Assessing the Value of Volunteer Activity

Abstract

One standard way to convert estimates of time volunteered into estimates of the dollar value of volunteered time is to multiply estimated hours by the average hourly compensation rate for paid labor. Economic theory suggests an alternative valuation strategy that acknowledges the importance of taxes, the provision of volunteer-assisted services at less- than-market prices, and the value of volunteer experiences captured by volunteers themselves. One conclusion is that the standard estimate overstates the value of volunteering to the recipients of volunteer-assisted services but understates the overall value of volunteering when the gains accruing to volunteers themselves are included.

Full text

http://nvs.sagepub.com/
Nonprofit and Voluntary Sector Quarterly
http://nvs.sagepub.com/content/28/1/3
The online version of this article can be found at:
DOI: 10.1177/0899764099281001
1999 28: 3Nonprofit and Voluntary Sector Quarterly
Eleanor Brown
Assessing the Value of Volunteer Activity
Published by:
http://www.sagepublications.com
On behalf of:
Association for Research on Nonprofit Organizations and Voluntary Action
can be found at:Nonprofit and Voluntary Sector QuarterlyAdditional services and information for
http://nvs.sagepub.com/cgi/alertsEmail Alerts:
http://nvs.sagepub.com/subscriptionsSubscriptions:
http://www.sagepub.com/journalsReprints.navReprints:
http://www.sagepub.com/journalsPermissions.navPermissions:
http://nvs.sagepub.com/content/28/1/3.refs.htmlCitations:
What is This?
- Mar 1, 1999Version of Record >>
by guest on June 12, 2013nvs.sagepub.comDownloaded from

Brown The Value of Volunteer Activity
ARTICLES
Assessing the Value of Volunteer Activity
Eleanor Brown
Pomona College
One standard way to convert estimates of time volunteered into estimates of the dollar
valueofvolunteeredtimeistomultiplyestimatedhoursbytheaveragehourlycompensa
-
tionrateforpaidlabor.Economictheorysuggestsanalternativevaluationstrategythat
acknowledgestheimportanceoftaxes,theprovisionofvolunteer-assistedservicesatless-
than-marketprices,andthevalueofvolunteerexperiencescapturedbyvolunteersthem-
selves.Oneconclusionisthatthe standardestimateoverstatesthevalueofvolunteering
totherecipientsofvolunteer-assistedservicesbutunderstatestheoverallvalueofvolun-
teering when the gains accruing to volunteers themselves are included.
Volunteer labor deserves a special place in discussions of philanthropy and
civic renewal. Alexis de Toqueville (1988), in his classic study of American
democracy, saw voluntary association as the means by which a society of
equals gathers the power to effect social goals. Aristocrats, with their enor-
mous personal power, were gone from the scene, and “what political power
could ever carry on the vast multitude of lesser undertakings which associa
-
tions daily enable American citizens to control?” (p. 515). Volunteering is a
form of civic engagement through which individuals can make meaningful
contributions to their own visions of societal well-being.
The significance oftheAmericantradition ofvoluntary actionis noteasily
quantified, but it is substantial: Toqueville (1988) saw “not only commercial
andindustrialassociationsinwhichalltakepart,butothersofathousanddif
-
ferent types”(p. 513), andthere are estimatessuggesting that itsdollar value
todayisatleastonparwithpersonalgiftsofmoneyandfinancialassets.Policy
Note: Thisarticle isa revisionof onepresented atthe26thannual conferenceof the Associa
-
tion for Research on Nonprofit Organizations and Voluntary Action, Indianapolis, Indiana,
December 4-6, 1997. I gratefully acknowledge research support from the National Commis
-
siononPhilanthropyandCivicRenewal.IwouldliketothankMatthewHamilton,PaulScher
-
vish, and, especially, John Havens for helping me to understand the Independent Sector
data.Ialoneamresponsibleforallshortcomingsoftheviewsandanalysispresentedherein.
Nonprofit and Voluntary Sector Quarterly, vol. 28, no. 1, March 1999 3-17
© 1999 Sage Publications, Inc.
3
by guest on June 12, 2013nvs.sagepub.comDownloaded from

makers who fret over the impacts of legislative change on charitable giving
might therefore fret over volunteering as well, but such debate is rare. There
are two principal reasons for this comparative silence. First, whereas the tax
system leads us to measure monetary giving, there is no data-generating tax
law to spur accurate records of volunteer labor. Second, the numerous per
-
sonal rewards to volunteering may overshadow government policy in the
decision-making processes of potential volunteers.
There are good reasons to be interested in dollar measures of the value of
volunteering.Such measuresallowusto locatevolunteeringin theAmerican
landscape. With them, we can make such statements as, “The value of time
volunteered exceeds the value of charitable money donations,” and “The
valueofvolunteer laboris ofthe sameorder ofmagnitudeas thefederal gov
-
ernment’s budget for income security programs.” Dollar measures can also
help us to identify important trends in voluntarism. For example, thespread
of computer technology has brought higher levels of productivity in a vast
array of endeavors, raising volunteer productivity along with wages. Dollar
values will capture this, whereas data on hours volunteered will not.
In this article, the conceptual and practical considerations involved in
assigning adollar value to volunteeringare examined. The followingsection
exploreswhateconomictheorycantellusaboutthedollarvalueofanhourof
volunteering.Volunteerlaborisarguedtoyieldvaluetovolunteersaswellas
value to recipients and that there are standard economic arguments for
including bothin an assessmentof the valueof an hourof donated time.The
sectiontitled“DefiningandMeasuringVolunteerLabor”looksatsomeofthe
issuesinvolvedindefiningthelimitsofwhatcountsasvolunteering.Thesec-
tiontitled “TheValue ofVolunteer Laborinthe UnitedStates” containssome
estimates of the dollar value of volunteer time in the United States, based on
alternativemethodologiesandrelyingon datacollectedfor IndependentSec
-
tor (IS). Concluding remarks can be found in the final section.
ASSIGNING DOLLAR VALUES TO VOLUNTEER HOURS
To understand why assigning a dollar value to volunteer labor is tricky
conceptually as well as practically, consider the way labor is valued in a
smoothly functioning labor market. A profit-seeking employer estimates the
additional revenuethat can begenerated if anotherworker is employed; this
amountisthemostthe employerwillpay fortheextralabor.A workerthinks
aboutthe variousoptionsavailablefor spendingtime andmoney,and works
forhowevermanyhoursarenotmorevaluableinotherpursuitsthantheyare
earning the available wage. The wage rate equates the benefits derived from
usingalittlemorelabor toproducesomething demandedbyconsumerswith
the costsof using thatlabor, in termsof what theworker gives upin order to
4 Brown
by guest on June 12, 2013nvs.sagepub.comDownloaded from

