from services
offered by professional staff. In some cases, the productivity of volunteers may
increase if the volunteer shares certain characteristics with clients (such as age,
race, economic background, or experience). On the one hand, volunteers do not
receive wages, and therefore their incentive to put effort into their work may be less
than or greater than that of an employee whose livelihood depends on wages
received. Volunteers do not face the costs of termination as do employees and,
hence, do not face the disincentives of shirking. On the other hand, because the
volunteers freely chooses the assignment, they may be driven by passion, work
fewer hour at the assignment (hence is less likely to be fatigued or bored) and may,
indeed, be more productive than a paid employee. Thus, it is reasonable to assume
that the productivity of volunteers and staff differ. As a result, it is difficult to say, a
priori, what value ‘m’ will take; it depends on the assignment and the volunteer. We
therefore consider the cases of m less than, equal to, or greater than 1.
Although the wage bill of volunteer labor is zero, the attendant costs can be quite
significant. As volunteers work for shorter periods and less frequently as paid labor
there are costs of scheduling and supervision. There is ongoing recruitment and
training, as volunteers may quit without penalty. Other costs may include screening,
for health and security reasons. In the aforementioned study on hospital volunteers,
these costs were low but not negligible at $2.62 per hour, a small fraction of the
market wage costs.
Thus the wage bill for an organization using paid and volunteer labor is:
Costs of labor C L = wL+ bV where w = market wage, and b < w
4
The marginal cost of volunteer labor = b and paid labor is = w
Equalizing the marginal cost of labor to its marginal product, we find
For volunteer labor: b = (1-a) m [Y/ (LP + mLV)] …………………. [1]
For paid labor: w = (1-a) [Y/ (LP + mLV )]…….…….………..[2]
Substituting equation [2] into equation [1] yields
b = mw……………… [3]
In other words, if the marginal cost of volunteer labor b < mw, the organization
should shift its production to increase the use of volunteer labor. To understand this
inequality, and therefore the choice of whether to use paid or unpaid labor, we need
to explore the values of ‘m’ and ‘b’ as they relate to various types of volunteering.
Before doing so, we must digress to comment on production externalities of NPOs
using volunteer labor. Bowman (2006) has written because volunteering builds social
capital, the total benefits “could exceed the sum of its parts from society’s point of
view, regardless of how they are measured” (p. 1). This perspective suggests that
that the productivity of volunteer labor should include the positive externalities
generated. Consider how this positive externality occurs. The social capital created
by volunteers is an expression civic engagement which has value to society (Putnam,
1995). Volunteers make the work of the nonprofit transparent to the community.
They also provide word-of-mouth promotion and publicity and help cultivate a
broader base of supporters for the NPO and its mission. Such activity may result in
increasing organizations’ networks and capacity to attract clients, volunteers and
donors (Grantmaker Forum, 2003).
Accordingly, we incorporate externalities into the production function for volunteers
and extend our analysis. Let the externality of using volunteer labor be a linear
function of the volunteer labor used:
Externality resulting from volunteer labor = nLV; where -1 < n < +1, thus
recognizing that externality may be positive or negative.
Y = AKa b (LP + mLV + n LV) 1-a, where A > 0 and 1 > a ………..………..[4]
5
For volunteer labor: b = (1-a)( m+n) [Y/ (LP + mLV + n LV)] ……….. [5]
For paid labor: w = (1-a) [Y/ (LP + mLV)]………………………..[2]
Substituting equation [2] into equation [1],
b = (m+n) w……………………………..[6]
Thus, by using an objective function with positive externalities of volunteer labor n
>0, we allow the NPO to choose its input labor to optimize the externality as part of
its mission. This perspective suggests that the NPO recognizes the positive
externality and will use more volunteer labor whenever m < (m+n), even if the costs
of volunteer labor and resulting benefits make it rational not to do so in a monetary
sense. The public sector may recognize this externality as well, and, accordingly,
decide to promote volunteering and subsidize the NPO to help offset the costs
associated with volunteer labor.
If there is a negative externality, n<0, of volunteer labor, for example, conflict with
labor unions, or paid staff feeling threatened that volunteers may replace them, then
organizations may choose not to utilize volunteer labor.1 Furthermore, if volunteers
are accepted due to long standing customs, NPOs may find themselves 'making
work' for volunteers, and were they to leave, their work would not be replaced by
paid staff even if the NPOs could afford to. In this case, volunteers may represent a
deadweight loss, this too can be capture by n <0. Thus, if m > (m+n), then even if
volunteers are productive and cost effective in a monetary sense it may be rational
for the NPO to cut back on their use.
