Every non-profit loves a volunteer. From the ticket taker at a fundraiser to the accountant who reviews your books once a month to the lawyer who helped you incorporate, volunteers are a welcome addition to any non-profit as they provide valuable services that the non-profit would otherwise need to pay. And the less spent on general expenses means the more funds available for your programs!
What is a Volunteer’s Time Worth?
According to the Financial Accounting Standards Board (FASB), an organization must record as a contribution the value of a volunteer’s services provided to the non-profit, along with a corresponding contributed service expense. In order to properly record these services, two questions should be asked:
1. What types of services provided should be recorded?
While all volunteers’ help provides value to the organization’s programs and services, only certain services must be recorded as a contribution. Professional services which require a level of competence beyond the average person must be recorded as a contribution. For example, the volunteer accountant who prepares your monthly financials or the volunteer electrician who sets up your new A/C unit would be considered a contributed service and must be recorded. These types of services require a professional who has knowledge and experience beyond that of the “average Joe.” On the other hand, if it is reasonable to assume that any ordinary person with no specific training or experience could provide a service, then it is not necessary to record a contribution of services provided. For example, while the volunteer who helps stamp and address donor envelopes is helpful to the organization, their services do not need to be recorded as a contribution as no specialized knowledge or experience is required to perform this task.
2. How do I determine the value of services donated?
Now that you have determined that you must record a contribution, the next question is: What value do I record? Contributed services should be recorded at the value of services provided. A good rule of thumb to follow is that these contributed services should be recorded at what it would have cost the non-profit to obtain those services had they not been donated. In our electrician’s example, the organization would normally record the value of contributed services provided by the electrician at the electrician’s standard hourly rate. After all, if it wasn’t for the electrician’s generosity (no one likes working in the summer heat!), the non-profit would have had to pay to have the A/C installed.
So, the next time someone offers to volunteer for your organization, make sure to let them know how much you appreciate their help, and afterwards, don’t forget to consider whether their service should also be recorded as a contribution on your books.