How to Calculate the Lifetime Value of Volunteers

It’s not uncommon for nonprofits to calculate the lifetime value of their donors. It helps them make decisions about how much is reasonable to spend on cultivating new contributors. This metric also helps the organization assess whether they are doing a good job at retaining supporters. But, little has been done to calculate the lifetime value of volunteers.

So, I thought I’d give it a try. Stick with me through the math…

**Why Calculate the Lifetime Value of a Volunteer?**** **

Calculating the lifetime value of a volunteer is another way to assess volunteer contributions of time and talent. Lifetime value offers a metric that can inform your program management processes.

Does all this talk about “value” degrade the contributions of volunteers? I don’t think so. In fact, it’s just the opposite.

Volunteer program managers are ultimately responsible for designing and implementing successful volunteer strategies at their organizations. To this end, they need a broad range of data – this might include volunteer satisfaction surveys, Return on Investment (ROI), the value of volunteer time, program performance outcomes, budgets, etc.

These vital statistics can help managers track their program’s progress in myriad ways. Using key metrics helps managers make informed decisions (versus best guestimates) and is just plain good management practice.

**Your vital statistics can help you …**

- Make volunteer recruitment budget decisions
- Assess the impact of program changes or improvements
- Inspire new resource investments in your program
- Focus your energy where it will have the most impact

So, no, tracking the value of volunteer time does not devalue volunteers. When programs are better managed, they are better for volunteers and, ultimately, more supportive places to contribute time and talent.

“Value,” in this case, does not refer to the worth of individual volunteers. Clearly, volunteers offer value beyond the numbers, and numbers do not adequately describe the compassion and dedication volunteers offer our causes. Rather, it is a useful tool to compare how things are now and how things are in the future, so that managers can track the impacts of their decisions and make smart changes going forward.

**How to Calculate the Lifetime Value of A Volunteer (LTV)**

Calculating this value in the most basic way isn’t too complicated. There are certainly additional things you can include in the formula (for example, you might also add the weekly value of volunteer cash and in-kind contributions to the mix). But, for now, we’ll focus on the basics.

**STEP 1: Figure the Basic Inputs**

**Weekly Value of Volunteer Time**

(a) Average the total hours per week for all volunteers (total hours per week/total number of volunteers)

(b) Hourly value of volunteer time $23.07 per hour (click here to find your state’s hourly value) (https://www.independentsector.org/volunteer_time)

**Average Length of Stay of Volunteers (in years)**

(c) Average number of years retained for each volunteer

(total years/total number of volunteers)** **

**STEP 2: Calculate the LTV**

**Simply plug the basic inputs you’ve assembled into this simple formula:**52(a**x**b)**x**c

**CASE STUDY: PART 1**

Here’s an example of how the calculation would work.

**Note:**a 20% increase in the total number of volunteers would be 90 volunteers donating 396 hours per week and, as a whole, volunteering a total of 291 years (if all other averages remained the same for the new volunteers).

**STEP 1: Figure the Basic Inputs**

**Weekly Value of Volunteer Time**

(a) 330 / 75 = 4.4 hours per week (or 396 / 90 = 4.4 hours per week)

(b) Hourly value of volunteer time in Florida is $21.64** ^{*}** per hour

**Average Length of Stay of Volunteers (in years)**

(c) (255 / 75 = 3.4 years (or 291/ 90 = 3.23 years)

**STEP 2: Calculate the LTV**

**Simple Formula:**52(a**x**b)**x**c

**Basic Example:**52(4.4**x**21.64)**x**3.4 =**$**16,834.19 lifetime value per volunteer

**In this case, the lifetime value of the 74 volunteers would be over $1.25 million dollars. **

**How to Increase the Lifetime Value (LTV) of Volunteers **

There are three basic ways to increase lifetime value:

- Increase the number of hours people volunteer for you
- Increase the duration of time they volunteer
- Increase the number of people who volunteer

**CASE STUDY: PART**2For the case above, it might look like this …

**Basic Example:**52(4.4**x**21.64)**x**3.4 =**$**16,834.19

**Example**(with 20% more average volunteer hours)**:**52(5.3**x**21.64)**x**3.4**= $**20,277.55

**In this case, the lifetime value of the 74 volunteers (with 20% more average hours) would be over $1.50 million dollars. **

**Example**(with 20% increase in volunteer retention)**:**52(4.4**x**21.64)**x**4.1**=**$20,300.05

**In this case, the lifetime value of the 74 volunteers (with 20% increase in volunteer retention) would be over $1.52 million dollars. **

**Example**(with 20% increase in the number of volunteers)**:**52(4.4**x**21.64)**x**3.23**=**$15,992.48

**In this case, the lifetime value of the 90 volunteers (a 20% of total volunteers) would be over $1.44 million dollars. **

So, you now have three options with different total lifetime values.

**Now you must decide which has the most potential value and is the easiest to accomplish – 1) ask volunteers to increase their hours, 2) inspire them to stay longer, or 3) recruit additional volunteers.**

Using calculations like these can help you make the tough decisions about where to focus your time and energy, and how much you should invest in volunteer retention versus recruitment…and have the data to back it up!

I’m glad you stuck with me through the math! Do you think we should create a calculator to do the math for you, like we did **here**? If so, let us know in the comments.

Rob J ConsultingOctober 1, 2015 at 2:17 pmHi Tobi.

Interesting concept. Like Tony (and as you acknowledge) I don’t think this tells the whole story but it is another useful addition tot eh debate on volunteer metrics.

Have you come across the speech by Andrew Haldane last September? Andrew is Chief Economist at the Bank of England and he made some thoughtful and helpful comments about measuring volunteering. You can access the speech online at http://www.bankofengland.co.uk/publications/Documents/speeches/2014/speech756.pdf