Examples of positive externalities are common in the voluntary sector. Hospital CEOs
note that volunteers promote public health, an outcome they value. Given this
positive externality, they prefer to continue to use volunteers even if paid labor is
more cost effective (Handy & Srinivasan, 2005). Training programs provided by
NPOs using volunteers are not always cost-effective, yet governments recognize the
positive externalities and subsidize NPOs for such training. In the United States,
government subsidizes placements of volunteers in AmeriCorps in part for the
1 It is not a forgone conclusion that labor unions inevitably resist volunteers ( Brudney & Kellough, 2000)
6
positive externalities that ensue, for instance, the training and socialization of young
people, and the exposure to diverse populations (Simon & Wang, 2002).
Other positive externalities include: the role modeling provided by volunteers;
children are more likely to volunteer if their parents volunteer, thereby increasing
the future pool of volunteers (Toppe, Kirsch & Michel, 2002); and positive health
benefits for volunteers, especially among older volunteers (Musick &Wilson, 2003;
Greenfield & Marks, 2004). Solberg (2003) reports that one-time volunteering for
major sports events acts as a catalyst that boosts volunteering in the community.
Many first time volunteers sought further opportunities to volunteer.
Types of Volunteer Labor Resources
Volunteer labor resources are diverse. Cnaan et al (1995) suggest that volunteering
is far from a monolithic experience; rather it takes different meanings as the net-
cost of performing a volunteer activity varies. Their findings suggest that volunteer
activities represent different costs and benefits to different individuals depending on
the status of the individual and the nature of the task involved.
The volunteer labor received by NPOs differs. It may come from few individuals who
come in for many hours each week to many who come for short periods and
infrequently. This volunteer labor addresses different needs of the NPO and
represents differing configurations of costs and benefits to the organization and
individual. The costs and benefits for the individual are impacted further by whether
the individual is seeking, for example, human capital investment, social contacts or
fulfillment of a court-obligated sentence of “community service.” These motivations
can impinge on the volunteer’s decision to participate as well as the depth of her or
his commitment, involvement, performance of the work, and, hence, productivity.
For example, individuals may feel pressured to participate in an event that requires
them to volunteer time if their boss “suggests” that they join co-workers in a team
event to clean up the local park. Students may feel compelled to volunteer, or indeed
their high school might require “service” to graduate or to present an attractive
resume for college (Serow,1991). More obtrusively, courts may mandate community
service for some offenders in lieu of legal sentences or penalties. Thus, even if
volunteer labor is relatively cheap to the NPO, because of the uncertainty of
motivation, especially in the presence of coercion, the productivity of the donated
7
labor can be low. In contrast, a volunteer may be more productive than a paid
employee: Consider, for example, an individual with high social status who
volunteers to fund-raise, and does so for a few hours over several months. If this
individual has a high success rate due to her social standing, she may be more
productive than a paid staff person doing the same task in the same time.
Productivity and Volunteer Management
Volunteer management is likely to vary, in both cost and productivity, according to
the type of volunteering. We consider four of the many types of volunteering:
mandated or service learning, short-term or episodic, “virtual” (that is, through
electronic means), and long-term or traditional. We consider the crucial coefficients
of b, w, m, and n in this analysis, where:
b = marginal cost of volunteer labor;
w = marginal cost of paid labor;
m = relative productivity of volunteer labor compared to paid labor, where
m=1, volunteer labor is equally productive as paid labor;
m<1, volunteer labor is less productive than paid labor, and
m>1, volunteer labor is more productive than paid labor
n = the externality from the use of volunteer labor, where
n>0, a positive externality of volunteer labor, and
n<0, a negative externality of volunteer labor
1. Service Learning or Mandated Volunteering
Of the four types of volunteering, service learning or mandated volunteering is likely
the most expensive to the organization - as well as the least productive. Toppe
(2005, p.13) defines “high quality” service learning as lasting for at least one
semester and involving students in both planning and reflection activities. By this
definition, Toppe (2005, p.12) finds, alarmingly, that only 10.6 percent of students
enrolled in service-learning in the United States participate in high quality programs.
