Economic Impact of the Volunteer Sector

By Melanie Grooters

Graduate Student, Case Western Reserve University

Definition

The economic impact of the volunteer sector (also called the nonprofit or third sector) is extensive but nearly impossible to accurately estimate. Given the nature and reporting requirements of the nonprofit sector, accurate and complete statistics are in and of itself, difficult to project. However, prior to September 11, 2001, the historic day that the United States was attacked on its own soil, volunteerism had been suffering from a decline (Norton 2001).

Yet, this difficulty does not detract from the impressive contribution and impact of the volunteer sector—according to sector scholar Lester M. Salamon, 1996 statistics indicated that nearly eleven million workers were employed by nonprofits. This equaled around seven percent of all workers in this country—by comparison, agriculture employees accounted for less than one-third of that number. But, in addition to direct employment, these nonprofit entities had an equivalent of 6.3 million full-time volunteers which, when combined with paid employees, totaled nearly eleven percent of all paid and volunteer workers in the United States economy (Salamon 1999).

In October 2001, the INDEPENDENT SECTOR, a research group that studies the nonprofit sector, released its biannual survey results for the previous year. It reported that "83.9 million Americans volunteered their time last year" and each week contributed around four hours. That equals some 15.5 billion hours donated to the nonprofit sector. The dollar value of those hours, based on the average of $17.26 per hour for nonagricultural employees, equals $239.2 billion—compare that to the $220.1 billion spent by Americans on new, single-family homes during that year.

Interestingly, since September 11, 2001, volunteerism has seen a dramatic increase (Norton 2001). Recognizing the void that volunteers can fill, President George W. Bush called on America to join efforts to meet not only the needs resulting from the destruction of that day, but to contribute time to other unmet social needs. Interest in and commitment to volunteer opportunities remains high as national and world terrorism threats continue, and as the faltering economy results in increasing numbers of people in need of assistance.

Historic Roots

A very large part of America's attractive voluntary spirit stems from our religious heritage. The lessons are as varied as the religions of the hundreds of groups that came and still come to our shores. The common root of these varied testaments is an awareness that service beyond self is both an obligation and a joy. It is the ultimate universal truth. (O'Connell 1983)

History shows that volunteerism was evident in first civilizations, where survival depended on coming together to work for the common good, to ensure adequate food supplies and shelter. Indeed, it is thought that the very first European settlers on American soil owe their lives to the aid of the Native Americans who taught them skills and means for successful farming. In a lecture to a class at Grand Valley State University, Dr. Joel Orosz noted the following: In 1631, John Winthrop preached a four-hour sermon to challenge listeners to "create a shining city on a hill;" in 1636, Harvard College, the oldest incorporated entity in the United States, was established to train Puritan ministers that were needed to propagate the faith; Benjamin Franklin organized the first volunteer fire company in the U.S. and when he died in 1790, left $4500 to establish the first foundation to benefit Philadelphia and Boston. These examples are just a few that illustrate the progress of the voluntary sector and its impact on the development of America.

The formal identification of the voluntary nonprofit sector was noted by the Frenchman Alexis de Tocqueville in his 1831 visit to America. Sent by France to study American penitentiaries, Tocqueville observed "Wherever at the head of some undertaking you see the government in France, or a man of rank in England, in the United States you will be sure to find an association" (Salamon 1999, 1-2). Ultimately, Tocqueville wrote a book in which he "identified this sector as one of the most distinctive and critical features of American life" (Ibid., 7). He went on to observe

In democratic countries the science of association is the mother of science; the progress of all the rest depends upon the progress it has made—among democratic nations—all the citizens are independent and feeble; they can do hardly anything by themselves, and none of them can oblige his fellow men to lend him their assistance. They all, therefore, become powerless if they do not learn voluntarily to help one another. (Ibid., 15)

Until the New Deal created by President Franklin D. Roosevelt, the public felt that government had no place interfering with needs of society, and those needs were largely met by the church and other nonprofit organizations. However, the Great Depression brought with it a challenge of nearly twenty-five percent unemployment and burgeoning social needs. Thus began the intervention and subsequent reliance on government to meet the needs of the country.

Today, to some extent, nonprofits have partnered with the government to deliver needed services. The success of these nonprofits relies heavily on volunteer hours donated by concerned and caring citizens.

Importance

Kathleen S. Kelly (2002) noted "A historic and deeply rooted cultural belief in the United States is that our country's social needs should be addressed by voluntary action to the greatest extent possible, rather than by government." The former Red Cross head, Elizabeth Dole, summarized this unselfish attitude by saying "The idea of giving to others is ingrained in our nature, taught by our parents who were taught by theirs." When one considers that there are 1.6 million U.S. nonprofits (Kelly 2002) that receive 15.5 billion volunteer hours (Norton 2001), is seems evident that this sector and its contribution to society plays an enormous role in meeting needs that would otherwise go unmet.

