I had the pleasure of visiting Meals on Wheels and More in Austin, TX, and, like many nonprofits, volunteers are the lifeblood of the organization. Last year, nearly 7,000 volunteers gave their time and energy to deliver almost a million meals to more than 5,000 people in need. Having this exposure to such a large corps of motivated, caring, and committed individuals got me thinking about how valuable volunteers can be. But they are still underused when it comes to business office functions.
A quick search for accounting on VolunteerMatch.org turned up 56 matches within 20 miles of Manhattan, and only 25 within the same distance of Chicago. Because there are a lot more nonprofit organizations in both those cities, it’s clear not every nonprofit is looking to augment its business office with volunteers. There are plenty of reasons, of course, why nonprofits deny themselves this benefit. The primary thought is that the time it takes to train a volunteer on the nonprofit’s specific accounting practices outweighs the benefits. But companies like Accountemps exist for a reason, and if you’d be willing to pay for a temporary employee, then it makes sense to recruit the same skills from a volunteer.
Getting volunteers to provide their time and specialized skills is important and so is properly accounting for those skills. Donated services, even the ones we’re discussing here, are only recorded for GAAP when:
- The services create or enhance nonfinancial assets, or
- The services require specialized skills, are provided by someone who actually possesses those skills, and would have to be purchased if not donated.
Of course a volunteer accountant, even on a part-time basis, possesses specialized skills that are required to do the job, and those skills would definitely need to be purchased if they weren’t donated (as the salary line on your department’s income statement can attest). Even then, the donation must be offset with a corresponding expense and valued based on what the person would have earned as an employee.
It’s also important to record in-kind donations in order to show the community support the organization receives in financial terms. It can also help document an organization’s true program costs. That can go a long way toward showing funders how far their dollars can be stretched.