The Expanded Value Added Statement Accounting for the Value Added by Volunteers Laurie Mook...

The Expanded Value Added Statement

Accounting for the Value Added by Volunteers

Laurie Mook

OISE/University of Toronto

November 15, 2004

SOCIAL ACCOUNTING CERTIFICATE

Agenda: November 15, 2004

10:00 - 10:20 The Expanded Value Added Statement

10:20 – 10:35 Exercise 1

10:35 – 11:00 Discussion

11:00– 11:30 Exercise 2

11:30 – 11:50 Discussion

11:50 –12:00 Presentation next class!


Overview of Presentation

Value Added and Expanded Value Added

The Expanded Value Added Statement

Case Study of Canadian Red Cross, Toronto Region


What is Value Added?

Value added is one indicator of organizational performance

It measures the wealth that an organization creates by “adding value” to raw materials, products and services through the use of labour and capital


Pasta Sauce Example


GOURMET

PASTA SAUCE


$1.00

$2.00

$3.00

Raw Materials

Value Added

(primary outputs)

Final Product


Non-profit example


Nutrition program

Office supplies Ingredients for meals


Nutrition program

Instruction Preparation of meals Assistance with

shopping and meal preparation

Follow-up


Nutrition program

Knowledge of nutrition Improved planning

preparation Nutritious meals Better health


Raw Materials

Value Added

Final Product

$1000.00

$1050.00

$2050.00


Raw Materials

Value Added

Final Product

$1000.00

$1050.00

$9600.00

$11650.00

Income Statement

For the fiscal year

Revenues 100

Expenses (85)

Profit 15

Revenues Expenses

Profit

VALUE ADDED BY VOLUNTEERS WORKSHOP

Income Statement

For the fiscal year

Revenues 100

Ext. G&S (35)

Employees (25)

Investors (10)

Amortization (10)

Govt. (5)

Profit 15

Externalgoods &services

Revenues

Employees

Investors

Amortization

GovernmentProfit


Value Added Stmt

For the fiscal year

Revenues 100

Ext. G&S (35)

Value Added 65

Employees 25

Investors 10

Govt. 5

Org. 25

VA Dist. 65

Externalgoods &services

RevenuesV

Employees ALU

Investors E

Amortization AD

Government DProfit E

D



Calculation of Value Added

Value of services – Materials/Outside Services Purchased = Value Added

OR Materials/Outside Services Purchased

+ Value Added = Value of Services


Value Added StatementSales $XX

Less: Purchases of external goods and services XX

Value Added XX

Distributed in the following way:

To pay employees

Wages, pensions, and benefits $XX

To pay providers of capital

Interest XX

Dividends to shareholders XX XX

To pay government XX

Taxes payable

Reinvestment in the business

Amortization of capital assets XX

Retained profits XX XX

Value Added $XX


What is Expanded Value Added?

Value added by itself does not tell the whole story

Volunteers add value too Expanded Value Added combines

financial and social data to give a fuller picture of the social and economic impact of an organization


IYV Volunteer Value Added Project

Calculated the value added by and for volunteers at four nonprofits: Canadian Breast Cancer Foundation,

Ontario Chapter Canadian Crossroads International Canadian Red Cross, Toronto Region Jane/Finch Community and Family

Centre

Calculated the value added by and for volunteers at four nonprofits: Canadian Breast Cancer Foundation,

Ontario Chapter Canadian Crossroads International Canadian Red Cross, Toronto Region Jane/Finch Community and Family

Centre


Key Findings

1,506 volunteers contributed an estimated 63,568 hours in the year of the study, or 32.6 full-time equivalents (FTE)


Key Findings: Volunteer Hours

Program

Est. # of vol

hours

Congregate Dining 340Community Services 9680Disaster & Emergency Services 2800Transportation 14574Fun and Fitness 1716First Aid 1464Employee & Volunteer Resources 350Summer students 6800International Services 320Home Health Care & Equipment Services 1586Finance & Admin 1856Meals on Wheels 20982Regional Council (Board) 1100

All volunteers/respondents 63568


Key Findings


Key Findings: Volunteer Hours

# hrs Rate AmountCouncil 1100 $40.24 $44,264 Office 2206 $14.33 31,612

$75,876

Programs 60262 $14.33 $863,554

Total 63568 $939,430


Key Findings


Key Findings

The volunteers in this study contributed $98,218 in non-reimbursed out-of-pocket expenses


Key Findings: Out-of-pocket Expenses

# of volunteers

% with expenses

Amount per vol with

expenses TotalsCommunity Services 772 40% $75.00 $23,160

Disaster & Emergency Services 150 84% $111.19 13,956Transportation 113 92% $235.92 24,438

Home Healthcare & Equipment 21 33% $163.26 1,143Meals on Wheels 260 68% $145.00 25,582Finance & administration 2 50% $105.00 105Council 11 67% $225.00 1,650Other 67 75% $163.26 8,183Summer students 110 NA NA 0Total 1506 $98,218


Key Findings

The organization created value by providing opportunities for skills development and personal growth