work for pay. This market-determined wage rate isthe economist’snotion of
the (marginal) value of labor.
Becausewe donotobservewagesin marketsfor volunteerlabor,theprob
-
lem of assigning a dollar value to volunteering may seem to be primarily a
data problem. Because markets equate benefits and costs at the margin, it
mightseemasthoughwecouldlookfordataoneitherbenefitsorcoststoesti
-
matethevalueofvolunteer time.Ifwehadgood informationonthe activities
performedbyvolunteers,wecould seehowmuchmarketspaid workersper
-
forming similar tasks, and these wages wouldbe good benefit-based proxies
forthevalueofvolunteertime.Alternatively,wecouldseekdataonthewages
volunteersearnintheirworkforpay;becausethismeasuresthevaluetothem
oftheir time,itcould bethebasis fora cost-basedestimate ofthevalue ofvol
-
unteer time.
Unfortunately,themarketsforvolunteerlaboranditsproductsarenotthat
simple. First, the fact that volunteers are not pursuing wages suggests that
volunteering produces something of value to volunteers as well as to the
recipients of volunteer-assisted services. Second, when volunteer labor is
used toproduce a good or servicethat is provided free ofcharge or athighly
subsidizedprices,thewagerateisnottheonlymissingprice.Thereisnomar-
ketsignal ofthe valueof that goodor servicetothe peoplewhoreceive it.We
may be able to measure the value of the inputs used or the value of similar
goodsandservicespurchasedbyadifferentclientele,butneitherofthesecor-
responds to the value of the services to those people who receive them.
These issues are tackledin turn. First, we note that volunteering produces
value for (at least) two constituencies, volunteers and recipients. Second, we
confront the limitations of using observed market measures tovalue thepro-
vision of goods and services to recipients who do not pay their full cost. It is
worth noting that I have simplified my task by treating all volunteering as
being aimed at clients;politicalandenvironmentalactivism areformsofvol
-
unteering,forexample,inwhichitismuchhardertoquantifybenefits.Third,
weconsidertherangeofmotivationsthatinspirevolunteerstogivetheirtime
and some estimates ofthe hourly value of volunteering consistent with these
motives.
SUMMING THE VALUE TO CLIENTS
AND THE VALUE TO VOLUNTEERS
Volunteering has value to volunteers as well as to the recipients of
volunteer-assisted services. Volunteering is motivated by some combination
of self-interest and of concern for the well-being of others. To the extent that
volunteers and recipients alike derive satisfaction from the recipients’ con
-
sumptionofvolunteer-producedservices,theseservicesarewhateconomists
termpublicgoods.Thevalueofsuchservicesisthesumofthebenefitsaccruing
The Value of Volunteer Activity 5
by guest on June 12, 2013nvs.sagepub.comDownloaded from

toallconcernedparties,recipientsandvolunteersalike.Totheextentthatvol
-
unteers are motivated by ancillary rewards stemming from volunteering,
suchas socializingorgainingworkexperience, thereoccurs whateconomists
term joint production. Again, the value to volunteers of the experiences pro
-
duced jointly with recipient-oriented services needs to be counted in meas
-
ures of the value of volunteering.
There are lots of situations in life where one person cares about another’s
consumption. Such is the nature of love and of envy. Economists tend to
acknowledge such interdependencies when they affect the allocation of
resources (for example,within a loving family; see Becker, 1981;Lundberg &
Pollak, 1996) andtoignorethem whenthey areunintended sideeffects (such
as envy) that have consequences for utility but not for resource distribution.
The allocation of time to volunteering cannot generallybeexplainedwithout
referencetothe volunteer’sconcernfor others.Weacknowledge andattempt
to measure thesatisfaction gained by volunteers becausethis satisfaction is a
motivating force behind volunteering. Paid employment yields satisfaction,
too, but economists ignore this because the wage seems to offer motivation
enough. (Freeman, 1997, offers the hypothesis that volunteering does not
bring satisfactionbutis anonerous dutyone wouldprefer toavoid. Itis hard
to reconcile this view with the large literature on volunteer motivation. [See
Cnaan & Goldberg-Glen, 1991, for a review and extension of the literature.])
We know that volunteers receive a remarkable level of satisfaction from
volunteering—so remarkable that they will perform work for no wage. In
paid employment, when a job is unusually pleasant or noxious, economists
measure thevalue ofthe specialjob characteristics throughtheir effecton the
wage. Forexample, forest rangersand firefighters mayneed similar levelsof
skill,andyetoneoccupationcomeswithanunusuallevelofdanger;thewage
premium paid to firefighters gives a measure of the remarkable danger
involved in the job. To an economist, then, a job that one will perform at a
wageofzeromustofferremarkablelevelsofsatisfaction,andtheremarkable
-
nessofthevolunteeropportunityismeasurablebythedifferencebetweenthe
volunteer’s ordinary wage and the zero wage accepted in the volunteer
opportunity.
Asimilar pointismade aboutmoney givingin Kaplow(1995).Economists
thinkofcitizensasreceivingnopleasurefrompayingtaxes,justaswethinkof
workers as deriving no particular pleasure from work. It follows, therefore,
thatpartofthevalueofthecharitabledeductionintheincometaxcodeisthat
itallowstaxpayerstoenjoygivingmoneyawayinsteadofgrudginglypaying
it to the government.
Iconsider,inturn,thequestionsofmeasuringvaluetorecipientsandvalue
tovolunteers.Theexampleswillfocusonlow-incomerecipientsofvolunteer-
assisted services, but the principle that volunteers subsidize goods that are
“tooexpensive”appliesbroadly:Operaguildssubsidizethecostofopera,and
telethon staffers raise money for universities to bring the price of tickets and
tuition down to manageable levels.
6 Brown
by guest on June 12, 2013nvs.sagepub.comDownloaded from