One explanation for the limited availability of high quality service learning (as
defined by Toppe, 2005) is the high cost of this type of “volunteer” labor: that is, b
takes on a relatively high value that can surpass the cost of employing paid labor w
to carry out the same tasks. Locating organizations amenable to service-learning,
8
placing student workers in assignments, setting and monitoring learning objectives,
evaluating the experience for the participants and organizations, integrating the
experience into the larger education of the student, and repeating the process for
new students is costly.
9
In addition to the high volunteer labor cost b of service-learning, the benefits to
NPOs are highly uncertain m<1, as we question the productivity of volunteering that
has an element of coercion. Furthermore, participants are young and often
inexperienced, have little background or readiness for their placements, may not
appreciate or enjoy their placement, and be more interested in the “academic”
aspects of the experience than in performing the actual jobs NPOs ask them to
perform. These considerations raise supervision costs, further lowering labor
productivity.
The case of mandated community service workers further illustrates the point.
Because they would likely not volunteer without a legal mandate, shirking arises as
an issue. Monitoring costs are especially high as the “principal” and “agent” may
harbor very different goals for the “volunteer” experience. As a result, paid labor
may be more productive (m < 1) and, perhaps, less expensive (w < b) when the full
costs of volunteering are taken into account.
Given that labor costs b are high and productivity m <1 for service learning and
mandated volunteer opportunities, why do many NPOs nevertheless incorporate this
type of volunteering? We believe that the answer lies in the positive externalities
(n>0) that arise. This type of volunteering is intended to benefit the participant and
the greater society (building social capital), more so than the NPO (although NPOs
typically share these goals as well or receive subsidies to defray costs). Since
students are “persuaded” to volunteer, whereas offenders are coerced, the positive
externalities are likely greater for students, as they are likely to continue
volunteering as adults if their experience is rewarding (Toppe, Kirsch and Michel,
2002).
To achieve these positive externalities, NPOs engaged in service learning should
strive to give students a rewarding experience, even if the productivity of their
volunteering is low. Furthermore, government might have a role to play in promoting
and subsidizing volunteer activities with positive externalities. The nonprofit subsidy
might take the form of requiring the third parties desiring volunteer placements,
such as schools and the legal system, to share the costs of volunteer administration
in the host organization. Similarly, host organizations might consider a placement fee
to be paid by the third parties, government, or other interested agencies to offset
10
the costs of volunteer administration.
2. Short-term or Episodic Volunteering
Short-term or episodic volunteering may be the least expensive to integrate into the
NPO (b < w), but may return the least benefits as well. If volunteers are willing to
contribute to NPOs’ goals on an episodic, non-continuous basis when they (rather
than host organizations) choose, we might rightly question the benefits to the NPO.
An apt parallel is to inquire when organizations would be willing to pay employees for
such a sporadic contribution: The likely answer is that it is conceivable if labor costs
are very low (as with volunteers or the minimum wage), or the task requires minimal
orientation, training, or other support. A contrasting model is the “unpaid
consultant”; NPOs may seek free professional expertise for specialized tasks not
needed continuously but that are significant to organizational productivity (m).
Examples include legal advice, risk management assessment, leadership of a fund-
raising campaign, et cetera (Brudney, 2006).
Despite the uncertain benefits episodic volunteers might bring, NPOs cannot afford to
ignore them. Handy, et al (2006, 31) describe the growing popularity of episodic
volunteering: “The interest has grown as inductive assessments showed that
volunteer co-ordinators are increasingly faced with people who wish to help only for
shorter and very well-defined tasks.” NPOs must adjust to their labor supply.
A further reason to involve episodic volunteers relates to its positive externalities
(n>0 ): Episodic and short-term volunteer opportunities build “civil society” within
communities with a minimal investment of time. Summer festivals that depend on
large numbers of episodic volunteers help integrate the multicultural community,
increase tourism, and builds social capital. Handy, et al (2006) posit that in the
absence of volunteers the summer festivals in Victoria (Canada) would not be
possible.
Even if the positive externalities are significant (n>0), the wavering commitment of
episodic volunteers and the generally short time duration of their contribution means
that labor productivity may be low (m < 1). To make episodic volunteering more
productive for the NPO requires the efficient coordination and management.
Volunteer tasks should be well-defined and tailored for limited participation. To
11
accommodate drop-in, irregular volunteer contributions efficiently, an organization
might develop routinized jobs or tasks that could be performed with little or no
training or supervision. Examples consist of mass mailings, filing or shredding
documents, packing boxes, et cetera. Job descriptions for typical episodic volunteer
jobs might fit on a small (3 x 5) index card and require no additional introduction or
explanation.