The estimated market value for volunteers’ personal growth and development was $121,791


Key Findings: Personal Growth and Development

Total number of volunteers: 1,506

Percentage of respondents who indicated strongly that they benefited from personal growth and development by volunteering for this organization this year: 53.38%

Average cost of community college course for personal growth and development: $151.50

1,506 x 53.38% x $151.50 = $121,791


N o n -p ro fi t O rga n iza tio n

M onetary resourcesInternal

M on etary resou rcesE xtern a l

N on -m on eta ry resou rces

P rim ary O u tp u ts S econ d ary O u tp u ts Tertia ry O u tp u ts

V a lu e o f O u tp u ts


C a na d ia n R e d C ro s s , T o ro n to R e g io n


$5,741,634

M onetary resourcesExternal$98,218

Non-m onetary resourcesVolunteers$939,430

P rim ary O u tp u ts S econ d ary O u tp u tsSkills Developm ent

$121,791

Tertia ry O u tp u ts



C a na d ia n R e d C ro s s , T o ro n to R e g io n


$5,741,634

M onetary resourcesExternal$98,218

Non-m onetary resourcesVolunteers$939,430

P rim ary O u tp u ts Secondary OutputsSkills developm ent

$121,791

T e rtia ry O u tp u ts



Expanded Value Added Statement


Disclaimer

This statement provides social data to accompany the organization’s financial report. It is specific to the year and circumstances reported. It cannot be used to compare with results from other organizations or this organization at other times. It is provides a partial account of the value of volunteer contributions.


Key Points

The Expanded Value Added Statement takes a broader look at an organization integrates social and financial information takes a stakeholder approach the particular example in this presentation

highlights the role of volunteers, but it can be modified to include other social and environmental impacts


DISCUSSION


Discussion Questions

1. Any questions about the presentations?

2. Discussion Questions: What are some uses of an EVAS? What are the possibilities and limitations

of the EVAS? What about ‘value subtracted’? How might stakeholders react to it?


EXERCISE 1


Employees

6. Total number of employees in the organization:

a) Full-time 60b) Part-time ________; Full-time equivalents of part-time

employees ________


Volunteers

7. About how many volunteers did your organization have during the last fiscal period? 1,500

8. Even though this may be difficult to calculate,

estimate the total hours these volunteers contributed to your organization during the last fiscal period (please see Volunteer Contributions Worksheet at the end of this document): 63,600


Volunteers

9. Even though this may be difficult to calculate, estimate a hypothetical overall average hourly rate for the value of the activities your volunteers performed in the last fiscal period (please see Volunteer Contributions Worksheet at the end of this document): $14.45


Financial Statements

11. In the last fiscal period, what were your organization’s total expenses (to the nearest dollar)?

$5,700,000


Financial Statements12. The following questions relate to some of the

expenses incurred by your organization for the last fiscal period. Please include below the amounts by the applicable category, to the nearest dollar, for the last fiscal period:

1. Wages and benefits $2,600,0002. Taxes paid (e.g., property taxes) 3. Interest paid on long-term debt 4. Amortization/depreciation expense $200,000


Selected findings

Approximately 1,500 volunteers contributed an estimated total 63,600 hours or an average of 42 per volunteer. This is the equivalent of 33.1 full-time equivalents (using 1,920 hours as one full-time equivalent, or FTE).

The volunteer hours contributed represent 36% of all the hours contributed to the organization based on a total of 93.1 FTEs (60 FTE staff and 33.1 FTE volunteers).


Selected findings

The organization provided primary services or goods valued at $6,619,000 , made possible by monetary resources of $5,700,000 and non-monetary resources (volunteer contributions) of $919,000. Volunteer contributions amounted to 14% of total resources.


Selected findings When the audited financial statements only

were considered, the value added (additional value created by labour and capital) generated by your organization was $2,800,000.

Using the hourly rate of $14.45 for the value of the activities of your volunteers, volunteers contributed $919,000 more to the value added, creating a total of $3,719,000.


Selected findings This value added can also be expressed as a ratio

to purchases for external goods and services. When using items from the audited financial

statements only, the ratio was 0.97 to 1. However the ratio rose to 1.28 to 1 when the statement was expanded to include the contributions of volunteers.

This means that your organization generates $1.28 of value added for every $1 of external purchases.


Selected findings

If you include volunteer contributions in your Value Added Statement, the value added shown by your organization increases by 33%.


EXERCISE 2


You have 30 minutes to do the exercise

You will need the exercise sheets, a pen, and a calculator to do this exercise

After the exercise, we will have a discussion

Exercise 2: General


Exercise 2: To note

If you were not able to get all the numbers for your organization, use your best guess, or if this is not viable, use the case in Exercise 2

You may not be able to get everything done, but get as far as you can

Refer to the first exercise to see how the numbers were calculated

Work together with your neighbours!


Discussion

How easy/hard was it to collect the data for your organization?

Which rate did you use to put a value on volunteer contributions and why did you choose it?

What other items could you see being including in the EVAS?


Further thinking

Read and try to answer the questions at the end of chapters 6 and 7


That’s it!

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