Putting a value on people power
As the nation celebrates Volunteers Week 2020, a new report reveals the true scale and benefits of volunteering in a community business. Stephen Nicol of Nicol Economics reflects on how dependent community businesses are on local volunteers for survival.
It is a rare privilege to deliver research on a subject matter in which I have been so personally involved and so you could describe Assessing the Value of Volunteers in Community Business as a bit of a labour of love.
As an economist, I have spent much of my career working out how to value a wide range of things from the mundane to, at times, the near ridiculous.
Outside of my paid work I have become increasingly involved in supporting a local community facility – our community–run open air swimming pool. As the current Chair, I am acutely conscious of how much time our 80 plus volunteers put into running the facility: from the members of the committee who lead on finance, marketing, operations and fundraising; to those who keep our café open during the summer and carry out maintenance during the winter.
In 2019, I carried out research for Nesta, the public innovation foundation, on how to value the concept of “people power”: that is people giving their time and other resources free of charge to support valuable social activities. In 2020, Power to Change asked me to apply this research to community businesses.
The concept is pretty simple. Take a volunteer, find out how much time they spend supporting a charity or community business. Work out what they spend their time on. Apply the national average wage for that activity. Hey presto you can calculate the overall value of volunteering time for a charity, community business or across the whole sector.
The Office for National Statistics (ONS) carried out a similar exercise to produce something at a UK level called, in typical dry economics language, “household satellite accounts”. These put monetary values on a wide range of important activities that we as citizens carry out but for which we often do not get paid: for example caring, transport, cleaning and of course volunteering.
There is an army of some 200,000 volunteers across the 9,000 community businesses in the UK. On average there were around six volunteers for every paid member of staff in a community business. My research estimates that these volunteers provide 15.5 to 18 million hours of time every year. This time is worth £210 to £250 million each year or the equivalent of £24,000 to £27,000 on average for each business. This value is the equivalent of 24% and 28% of all income received by the sector or 13% to 15% of the average (median) operating costs of community businesses.
Put succinctly, most community businesses simply would not be viable – or their activities would have to be radically cut back – without this invaluable resource of volunteers bringing their time and considerable expertise.
Finally, it is worth remembering that volunteering is a two-way exchange: the community business benefits, but so do the volunteers. There is a robust body of research on the benefits of volunteering for volunteers.
Regular volunteering tends to lead to improved well-being, health and social interaction and skills. I see this in our community organisation where I live. Our activities provide invaluable social glue and help give social contact and sense of purpose to many of our volunteers. Valuing these benefits is tricky, but using values from other research I estimate that the well-being benefits to volunteers in all community businesses could be running at £230 million per annum.
So, it has been particularly satisfying to develop a reasonable value of volunteer time across community businesses. This puts some firm numbers against what I know both personally and professionally. Volunteers are the vital and, at times, unsung and heroes of the community business sector.
Director of Nicol Economics