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Volunteer work and extended measures, 1997 and 2000
The value of volunteer work17
In 2000, the value of volunteer work in the NPO sector amounted to $14 billion (equivalent to 1.4% of Canada’s GDP), a marginal decline from its 1997 level (equivalent to 1.7% of Canada’s GDP). This was due to a decrease in hours volunteered18 between these two years.
Philanthropic intermediaries and education and research organizations experienced the largest decline in the value of volunteer work, down 20% and 17% respectively. The few fields that registered an increase have small volunteer complements, such as environment, business and professional associations, international, and law, advocacy and politics.
In 2000, 6.5 million people, or 26.7% of Canadians, volunteered their time and skills, down from a volunteer rate of 31% in 1997. Although a million fewer Canadians volunteered, those who did devoted more time, partially mitigating the decline in hours. In 2000, volunteers contributed 162 hours on average, up from 149 hours in 1997, resulting in 1.1 billion hours volunteered, equivalent to 539 thousand full-time jobs (calculated using a 40 hour work week).
Patterns in volunteering can be affected by a redistribution of resources from the non-market (unpaid) to the market (paid) sector, particularly during some periods of the business cycle. Between 1997 and 2000, Canada’s economy advanced at an average of 3.5%19 per year and the employment rate rose from 58.8% in 1997 to 61.2% in 2000. Greater involvement in the paid labour market may have left individuals with less time to volunteer.
Because NPOs rely heavily on volunteers to undertake their activities, the standard measure of GDP is extended in this report to include a replacement cost value of volunteer work. This represents the cost to replace volunteer effort if the same services were purchased on the paid labour market. This extension for non-market volunteer activity allows for an alternative valuation of nonprofit sector output by more fully accounting for its use of productive resources. Using this approach, extended measures of labour services and revenue can also be obtained. Extended measures were estimated for 1997 and 2000, the common years for which both the standard economic accounts and the value of volunteer work are available.
In 2000, NPO GDP was $66 billion, amounting to 6.6% of the economy. Including the value of volunteer work drives up the economic contribution of the overall nonprofit sector to 7.9%20 of the economy. Between 1997 and 2000, the total extended value of the nonprofit sector's GDP grew by 15.2%, less than the standard measure (+19.3%), reflecting the marginal decline in the overall value of volunteer work.
Core nonprofit organizations mobilized over 86% of the total volunteer effort in 2000 ($12.1 billion), reflecting the key importance of this resource to generally smaller organizations. The economic contribution of the core segment to the Canadian economy as a whole increases by over a percentage point from 2.4% to 3.6% when the value of volunteer work is taken into account. The replacement cost value of volunteer work accounted for 33.5% of the extended value of economic activity in the core nonprofit sector.
The bulk of volunteering was concentrated in three main activities. Culture and recreation utilized the most volunteers, with $3.6 billion worth of volunteer effort in 2000, followed by social services ($2.9 billion) and religion ($2.3 billion). These three groups alone accounted for 72.7% of the value of the volunteer work and 47.5% of paid labour compensation in the core nonprofit sector. Benefiting from 30.2% of total volunteer effort, the ranking of culture and recreation organizations in total economic activity climbs from fourth to second place when the value of volunteering is included with GDP.
In 2000, NPOs paid $57.3 billion in compensation of employees and received the equivalent of $14.0 billion in volunteer work. When paid labour compensation and the replacement cost value of volunteer work are summed, the outcome is an extended value of total labour services. In 2000, the value of volunteer work accounted for 19.7% of the total value of labour resources provided to the overall nonprofit sector, down from 22.6% in 1997. This decrease may be related to an expanding economy, whereby people become more involved in the paid labour market and tend to devote less time to volunteer work. This situation might lead nonprofit organizations to increase their reliance on the paid labour force in order to achieve their missions.
In both 1997 and 2000, organizations in the core nonprofit sector accounted for about one-third of paid labour compensation of NPOs. In 2000, they benefited from over 86% of total volunteer labour services, worth $12.1 billion, compared to $19.1 billion in paid labour compensation. It is therefore not surprising that the share of the value of volunteer work in total extended labour services is twice as large for this group than the overall NPO sector. Between 1997 and 2000, stronger growth in paid labour (+26.2%) than in the value of volunteer work (+1.8%) for the core nonprofit sector, resulted in a decline of this share from 44.0% to 38.8% between these two years. The overall value of labour resources employed by these generally smaller organizations represented 5.7% of the wage bill for the Canadian economy in 2000, compared with 13.2% for the nonprofit sector as a whole.
The use of volunteers relative to paid workers varies considerably across fields of activity. In 2000, the share of volunteer work in the extended value of labour services ranged from 66.1% for law, advocacy and politics to 4.7% for health when hospitals are included. With shares of 16.9%, 16.1%, and 5.1% respectively, development and housing, business and professional associations, and other education and research made use of substantially less volunteer effort as opposed to paid labour.
In contrast, organizations primarily engaged in the culture and recreation, environment, and religion fields relied more heavily on volunteering than other organizations, with volunteering accounting for 62.1%, 58.4%, and 49.5% respectively of their total value of labour services. These first two fields and law, advocacy and politics were the sole activities that relied more heavily on volunteer labour compared to paid labour while religion was almost evenly balanced between both labour sources.
The field of health, which is essentially dominated by hospitals both in terms of GDP and labour income, relies significantly less on volunteer effort as opposed to paid labour and consequently ranked ahead of all other areas in terms of paid remuneration, followed by education and research. While these two fields benefited from only about one-fifth of volunteer work, they accounted for 70.8% of paid labour services. The dominance of paid labour services in health and education reflects the reliance on skilled labour in these two sectors.
Despite a small decline in the value of volunteer work between 1997 and 2000, volunteering continues to represent a considerably larger resource to the nonprofit sector than monetary and in-kind donations from households. The replacement cost value of volunteering was estimated at $14.0 billion in other “in-kind” revenue offered to the nonprofit sector in 2000, more than double the $6.6 billion of donations received from households.
As is the case for volunteering, the core nonprofit sector received the bulk of donations from households, with over 90% of donations in 2003 made to organizations in the core nonprofit sector.
The labour services that volunteers provide are a significant resource provided as a transfer in-kind from households. Combining the value of volunteer work with donations from households triples the importance of household transfers in overall sector revenue, from 6.1% to almost 16.9% (shown below as sum of transfers from households and volunteering services)
For the core nonprofit sector, adding the value of volunteer work nearly triples the importance of transfers from households from 11.8% to nearly 29.0%.
20. As is the case for all shares of extended value cited in this report, this share is calculated after adding the value of volunteer work to both the numerator (GDP of the nonprofit sector) and the denominator (GDP for the total economy).