VALUE AND WILLINGNESS TO PAY
Foreconomists,“value” reflectsthe willingness ofpeople topay forsome
-
thing. This is aproblematic startingpointfor a discussion of the value of vol
-
unteer labor. Volunteer labor and philanthropic nonprofit organizations are
generally dedicatedtofilling ingaps inservice provision thatmarketsdo not
reach. They exist, in other words, because their supporters are not satisfied
with the market outcomes that reflect people’s willingness to pay.
Any discussion of the value of volunteer labor to those who receive
volunteer-assisted services must, therefore, begin on a cautionary note. The
standardeconomicnotion ofvalueis basedonwillingness topay.When non
-
profits and volunteers are motivated to provide services to clients who lack
the willingness to pay (out of what may be a very meager personal resource
base) for those services at prevailing prices, the value of those services to the
clients is not observed directly.
This does notmean that the services have zerovalue. First, recipients may
be willing to surrender some resources in exchange for volunteer-assisted
services,but thislevelof willingnesstopay istoo lowtobe registeredin mar-
kets withrelatively high equilibriumprices. If a personcannot pay the going
price, there is no market transaction and hence no record of how much that
person waswilling to pay. Second,if we could observethe clients whenthey
hadagreaterabilitytopay,wemightobservethemwillingtopayfortheserv-
ices in question.
There are conceptual ways to measure the value to recipients of services
providedfreeofcharge.Insteadofasking,asamarketdoes,howmuchmoney
theywouldpayfortheservices,onecanthinkabouthowneedyclientswould
trade off the services provided to them against (hypothetical) gifts of cold
hard cash. This is a well-defined experiment that allows us to measure will
-
ingness to pay at a higher level of income than the recipients currently
command.
Suppose, forexample, that apoor person is givenone week’s housing ina
single-room occupancy (SRO) hotel. Comparable lodgings rent for $100 per
week, making the marketvalueofthe housingequalto $100.Ifhousingwere
therecipient’sonlyunmetneed,thenwecouldguessthatthevalueofthepro
-
vided service was $100. But if the recipient has other pressing needs that are
notmet,hecouldwellpreferanoutrightgiftof$100.Partofthe$100wouldbe
devoted to housing, but some of it would be parceled out to address other
needs. For example, he might choose a housing option with less privacy that
cost only $70 perweek,leaving$30 perweekfor foodandmaking himbetter
offthan heis withjusttheSROhousing.Theprivacy affordedby theSRO has
somevalue, buthe isin noposition totrade $30for it.He mightbe indifferent
betweenreceivingtheSROhousingandthealternativeofreceivingacashgift
of,say,$75. Ifso, then thevalue ofthe housingto thisrecipientis $75because
the housing makes him just as much better off as would a gift of $75. This
measureofvalueliesbetweentheimpoverishedrecipient’swillingnesstopay
The Value of Volunteer Activity 7
by guest on June 12, 2013nvs.sagepub.comDownloaded from

