Volunteers are the lifeblood of any nonprofit organization. Their work is truly invaluable yet can be complicated to quantify. That said, one way to approximate that value is to calculate a volunteer’s lifetime value (LTV). We believe that this information can be extremely helpful for an organization. Below is some important information on LTV and why it should matter to your organization.
What is the Lifetime Value for a volunteer and what does it calculate?
Lifetime value helps nonprofits better understand the value that their volunteers are bringing to their organization. Since these generous people are donating their time and talents, it can seem difficult for an organization to fully understand just how valuable the time of their volunteers is. The value of a volunteer varies from nonprofit to nonprofit but the general concept remains the same. Lifetime value is the estimated total value of a volunteer to an organization. This number helps nonprofits determine how much they should invest in recruiting volunteers (volunteer acquisition cost) and, combined with a few other concepts like payback period, can bring a level of “science” to the art of volunteer management. Ultimately, this helps nonprofits maximize the impact they can have through better allocation of time and resources.
What does it look like in the world of business? In the nonprofit sector?
In simplest terms, a volunteer’s lifetime value is the impact or value of services that a volunteer is providing to a nonprofit. The current estimated national value of each volunteer is $27.20 an hour according to the Independent Sector. However, this is variable based on the type of volunteer work that is being provided and where the volunteer is located. As an example, the value of an hour of legal support can be as high as several hundred dollars – as that would be cost of hiring that same lawyer to do that same work if they were not volunteering. This is why it is important that nonprofits calculate their own lifetime values.
Can I only use my calculated LTV for hourly work? What if there are other ways in which our volunteers contribute to our organization?
This calculation acts specifically for the time a volunteer donates to your nonprofit. However, they can make an impact in a variety of intangible ways– not just through their hourly work. For an even more accurate calculation, organizations can estimate the intangible value volunteers provide to an organization outside of time (e.g., sharing an Instagram post may only take 1 minute of time but the value may be much higher if the post reaches 1,000 people or helps recruit a new donor or volunteer). Again, this may be done specifically for your organization and can vary based on the age, social reach and specific skills of a volunteer.
How should I use this calculation? What is the process and formula for finding my LTV? How can I make it better? Where do I go from here?
There are a multitude of uses for your calculated lifetime value as well as a variety of ways to increase it. These are strategies we here at Civic Champs are constantly trying to develop and strengthen. Over the next several weeks we will continue to answer these questions, going in-depth to provide our readers with the most valuable aspects of each of the concepts, and give nonprofits strategies so they can better understand their volunteers and how to utilize their talents in the best ways possible. Our next post will detail a step-by-step process on how to calculate the LTV for your own volunteers and we hope this information will prove to be valuable to your organization.
Have any comments or questions on the importance of LTV? Or do you have strategies on how to utilize it? Let us know by contacting us at firstname.lastname@example.org