Volunteer Time Financial Statement Illustrations

Financial notes for the article, “Tracking Volunteer Time to Improve Your Bottom Line: A Complete Accounting Guide,” by Dennis Walsh, CPA.

Dennis Walsh, CPATagged , ,
Volunteer Time Financial Statement Illustrations
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Financial statement excerpts.

These financial statement excerpts illustrate the article, “Tracking Volunteer Time to Improve Your Bottom Line: A Complete Accounting Guide,” by Dennis Walsh, CPA. See the full article here.

DescriptionBefore including volunteer timeAfter including volunteer time
Support
Contributions & grants250,000250,000
Donated services–120,000
Total support500,000370,000
Other revenue410,000410,000
Total revenue & support660,000780,000
Expenses
Program services520,000 (80%)640,000 (83%)
Management & general120,000 (18%)120,000 (16%)
Fundraising10,000 (2%)10,000 (1%)
Total expenses650,000 (100%)770,000 (100%)

By reporting donated nursing and medical social worker services of $120,000, total public support (before earned revenue) increases from $250,000 to $370,000, or 48%. We also see that inclusion of these services in program expense increases the spending efficiency ratio from 80% to 83%.

Hometown Hospice Care explains the nature of recognized services, as required by GAAP, in the following footnote to its financial statements:

Note 2: The organization recognizes contribution revenue for certain services received at the fair value of such services. Recognized services were provided by 5 medical social workers and 4 registered nurses as follows:

By adding this supplemental data, we see that Hometown Hospice Care has far greater volunteer support than indicated by the minimum GAAP disclosures alone.  The user of the financial statements takes away a better sense of the amount of public support for programs as well as the diverse range of volunteer supported activities.

Program services – Direct patient care

Salaries:

  • Medical social workers-2,500 hours at $20 per hour $50,000
  • Registered nurses-2,000 hours at $35 per hour $70,000
  • Total donated services $120,000

The agency chooses to add the following information to the preceding footnote:

In addition, the organization received the services of more than 60 volunteers, not recognized in the statement of activities because such services do not involve specialized skills. The current average value of volunteer services in the locality is $15 per hour. The organization estimates the value of the following services at $237,000:

Volunteer serviceHours
Direct patient care5,000
Family care3,000
Home volunteers3,000
Bereavement services2,000
Children’s programs1,000
Transportation services800
Office assistance1,000
Total15,800

About the Author

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Dennis Walsh, CPA, volunteers his post-retirement time helping North Carolina nonprofits with accounting concerns, work for which he recently received the Community Service Award from the Guilford Nonprofit Consortium. He shares his expertise nationally with nonprofits through Blue Avocado. Through the Deborah and Dennis Walsh Foundation, he has also published “Legal & Tax Issues for North Carolina Nonprofits” and Man From Macedonia, a memoir by civil rights leader Aaron Johnson. Dennis also authored the Blue Avocado article Nonprofit Bookkeeping Test, which is one of the ten most viewed Blue Avocado articles of all time. Dennis can be reached through the Micah Project. A version of this article was published by the Planned Giving Design Center.

Articles on Blue Avocado do not provide legal representation or legal advice and should not be used as a substitute for advice or legal counsel. Blue Avocado provides space for the nonprofit sector to express new ideas. Views represented in Blue Avocado do not necessarily express the opinion of the publication or its publisher.

9 thoughts on “Volunteer Time Financial Statement Illustrations”

  1. A very important article that all NFP need to hear. Volunteers are also covered under the organizations’ general liability or Workman’s comp. policies. Properly documenting their time is necessary.
    Gary Pigg, MBA
    garypigg@vbct.com

    Reply

  2. I enjoyed your article and have a question for you.  The majority of our volunteers are vision screeners.  The volunteer position does require screeners to be trained and certified and if we did not have the volunteers, we would have to hire screeners.  My question is, does the fact that the screeners must be trained and certified satisfy the SFAS 116 requirement of “requiring special skills” or must their “special skills” be their principal occupation?

    Reply
    1. In answer to your question, the fact that a volunteer does not work in a particular qualifying occupation does not preclude such services from recognition under SFAS 116.  The requirement is that the services are performed by a person possessing such skills.
      The potential issue I see here is whether the specialized skills requirement itself is satisfied.  While it is true that the training your vision screeners receive represents knowledge that is developed into skill not possessed by the general public, I think it could be reasonably questioned whether this rises to the level of profession or trade within the meaning of SFAS 116.
      It is my understanding  that your vision screening volunteers go through a half day of training and are expected to read and understand a manual.  As I am sure you are aware, many volunteer supported organizations require comparable volunteer training and orientation to participate in specific programs, but it is questionable whether this degree of specialized training fits with the intent of the accounting standard.
      This by no means diminishes the important training that such volunteers receive.  By implementing the “specialized skills” standard, the Financial Accountings Standards Board essentially made a practical compromise in this evolving area of accounting practice.
      In theory, all volunteer services would be valued and recognized in the statement of activities as revenue and reported within the appropriate functional expense area.  In practice, however, the vast majority of grassroots organizations lack the resources to account for and value a variety of services in a way that will ensure meaningful and comparable data within and among organizations.  So the FASB drew the cutoff with the services of professionals and tradespersons.  Hence, in many instances, volunteer services integral to mission performance are not reported in the financial statements under the current standard.
      Fortunately, as pointed out in my article, the organization may summarize and value such vital volunteer services as supplemental information in the footnotes to the financial statements.  In fact, SFAS 116 encourages this where practical.  And of course, contributions from all types of volunteers should be included in newsletters, annual reports, websites, and fundraising appeals in order to show the full scope of community support and services provided to constituents.
      This reply is, of course, my opinion only and I encourage you to seek views from other qualified advisors as you feel led.
      Reply

  3. RE: 07/20/2010 – 15:09.
    ….VOLUNTEER HOURS spent “in working in governance of the organization, however you should include committee/project service time.”…

    QUESTION: Where can the official definition of organizational governance be referenced.

    Please email the answer to PetAnd40@yahoo.com

    Reply

  4. RE: 07/20/2010 – 15:09.
    ….VOLUNTEER HOURS spent “in working in governance of the organization, however you should include committee/project service time.”…

    QUESTION: Where can the official definition of organizational governance be referenced.

    Please email the answer to PetAnd40@yahoo.com

    Reply

  5. You cannot add the value of donated services without also subtracting the incurred costs of managing the volunteers. Managing human resources, paid or unpaid, is very expensive.

    Reply

  6. You cannot add the value of donated services without also subtracting the incurred costs of managing the volunteers. Managing human resources, paid or unpaid, is very expensive.

    Reply

  7. Would we count the services of nursing students doing their practicum work as skilled time? They do assessments and primary health care for our meals recipients. They are not yet in possession of the RN and are supervised by their proff. They do work that, if we didn’t have them- we would pay someone to do. However, we would not pay a skilled person as the in-depth assessments they do are not required, just nice to have available.
    Thank you

    Reply

  8. Would we count the services of nursing students doing their practicum work as skilled time? They do assessments and primary health care for our meals recipients. They are not yet in possession of the RN and are supervised by their proff. They do work that, if we didn’t have them- we would pay someone to do. However, we would not pay a skilled person as the in-depth assessments they do are not required, just nice to have available.
    Thank you

    Reply

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