in the market, which may be zero, and the market value of the services (pur
-
chased by people with more income), which is $100.
Thismeasureof thevalue ofservices isknownas theequivalent variation.It
measuresvalueaccordingtoawillingness-to-paycriterioninwhichthatwill
-
ingnessismeasuredataparticularaugmented levelofincome.It isnotinany
sense“theright” measureofarecipient’svaluationofservicesprovidedatno
cost.Itis onemeasure that isdefined withprecision—it is theamountof cash
thatwouldyieldthesameadditiontotherecipient’sutilityastheservicepro
-
vided—and recognizes that the poor value the subsidized services they
receive, even when they are unable to pay for them.
Becauseourclientinthis exampleisnot registeringhispreferences inmar
-
kets,we needsome wayto estimatehispreferences ifwewant totryto calcu
-
latesuchmeasuresofvalueastheonedescribedabove.Oneapproachistosee
how people with just slightly more money spend it. We also need to know
whetherthe servicebeing providedis theonly onetherecipienthasaccessto.
Anefficientnetwork ofagenciesdesigned tohelpthe needymaydo areason
-
able jobof providing approximatelythe “market basket” ofgoods the recipi-
ents would choose for themselves. Looking at government programs for the
poor,forexample, MichaelMurray (1994) findsthat poorrecipients of amar-
ketbasketof government-supportedservices—Aidto FamilieswithDepend-
entChildren,housing,Medicaid,andfoodstamps—valuethecombinedserv-
ices at about 73% of their market value.
RECIPIENT-ORIENTED MEASURES
OF THE VALUE OF VOLUNTEER TIME
When a rocket scientist serves food in a soup kitchen, it is likely that she
does notbringto hervolunteer activitythe specialized skillsthatcommand a
high salary in the labor market. The opportunity cost of her time is high; the
market value of her volunteer product, which could have been produced by
muchcheaper labor,islow. Howdo weaccountfor thedifference?It mustbe
thatshederives enormous satisfactionfrom beingthere, servingfood. Other
-
wise, she would spend another hour in her laboratory; if she simply wanted
thehomelesstobefed,shecoulddonatethathour’swagestothesoupkitchen
and allow them to expand their services by far more than her hour of soup
serving does.
Asinthisexampleoftherocketscientistinthesoupkitchen,valuetoclients
islinkedmorecloselyto thevalueof thevolunteertask performedthantothe
value of volunteer labor in its paid employment. If volunteers cared only
aboutthehelptheygavetotheagencyprovidingtheservice,thesetwovalues
wouldbe closetogether: Volunteerswouldconsider thealternative ofspend
-
ingalittle moretimeworkingandthendevotingtheirearningstotheagency.
But given the myriadmotives that underlie volunteering—from oversightof
theagencytodevelopingjobskillstosocializing—theremaybeaconsiderable
amountofjointproductiongoingon.Onlypartofwhatisproducedisgoingto
8 Brown
by guest on June 12, 2013nvs.sagepub.comDownloaded from

clients,andtherestaccountsforthegapbetweenavolunteer’sproductivityat
work and her productivity as a volunteer.
Therearereasonstobelievethatvolunteersaregenerallylessproductivein
generating client-oriented services than paid employees. Because the wage
representsapowerfulmotivatorforworkerstoperformwellonthejobandto
stick with it, employers would rationally reserve for paid employees those
jobsthatinvolvedextensivetrainingandforwhichabsenteeismandturnover
would be costly. This suggests that volunteers have lower levels of task-
specific training than do paid employees.
On the other hand, volunteers may have higher levels of general training
andknowledgethantheaveragememberoftheworkforce.Onedemographic
characteristicthat isassociatedwithhigh valuesof timeiseducational attain
-
ment. The volunteer workforce is more educated on average than is the
employed civilian workforce (Hodgkinson & Weitzman, 1996, p. D151; U.S.
Bureau of the Census, 1995, p. 158). From this perspective, average hourly
wagesmaytendtounderstatethevalueofvolunteertime.Thiseffectisaccen
-
tuated by thedistributionofvolunteer timeamongvolunteers: Thosewithat
leastabachelor’sdegreecontributemorehoursperweekthanvolunteerswith
ahighschooldiploma,who inturnvolunteer moretimethanvolunteerswho
did not finish high school (Hodgkinson & Weitzman, 1996, p. D151; U.S.
Bureau of the Census, 1995, p. 158).
Volunteers have an advantage in performing some tasks, however. There
are occasions on which a trust relationship between volunteer and client is
especially valuable. Some tasks are best performed with generous doses of
caring andrespect.Becausethese attributesare noteasily measuredor moni-
tored,these tasksmaybe bestperformedby peoplewhoare notpursuingthe
ulterior motive of seeking a livelihood. Hospice care is an example. Another
example is the common volunteer activity of fund-raising; paid fund-raisers
may have no faith at all in the institution on whose behalf they solicit funds,
making their appeals considerably less convincing than those of volunteers.
If we believethat volunteers are, onaverage, as productive as membersof
the paid labor force, we can use hourly compensation rates to estimate the
hourly value of volunteer output. In 1995, the average hourly wage for civil
-
ian,nonagricultural,nonsupervisorialworkerswas$11.44(EconomicReportof
thePresident,1997,p.352).Togenerateanestimateoftheaveragehourlyvalue
of volunteer time, IS calculates average hourly compensation as the average
nonagricultural hourly wage,increased by 12%, to include the average value
of fringe benefits. Nonwage compensation in 1995 represented a somewhat
higher fraction of wages than the IS adjustment factor. For domestic indus
-
tries, nonwage compensation equaled 23.0% of wages (U.S. Department of
Commerce,1997,Table8.15),yieldinganestimateofthehourlyvalueofwork
-
ers’ time, based on what employers are willing to pay for it, of $14.07.
The tasks undertaken by volunteers do not mirror the distribution of jobs
people have for pay,
1
so we may want to look at market wages in industries
most like those in which most volunteers work. Narrowing our attention to
The Value of Volunteer Activity 9
by guest on June 12, 2013nvs.sagepub.comDownloaded from