For positive net benefits of episodic volunteering, NPOs must keep the marginal cost
of volunteer labor low (b). Costs for orientation, training, screening, and supervision,
should be minimized or nil. In a national sample of NPOs in the U.S., Hager and
Brudney (2004) found that NPOs that relied more on episodic volunteers focused on
recognition activities for their volunteers and less on training, supervision et cetera.
In contrast, NPOs with larger numbers of ongoing volunteers invested more in their
management, including training and professional development, screening and
matching procedures, and regular supervision and communication.
As mentioned above, some episodic volunteer jobs are analogous to unpaid
consulting; they are crucial to the organization, such as chairing an important
committee or task force or fund-raising campaign or providing pro bono advice for
legal, marketing, or risk management advice (Brudney, 2006). These job
assignments call for volunteers with expertise not readily available to the typical NPO
to contribute their time for short but intensive periods. Because these jobs feature
high volunteer labor productivity (m > 1), NPOs should accommodate higher costs
(b): Managers of volunteers should be prepared to provide the support necessary to
recruit, orient and engage the “unpaid consultant”.
3. Virtual Volunteering or Volunteering through Electronic Means
Virtual volunteering consists of donating time and skills to NPOs through electronic
technology, such as email and the Internet. This type of volunteering is on the rise
due to the increasing penetration of electronic technology into more facets of life, the
growing sophistication of NPOs, and the interest of people in volunteering in this
manner. NPOs are starting to show commensurate interest (Brudney, 2005).
Furthermore, virtual volunteering allows many individuals to participate who would
otherwise find it difficult, including shift workers who are not available at hours
convenient to the NPO, and physically challenged or socially anxious individuals who
12
avoid traveling to or appearing on site to volunteer due to their limitations or anxiety
of meeting new people. Virtual volunteering allows them to participate in ways that
do not require them to come to the NPO, and give them the privacy they need to get
involved (Handy and Cnaan, in press). Such involvement raises the volunteer’s social
capital and benefits society by integrating those individuals into society who may
have otherwise remained on the margins.
Another reason for the growth of virtual volunteering is that the productivity of this
labor (m) can be quite high because the people who prefer to volunteer in this
manner are more likely already to possess the requisite skills, and are looking to
hone, rather than gain, new skills. In addition, marginal labor costs (b) are relatively
low as these volunteers need little screening, training, and orientation since they are
not integrated into the ongoing functioning of the NPO. A virtual volunteer can
design a web page or web portal for the organization, or a new funding brochure or
solicitation, without disrupting organizational operations - or requiring much in the
way of screening or oversight. Because it is relatively easy to evaluate the products
of virtual volunteering, output monitoring may be all that is required. Because paid
labor is expensive for such work, virtual volunteers offer significant net benefits to
the NPO and bring productive capacity within the reach (and budget) of NPOs that
may otherwise not afford it.
An excellent example that illustrates the points above is the phenomenal growth of
“Wikipedia”, the electronic on-line free encyclopedia that relies almost entirely on
volunteer contributors. Wikipedia may well be one of the fastest growing volunteer
organizations whose contributors are engaged in virtual and episodic volunteering.
This resource appears to be highly productive as well. Giles (2005) compares error
rates and concludes that volunteer productivity is higher at Wikipedia than the
Encyclopedia Britannica, which relies on paid contributors.
4. Long-Term or Traditional Volunteering
The final type of volunteering we consider is long-term or traditional volunteers, so
called because they make an ongoing commitment of time to the organization on a
weekly or monthly (i.e., regular) basis often for a particular volunteer job or task.
This volunteer profile resembles a part-time employee, and Brudney (2005)
compares them to unpaid part-time staff. If the volunteer-as-unpaid staff analogy
13
has validity, then the organization needs to support the long-term, traditional
volunteer in ways comparable to its employee workforce. Accordingly, Stoolmacher
(1991) contends that NPOs “should treat volunteers as if they were paid employees”.
As a result, in this form of volunteering, the marginal cost of volunteer labor (b) is
likely to be highest. From this perspective, standard elements of volunteer
management are appropriate, such as recruitment, interviewing, screening,
matching, placement, job description, orientation, supervision, training, performance
review, maintenance of records, recognition, and fair and professional treatment.