Ties to the Philanthropic Sector

The ongoing vitality and growth of the philanthropic sector is strongly linked to its economic value within society. For example, many citizens consider it a wonderful and essential spiritual addition to society that religious congregations exist so that citizens can worship in the ways they see fit. Yet, from an economic standpoint, the congregations exist because they serve a purpose within society that is more than spiritual. Churches, synagogues, temples, and mosques provide needed services (ie., educational, communal, entertaining) to which a monetary figure can be assessed. Likewise, social service-oriented nonprofits, such as Goodwill and Gleaner's Food Banks provide needs goods and services to the impoverished that take care of a societal economic need, and perpetuate the value of the volunteer sector.

Key Related Ideas

Prior to September 11, 2001, volunteerism had declined, as noted by Leslie P. Norton, who felt that volunteerism was at its height in the 1950s and 1960s. Most financial contributions are tax deductible, donating time is not. Also, the time restraints of families with two full-time working parents limits the amount of free time available for volunteer activities. Yet, the events of September 11 have spurred a renewed commitment to volunteerism, with many charities seeing increases in participation. Before that infamous day, the UPS Foundation recognized the decline in volunteerism and, in 1998, launched its Volunteer Impact Initiative. By August 2000, the Initiative "helped 5 nonprofits attract more than 21,000 volunteers to serve nearly 215,000 young people" ("The UPS Foundation" 2001). In August 2000, UPS Foundation committed another $5.9 million to the Initiative in a commitment to "help nonprofits make dramatic, long-lasting improvements—to achieve high impact results" (Ibid.). The utilization of volunteers is intrinsic to the success of the nonprofit sector.

Important People Related to the Topic

• Frenchman Alexis de Tocqueville was sent to America in the early1830s to research the success of the young country. It was he who first noted the impact and intriguing role the charitable and volunteer sector played in the thriving economy of the United States.

Related Nonprofit Organizations

The Foundation Center, INDEPENDENT SECTOR, and UPS' Volunteer Impact Initiative are all organizations that promote and track the effect of the volunteer sector. It should be noted also that the dollar value of volunteers is recognized by foundations when issuing matching grants, and is considered dollar for dollar the same as monetary contributions.

The Foundation Center's mission is "to support and improve philanthropy by promoting public understanding of the field and helping grantseekers succeed" (The Foundation Center 2003).

INDEPENDENT SECTOR is a coalition of nonprofits, foundations, and corporations committed to strengthening not-for-profit initiative, philanthropy, and citizen action. IS performs research on philanthropy and the nonprofit sector, publishes and disseminates information, increases public awareness, and partakes in advocacy.

Volunteer Impact Initiative is a project of the UPS (United Parcel Service of America) Foundation. In the beginning phase of this Initiative, UPS provided grants to five organizations to assist them in increasing their numbers of volunteers and retaining them. The organizations receiving an initial $2 million and an additional $6 million from 2000 to 2004 are: Big Brothers Big Sisters of America, Junior Achievement, Points of Light Foundation, United Way of America and 100 Black Men of America. These grantees have reported incredible success with the Initiative's support.

Related Web Sites

American Red Cross Web site, at http://www.redcross.org, provides information on the organization's programs, history, and mission. The national organization has local chapters in all states and most cities, which can be found using the Web site's "ZIP Code Locator" or call (877) 272 7337. The American Red Cross ensures nationwide disaster planning, preparedness, community disaster education, mitigation, and response that provide the American people with quality services delivered in a uniform, consistent, and responsive manner.

The Foundation Center Web site, at http://fdncenter.org, offers a plethora of information regarding the philanthropic sector. The site provides an online foundation directory, access to grant information, newsletters, a history, training opportunities, upcoming conferences, and more.

The INDEPENDENT SECTOR Web site, at http://www.independentsector.org, gives the organization's history, mission, and current programs; provides downloadable research documents on giving and service and the nonprofit sector; and has an extensive overview of public policy that affects the volunteer sector.

The Volunteer Impact Initiative on the UPS Web site provides the Initiative's history, impact, and current work of grantees. Reports can be downloaded from http://www.community.ups.com/philanthropy/focus/volunteer.html.

Bibliography and Internet Sources

The Foundation Center. About the Foundation Center. [cited 6 February 2003]. Available from http://fdncenter.org/about/;jsessionid=R0323TP
MZZMYKP5QALRSGW15AAAACI2F.

Kelly, Kathleen S. "America's Voluntary Spirit," Public Relations Strategist 8 (2002): 1, 34-35.

Norton, Leslie P. "Social Capitalists," Barron's 81 (2001): 51, 32-33.

O'Connell, Brian. America's Voluntary Spirit. New York: The Foundation Center, 1983. ASIN 0879540796.

Salamon, Lester M.. America's Nonprofit Sector. New York: The Foundation Center, 1999. ISBN 0-87954-801-0.

UPS. U.S. Community Relations: Volunteer Impact Initiative. [cited 6 February 2003]. Available from http://www.community.ups.com/community/causes/us_relations/
impact.html.

n.a. "The UPS Foundation Commits $5.9 million to Volunteer Impact Initiative," Fund Raising Management 31 (2000): 6, 20.