the service sector (very little volunteer labor goes to the production of goods
ratherthan services)makesa differencedue largelytoalowernonwage com
-
pensation rate of 18.3% (U.S. Department of Commerce, 1996, p. 74). Basing
our productivity measure on average compensation in the service sector, we
get $11.41 × 1.183 = $13.50 (U.S. Department of Labor, 1996, p. 49). Further
restricting attention to social services woulddrop averagehourly compensa
-
tion to $8.44 × 1.169 = $9.87 (U.S. Department of Commerce, 1996, p. 74; U.S.
Department of Labor, 1996, p. 117).
If these estimates reflect the market value of services produced by volun
-
teers, do they represent the value of these goods to the clients to whom they
are provided? As discussed above, for those services provided free or at dis
-
counted prices, there is no evidence that clients value these services at their
marketprice.Indeed, ininstances inwhichvolunteers arehelping toprovide
servicesavailableinthemarket—fromeducationtofoodtomedicalcare—the
factthattheclientshavenotpurchasedtheseproductsisevidencethattheydo
notvaluethematmarketprices.Accordingly,weusethefactorofproportion
-
alitybetweenmarketpriceandclientvalueof0.73estimatedbyMurray(1994)
to discount the value to clients of volunteer-assisted services. This says in
essence that valuable services are being provided but that clients may have
other pressing needs going unmet that would have led them to allocate
resources differently if they had had the chance (as in the example with SRO
housing).Discountingtherangeofhourlycompensationratesintheprevious
paragraphyields anadjustedrangeofclient-based valueestimatesof$7.21to
$10.27 per hour of volunteer labor.
MOTIVATIONS FOR VOLUNTEERING: JOINT PRODUCTION
AND PUBLIC GOODS WITH VALUE TO VOLUNTEERS
Volunteersalsoderivevaluefromvolunteering,andtherewardsfromvol
-
unteering can take many forms. People may care about the value to the
employing agency and/or its clients of the time they contribute. People may
value the skills they develop while volunteering. They may enjoy the social
atmosphere in which volunteering takes place. They may care about partici
-
pating,preferringtogivetimeevenifthemoneytheymighthaveearnedinan
equivalentnumberofhoursspentworkingmighthavebeenmorevaluableto
theagency.And theymay prefer volunteeringover donatingmoney because
volunteering lets them keep an eye on how an agency is run.
Whateverthemotives,thecostofvolunteeringistimethatcouldhavebeen
spentinotherways,includingearningmoneythatcould,aftertaxes,bespent
on desired goods and services. Because time might have been spent generat
-
ing income,the “opportunity cost” ofvolunteering is tiedto hourly compen
-
sation in the labor market.
Thereare severalmanageable waysinwhichanhourlycompensationesti
-
mate ofopportunity cost mightbe refined. First,the opportunity-cost ration
-
alefor usingwages suggeststhat thevolunteerweighsthe benefitsgained by
10 Brown
by guest on June 12, 2013nvs.sagepub.comDownloaded from

volunteering against the benefits given up by not using that time to earn
spendingmoney.Unlessthevolunteergetssatisfactionfrompayingtaxes,itis
theafter-taxwagethatshouldbeusedtomeasuretheopportunitycostofvol
-
unteering. In 1995, most American taxpayers faced marginal federal income
taxratesofeither15%or28%,ontopofwhichmanypaidstateincometaxesas
well. Social Security andMedicare arealsofinanced through taxes on wages.
The distribution of income in theIS datasuggests that the majority of house
-
holds in that sample probably faced a 15% marginal federal income tax rate.
Roughly a third of volunteers were not employed, making it likely that their
volunteering came at the expense of another untaxed use of their time. If we
assume that 15% is a representative marginal federal income tax rate for vol
-
unteers’ labormarket opportunities andwe add tothat 10% forpayroll taxes
and state income taxes, we have a “tax price” or opportunity cost of giving
time of 75% of the person’s wage (because the remaining 25% would not be
theirs to spend).
Volunteers also give up any marginal fringe benefits that would have
accruedwithanotherhour’swork.Somefringebenefitsincreasewithanextra
hour’swork;for example,contributions topensions areoftena setfraction of
earnings, and the amount of unemployment insurance a worker can collect
often depends onoverallearnings.Other fringebenefitsdo notincrease with
an extra hour’s work; workers’ medical plans, life insurance policies, and
workers’ compensation are examples. Data on nonwage compensation for
1994 suggestthat about half(51%) of the cost of fringe benefits accrues to the
examples in which there is benefit derived from another hour’s work (U.S.
Department of Commerce, 1996, Table 8.15). Using economy-wide average
values for wages and fringe benefits, we estimate a representative opportu-
nity cost of an hour’s time as ($11.44)(.75) + ($11.44)(.23)(.51) = $9.92. (Note
thatthe fringebenefitcalculationhereadds11.7%to thewage, anadjustment
very close to the 12% adjustment used by IS.)
Alternatively, we can turn to the transportation economics literature for
estimates of how people value their nonwork time relative to their wage. To
reduce commuting time, people are willing to spend at a rate of about half
their wage; toavoid walking to andfrom transportation or waiting fortrans
-
portation,people wouldpay1.0to1.5 timestheir wage(Small, 1992).Inother
words, the average job seems to bea bitmore pleasant than standing at a bus
stop, but the economists’ view of paid work as a source of money and not as
directlyutilityordisutilityproducingissuspect.Thestressandothernegative
attributesoftheworkplacemakethenetreturntopaidworksubstantiallyless
thanthewage.Theopportunitycostoftimeisthereforesubstantiallylessthan
the wage. If behavior in choosing transportation modes is used as an indica
-
tionthatfreetimeisvaluedatabouthalfthewage,thentheappropriatevalue
foranhourof volunteertimeis$11.44×0.5=$5.72.Implicitinthiscalculation
isthejudgment thattimespentvolunteering ismorepleasantthantimespent
on the job.
The Value of Volunteer Activity 11
by guest on June 12, 2013nvs.sagepub.comDownloaded from