Because this type of volunteer work is similar to that of part-time, paid employees,
the administrative procedures associated with traditional volunteers are relatively
costly to the NPO, as compared to other types of volunteers.
Whether or not this investment proves cost-effective depends on the net benefits the
NPO realizes from the traditional volunteers (m).This mode of volunteering is
prevalent in many fields, including fire protection, business counseling, first-
responders, teacher-aides, docents, library assistants, and medical service workers
(Brudney, 2005, 1990). It is also less expensive than paying employees to provide
comparable services (w). Finally, positive externalities are high (n>0) because
traditional volunteers are often advocates and ambassadors of the NPOs and the
causes they support, as well as role models to potential volunteers. The problem for
sustaining, let alone increasing, such productive involvement of traditional
volunteering appears to be on the decline (McCurley and Ellis, 2003). Again, NPOs
must adapt to the changes in volunteer preferences toward other forms of
involvement, such as episodic volunteering.
A negative externality to consider (n < 0) is that paid workers may view the
participation of traditional volunteers in certain areas, such as education and
hospitals, as replacements for paid labor. Any perceived substitution between paid
and unpaid labor can lead to friction in unionized environments and is subject to
grievance (Macduff, 1997; Zahnd, 1997). In these cases, labor contracts may exist
to prevent volunteer labor from substituting for paid labor (Handy & Srinivasan,
2005), and NPOs may be constrained from using volunteer labor directly through
14
labor contracts and indirectly in order to achieve industrial peace.2 Volunteer
administrators will need to be skilled negotiators to deal with such matters. Some
evidence suggests that public employee unions in the U.S. may not resist volunteers
reflexively because their introduction offers unions opportunities to firm up labor
contracts and protect paid positions (Brudney and Kellough, 2000).
Conclusion
In this article, we have considered why NPOs may choose volunteer labor in lieu of
paid labor. Our analysis has concentrated on the economic factors involved in this
decision: b the marginal cost of volunteer labor, w the marginal cost of paid labor,
and m the relative productivity of volunteer versus paid labor. We have also explored
the externalities n generated by volunteering and the organizational response to
such externalities, in particular positive externalities.
We argue that if NPOs take into account the positive externalities of using
volunteers, then even if b is not always less than w, and the productivity of some
types of volunteering m is questionable, these organizations may still prefer
volunteer labor, due to the positive externalities generated, despite the relative cost-
efficiency of paid labor (w).
For most NPOs, increasing societal participation falls within their mission. Thus, they
may welcome service-learning arrangements even though they are not cost-
effective. NPOs recognize that service learning is the gateway for “nontraditional”
volunteers, such as students, racial and ethnic minorities, immigrants, and people of
low incomes to enter the volunteer workplace. Similarly, it may often be cheaper to
pay people to perform the jobs assumed by some episodic volunteers, when their
organizational productivity and costs of integrating volunteers are taken into
account. Yet, short-term episodic volunteer engagements may entice participants
into a lifetime of volunteering. Furthermore, volunteers have been known to act as
representatives or advocates for their host organizations in the community, to lobby
legislatures on behalf of their NPOs, and to provide a potential pool of experienced
employees should the need arise (Brudney, 2005, 1990). In the latter case the
employer can vet a volunteer for paid employment at relatively little cost or
2 In Ontario, Canada labor contracts had an explicit clause stating that volunteers may not perform work
done by paid staff except in those areas that were run by volunteers before 1986 (Canadian Union of
Public Employees [CUPE], 2000)
15
commitment. Volunteering offers other positive externalities, such as increasing
social capital when citizens engage in activities that augment their social and
professional connections.
As many have noted, the forms and participants in volunteering are undergoing
change. This article has examined four important types of volunteering to determine
when it might be advantageous economically for NPOs to incorporate volunteer
resources, and what management policies and procedures are best suited in each
case. The types of volunteering consist of mandated or service learning, episodic,
virtual, and traditional. This analysis shows that the use of volunteers in NPOs
depends not only on the relative cost and productivity of volunteer labor compared
to paid labor for the various types but also the positive externalities that can derive
from volunteer involvement. For each of the types of volunteering, we suggest
management techniques that are likely to be effective given their respective benefits,
costs, productivity, and externalities. In the end, the decision to enlist volunteer
labor depends on the net benefits to NPOs, and resulting externalities to the larger
society.
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