Somevolunteeractivitiesarelikelytobeasstressfulaspaidemployment.If
volunteers are motivated to provide services to clients or to develop market
-
able skills, they may well endure stressful environments to do so. In such
cases,thewage,properlyadjustedforfringebenefitsandtaxes,isthemeasure
ofthevolunteer’scostofvolunteering.Thiswouldseemrelevanttothecasein
whichvolunteersareprovidingprofessionalservicesonaprobonobasis.This
is an example of how understanding the motivation of the volunteer might
inform the estimate of the value of volunteer time.
In summary, looking at the motivations of volunteers suggests that their
timebevaluedatroughlyonehalftosixseventhsoftheaveragehourlywage.
Thelowervaluesaremostappropriateifvolunteeractivitiesarelessunpleas
-
ant than for-pay work environments. The higher values reflect after-tax
hourlyratesofcompensationandareappropriatewhenvolunteersfacelevels
of responsibility and stress comparable to those experienced at work. The
highervaluesalsoreflectthatthedistributionofvolunteers,andevenmoreso
the distribution of volunteer hours, contains a higher level of educational
attainmentthanthedistributionofworkerswhosetimevaluesarereflectedin
statistics on average wages.
DEFINING AND MEASURING VOLUNTEER LABOR
Thissectiondiscusses,inturn,theissuesofwhattocountasvolunteerlabor
and whatdata to useas the basisfor estimates of thenationwide level ofvol-
unteering. Therearemultiple perspectivesfrom whichto approachthe ques-
tion of what counts as volunteering. Cnaan, Handy, and Wadsworth (1996)
identifyfourdimensionsalongwhichactionscanberankedandthataffectthe
extent to which peopleclassify them as volunteering. The dimensions are (a)
theextenttowhichone’sparticipationisfreelychosen,(b)theextenttowhich
theoneisremunerated,(c)theextenttowhichthecontextoftheactionisstruc
-
tured rather than informal, and (d)how far from the center of one’s personal
spherethebeneficiariesoftheactionlie.Ourvaluationsassumethatthechoice
is made freely; other costs and benefits may not balance at the margin. Our
valuationsalsoassumethatmonetaryremunerationisnegligible,withvolun
-
teers deriving benefit directly from volunteering and not indirectly through
payment for services.
Theissueofwhetherone’svolunteeringservesoneselfisanimportantone.
In particular, if thevolunteerisalsothe client,thenitis reasonabletoassume
thatthevolunteerdoesnotderivebenefitfromvolunteeringpersebutsimply
from the service made available. But a volunteer is seldom the only benefici
-
ary of the volunteering; entirelyoutput-driven volunteeringmayyieldbene
-
fitstomany.Theprovisionofapublicgoodforone’sownsakebenefitsothers,
as when parents volunteer in their children’s classrooms or coach their chil
-
dren’s soccer teams. The distinction between altruism and self-interest is not
always observable; neither is it particularly relevant.
12 Brown
by guest on June 12, 2013nvs.sagepub.comDownloaded from

The toughest call in drawinga linearound what can legitimately be called
volunteer work comes along the personal-civic axis, and thisis related to the
third andfourth dimensions identified by Cnaan et al. (1996).If I carefor my
ownchildren,orpickupgroceriesformyparent,thatisnotvolunteerwork.If
Ivolunteerin aHead Startprogramor workwith MealsonWheels todeliver
foodtoshut-ins,thatisvolunteerwork.ButwhatifIbaby-sitformyneighbor
or pick up something at the grocery for an invalid friend?
There are at least two forces at work to limit what counts as volunteering.
First,personal responsibilitymakes certaintasks expectedbehavior, andper
-
forming these tasks does not count as volunteering. Braking for pedestrians
and raising one’s children are examples. Second, personal connections often
imply some form of reciprocity. Parents raise their children; children visit
their parents in nursing homes. I baby-sit for my neighbor; if my car breaks
down, I can call that neighbor and ask for a ride. Informal networks of bar
-
teredfavorsandsafetynets areanimportant partofthesocialfabric, butthey
differfromvolunteer laborfreelygiven.Theirinclusionorexclusion fromthe
definition of volunteer labor will affect the nature of what we are talking
about.
One way to excise personal networks of obligation or support is to count
only volunteer labor that is mediated by an organization, as reflected in the
third dimension of volunteering. This criterion has two advantages. First, it
removes the necessity of judging whether personal favors involve too much
implicit reciprocity or personal responsibility to be counted. Second, it links
volunteering to the civic sphere. There is a burgeoning interest among social
scientistsintheimpactoncitizens’politicalparticipationoftheirengagement
inapoliticalassociations. Volunteeringthat ismediated byan organizationis
an important example of civic engagement that holds the potential to “link
substantial sectors of the community and span underlying social cleavages”
(Putnam, 1995, p. 665). Among several forms of engagement, including
belonging to religious congregations, secular organizations, living with a
partner, having finished college, and working outsidethe home, only volun
-
teering hasbeen foundto contributesignificantly to thelikelihoodthat aper
-
sonisbothcompassionateandtrustingofothers(Brown&Speakman,1997).
On theother hand, “love thyneighbor as thyself” isa fundamental part of
theAmericansocialethic.Ifwewantvolunteeringtomeasureourwillingness
to reach out into our community, we want to include as volunteer labor the
informal helping we offer to neighbors, friends, and persons in need.
The distinction made here can be approximated within the data collected
by Gallup for IS. This data set distinguishes between informal volunteering,
which includesall work not mediated byan organization, and formalvolun
-
teering. Their definition of informal volunteering also includes volunteer
workdoneforanorganizationbutonanadhocbasis,suchasmakingcookies
for a school bake sale. Rather than being based on a distinction between the
civicandpersonalspheres,thisdemarcationismoreabouttheimpliedlevelof
commitment.
The Value of Volunteer Activity 13
by guest on June 12, 2013nvs.sagepub.comDownloaded from

In the IS data, excluding informal volunteering has a big impact on the
measured volumeof volunteering. IS reports thatinformal giving represents
about23%ofvolunteerhoursintheirsurvey(Hodgkinson&Weitzman,1996,
p. 3).
Once we have chosen what counts as volunteering,there remains the task
ofcountingvolunteers.Estimatingthenumberofvolunteersisanenormously
complex task (see, for example, Weitzman [1983] and Smith [1997]), and a
reviewofthe practical andmethodological challengesit faceslies beyondthe
scope ofthis work.In theabsence ofa consensus onthenumber ofhours vol
-
unteered,IusetheestimatespreparedbyIS.Theseprojectionsarehigherthan
those based on the Census Bureau’s Current Population Survey (Hayghe,
1991)andlowerthan thoseestimatedbySmith(1997).ISprojectsthat20.3 bil
-
lion hours were volunteered in 1995 (Hodgkinson & Weitzman, 1996, p. 3).
3
Removinghoursdevotedtoinformalvolunteeractivitiesreducestheestimate
of annual hours to 15.7 billion hours.
THE VALUE OF VOLUNTEER
LABOR IN THE UNITED STATES
As discussed earlier in this article, volunteering has value both to the vol-
unteers,measuredbywhat theywillinglygiveuptovolunteer,andtoclients,
measuredbywhattheymighthavebeenwillingtopayforvolunteer-assisted
services had they been given a choice between those services and cash. The
opportunity cost faced by volunteers is measured by hourly compensation
rates adjusted for taxes and perhaps for the disutility of paid employment.
The value of services to clients is approximated through wage-based esti-
mates of the market value of volunteer-produced services adjusted for the
inefficiency of in-kind resource transfer.
For each of these two components of the benefits received from volunteer
labor inthe United States, thereis a range ofplausible hourly values thatcan
be assigned. Looking at the value to the volunteers themselves of volunteer
-
ing, thelowest valueis obtainedwhen weassume that volunteersvaluetheir
nonmarket time at roughlyhalf their wage rate. This assumption arisesfrom
thetransportation literatureand isconsistent witha worldviewthat saysthat
asubstantialpartofpeople’spaidwagescompensatesthemforthestressesof
their jobs. The lowest values to clients arise when the productivity of volun
-
teersisestimatedbythewagesofsocialserviceworkers.Combiningthesetwo
low-endassumptionsyields anestimatedvalueofvolunteeringinthe United
States in 1996 of $203 billion. Including informal helping in the definition of
volunteering raises this to $262 billion.
Higher estimates are generated when after-tax economy-wide average
hourlycompensationratesareusedtoestimatetheopportunitycostoftimeto
volunteers, and the same (pretax) hourly rate is used in the calculation of
14 Brown
by guest on June 12, 2013nvs.sagepub.comDownloaded from

valuetoclients. Withthesehigh-end hourlyrates,our estimateofthevalueof
volunteering in the United States in 1996 is $317 billion, or $410 billion when
informal helping is included.
There may well be policy questions for which it is relevant to have esti
-
matesofthevalueofvolunteeringtotherecipientsonly.Therangeintheesti
-
mated value of volunteering to the recipients of the services provided is $113
billion to $161 billion in the narrower definition of volunteer labor and $146
billion to $208 billion when informal volunteering is included.
SUMMARY AND CONCLUDING REMARKS
Volunteer labor is an important resource in the American economy, pro
-
ducingrewardsforboththeclientswhoenjoyvolunteer-assistedservicesand
thevolunteersthemselves.Volunteersproduceservicesforothersworth$113
billion to $161 billion annually. In addition, volunteer activities were worth
roughly similar amounts to the volunteers themselves, yielding estimates of
the value of volunteering in the United States of $203 billion to $317 billion.
These estimates are produced using data on hours volunteered from the
1996 IS survey. The traditionally calculated, wage-based dollar value of this
volunteering is $201.3 billion. One interpretation that could be given to this
wage-based estimate is that it reflects what users of volunteer labor would
havehad topayifthey hadhadto hirethe laborthatinsteadwas freelygiven
to them. This article argues that economic notions of value should direct our
attention to the value resources have to individuals rather than to economic
intermediaries, such as volunteer-using agencies whose well-being is not an
end in itself. The calculations in this article suggest that the familiar wage-
based estimate of the value of volunteer labor lies above its value to clients,
exceeding our high-end estimate by about 25%, and lies below the overall
valueofvolunteering,includingthevaluetovolunteers,fallingjustbelowour
low-end estimate.
In generating these measures, volunteering was limited to regular volun
-
teerworkforanorganization; asaresult, wearemeasuringvolunteeringthat
extends beyond the personal sphere and into the civic arena. When informal
helping is included, the range of estimates of the value of volunteering
increases to $262 billion to $410 billion, of which $146 billion to $208 billion
accrues to clients.
These numbers do not account for the benefits third parties—fellow citi
-
zens—may enjoy when time is devoted to people or causes they care about.
Nordothesenumbersaccountforthelesstangiblebenefitsthatflowfromvol
-
unteering. Volunteer activities bring together people who might not other
-
wisehavecontactwithoneanother.Thesocialfabricofsodiverseacountryas
ours can only be strengthened by practices that bridge our socioeconomic
divides.
The Value of Volunteer Activity 15
by guest on June 12, 2013nvs.sagepub.comDownloaded from

Notes
1. Independent Sector (IS) collects data on the tasks performed by volunteers. Although the
task dataare notcomplete enough to invitean attempt tobase anestimate of thevalueof volun
-
teering on them, they provide some insight into the mix of activities undertaken. In some cases,
volunteer activities can be matched with the market wages of persons who do similar work for
pay. Activities that might reasonably be matched with for-pay jobs include clerical work
(reportedby5.8%ofvolunteersastheirprincipalvolunteeractivity),coachorrecreationalvolun
-
teer(4.4%),driver (2.2%),andcleaningorjanitorial work(1.6%)(Hodgkinson& Weitzman,1996,
p.I-34). Manyvolunteer activitiesdo nothavepaidcounterparts, suchas servingas acommittee
member (3.2%) or as a parish visitor or missionary (0.9%). The IS tabulation has no category for
professionalworkdoneprobono,acategorythatwouldhelpgiveasenseofhowmuchvolunteer
-
ing makes use of high-wage skills. We do get a sense that high-profile opportunities to serve on
boardsofdirectorsorasatrusteearefairlyrare,reportedasaprincipalactivitybyjust1.6%ofthe
IS sample. Information is missing on somewhat more than 10% of volunteers.
2.ISiscarefultoalertitsreadersthatitsdataandestimationproceduresaredesignedtoillumi
-
nate“patternsortrends”(Hodgkinson&Weitzman,1996,p.xiv).Oneindependentcheckonpat
-
terns of volunteering can be found in a 1984 telephone survey conducted by the University of
Florida’sBureauofEconomicandBusinessResearch;thevolunteerprofilethereisquitesimilarto
thatfoundintheISdata(see,forexample,Brown&Lankford,1992).Thissuggeststhatweaccept
theISdataasaplausiblecrosssectionoftheadultpopulationandfocusourattentionontheques-
tion of how to move from sample data to population estimates.
3. An earlier draft of this article included a substantial reduction in the estimated number of
hours volunteered annually. IS data allow one to calculate annual hours from either a question
aboutvolunteeringinthepastmonthoraquestionaboutvolunteeringinthepast7days.Thepast
7daysseemsashortenoughperiodtoyieldmorepreciserecallthanthepastmonth,andonthose
grounds initially seemed a better choice. However, there is evidence that people reporting high
monthly hours are underrepresented among the smaller number of respondents answering the
weekly hoursquestions. This suggests thatthe weekly hoursdata are tainted byselection bias. I
am grateful to John Havens for bringing this to my attention.
References
Becker, G. (1981). A treatise on the family. Cambridge, MA: Harvard University Press.
Brown, E., & Lankford, H. (1992). Gifts of money and gifts of time: Estimating the effects of tax
prices and available time. Journal of Public Economics, 47(3), 321-341.
Brown, E., & Speakman, J. (1997). Voluntarism and political activity:Does the lone bowler volunteer?
Unpublished manuscript.
Cnaan, R., & Goldberg-Glen, R. (1991). Measuring motivation to volunteer in human services.
Journal of Applied Behavioral Science, 27(3), 269-284.
Cnaan, R., Handy, F., & Wadsworth, M. (1996). Defining who is a volunteer: Conceptual and
empirical considerations. Nonprofit and Voluntary Sector Quarterly, 25(3), 364-383.
Economic report of the president. (1997). Washington, DC: Government Printing Office.
Freeman,R.(1997).Workingfornothing:Thesupplyofvolunteerlabor.JournalofLaborEconomics,
15(1), S140-S166.
Hayghe,H.(1991).VolunteersintheU.S.:Whodonatesthetime?MonthlyLaborReview,114,17-23.
Hodgkinson,V., &Weitzman,M. (1996).Givingandvolunteeringinthe UnitedStates.Washington,
DC: Independent Sector.
Kaplow, L. (1995). A note on subsidizing gifts. Journal of Public Economics, 58(3), 469-477.
Lundberg,S.,&Pollak,R.(1996).Bargaininganddistributioninmarriage.JournalofEconomicPer
-
spectives, 10(4), 139-158.
16 Brown
by guest on June 12, 2013nvs.sagepub.comDownloaded from

Murray, M. (1994). How inefficient are multiple in-kind transfers? Economic Inquiry, 32(2), 209-
227.
Putnam,R. (1995).Tuningin, tuningout:The strangedisappearanceof socialcapitalin America.
PS: Political Science & Politics, 28(4), 664-683.
Small, K. (1992). Urban transportation economics. Philadelphia: Harwood.
Smith, D. H. (1997). The rest of the nonprofit sector: Grassroots associations as the dark matter
ignored inprevailing “flatearth” mapsof thesector. Nonprofitand VoluntarySectorQuarterly,
26(2), 114-131.
Toqueville, A. de. (1988). Democracy in America. New York: Harper & Row.
U.S.Bureau oftheCensus. (1995).Statisticalabstract ofthe UnitedStates. Washington,DC:Depart
-
ment of Commerce.
U.S.DepartmentofCommerce.(1996,January/February).Surveyofcurrentbusiness.Washington,
DC: Author.
U.S. Department of Commerce. (1997, January). Survey of current business. Washington, DC:
Author.
U.S. Departmentof Labor. (1996,January). Employment andearnings. Washington, DC:Bureau of
Labor Statistics.
Weitzman,M.(1983).Measuringthenumber,hoursspentanddollarvalueofvolunteeractivityofAmeri
-
cans. Independent Sector working paper.
Eleanor Brown is a professor of economics at Pomona College. Her research lies primarily in the areas of
taxation, personal philanthropy, and volunteer labor.
The Value of Volunteer Activity 17
by guest on June 12, 2013nvs.sagepub.comDownloaded from