How To Report The Value Of Volunteer Labour In Financial Statements

Transcription

1 How To Report The Value Of Volunteer Labour In Financial Statements Most community service organisations rely heavily on volunteers to contribute substantially towards direct services and/or governance. The financial record keeping systems and financial statements of these organisations at present do not put a dollar value on this volunteer labour. Federal and States Governments have published inquiry reports that include valuation models for volunteer labour. Recent International and Australian models have been developed to legally recognise and report volunteers labour hours in the finance systems and financial statements of community service organisations. This workshop will arm you with all the Australian and States data and a practical example of how to legally report the value of volunteer labour in your financial statements. Slide 1

2 Volunteering in Australia Productivity Commission Research Report 2010: Contribution of the Not-for-Profit Sector Approx NFPs - about are small unincorporated organisations. ABS classifies as economically significant (employ staff or access tax concessions). Economically significant NFPs employed staff = 8 % Australia s employment = $43 billion to Australia s GDP in Employees = 41% full-time, 34 % part-time and 24 % casual employees. Continued next slide Slide 2

3 Productivity Commission Research Report 2010: Contribution of the Not-for-Profit Sector CONTINUED Contribution NFPs to GDP increased from 3.3 to 4.1 % of GDP between and = strong average annual growth (7.7 per cent) in the NFP sector over this period. Over 4.6 million Australians volunteered with NFPs in two-thirds of these volunteer with NFPs that do not have employees. Volunteers 623 million hours in the NFP sector = equivalent to fulltime positions = wage equivalent value $14.6 billion. More Australians are volunteering, but for fewer average hours = most areas have seen a decline in volunteering. NFPs report rising costs of recruiting, managing and training volunteers. Minimum qualifications, occupational health and safety, food safety, security checks, and public liability insurance add to these costs. Slide 3

4 Productivity Commission Research Report 2010: Contribution of the Not-for-Profit Sector CONTINUED Slide 4

5 Who volunteers People in the age group were most likely to volunteer Women were more likely to volunteer than men People aged 65 84, on average, contributed the most hours annually Around 16 per cent volunteered for community/welfare organisations. Most board members of NFPs volunteer their time and expertise. Fundraising 48 per cent of volunteer involvements Complex accountability requirements and legal and financial risks mean NFPs recruit qualified employees = voluntary positions replaced with paid staff. Slide 5

6 Productivity Commission Research Report 2010: Contribution of the Not-for-Profit Sector Slide 6

7 Volunteers labour inputs National Disability Insurance Scheme the [NDIA] would reimburse service providers or disability support organisations for those parts of a person s support package that they supplied. The Agency would set prices for such reimbursement to ensure the long-run viability of efficient providers, which would include adequate returns for capital investments. There are significant opportunities for service providers under the NDIS. Many not-for-profit organisations partly fund their current provision of services through volunteers and philanthropy, and with full funding of NDIS supports, could divert those resources to wider disability concerns. This would include enhancing employment opportunities, increasing community engagement with people with disabilities, research, or resourcing of complementary areas outside the NDIS. Australian Government, Productivity Commission Inquiry Report:: Disability Care and Support 31 July 2011 page 51 Slide 7

8 VOLUNTEERS IN-KIND INPUTS TO UNIT COSTS OF OUTPUTS Source: Australian Government s Productivity Commission 2010 Report Contribution of the Not For Profit Sector page 40 Slide 8

9 Present situation no financial reporting in-kind direct labour services Most organisations do NOT report volunteers in-kind direct labour services as community co-contributions in-kind. Your organisation s formal financial statements for external and statutory reporting do not at present include the value of volunteers in-kind direct labour services contributions. The present situation mis-states the relative value of the in-kind contribution of volunteers direct labour service hours obliged by statutory or contractual mandates. These volunteer resource inputs are part of the full/true cost of achieving the outputs of the organisation. Slide 9

10 Change is on the way financial reporting in-kind direct labour services Establishment of an Australian Charities and Not-For-Profit Commission Pressure from within the accounting profession itself Australian Government s Australian Accounting Standards Board Minutes of the September 2011 meeting contains the following minute: Recognition and Disclosure of Contributed Services. The Board considered the issues paper on the recognition and disclosure of contributed services (donated services) received by not-for-profit entities (NFPs). After considering the submissions received on this topic in response to ED 180 Income from Non-exchange Transactions (Taxes and Transfers), the Board: (a) decided all NFPs (whether in the private or public sector) should: (i) be required to make disclosures about the nature and significance of donated services received, whether recognised or unrecognised; and (ii) in principle, be required to recognise donated services received at fair value, when fair value can be measured reliably; (b) acknowledged that applying the recognition principle in (a)(ii) above would give rise to cost/benefit issues, particularly for smaller NFPs, that need further consideration; Slide 10

11 A model for valuing and financial reporting in-kind direct labour services Imputing a cost for this in-kind direct services labour Example: certain Board positions/activities being undertaken as regulatory-required cost of corporate governance. Canadian Centre for Philanthropy - comprehensive set of eight tools for financial recognition and reporting of the economic value of volunteer activity a copy is included on your Workshop CD resources. As a minimum, in-kind costs can then be recognised and reported in the organisation s internal management budgets, financial statements and annual reports as being volunteers in-kind community cocontributions. To recognise these in-kind costs, it is important that an identical offset of revenue be also recognised and reported in the budgets, financial statements and annual reports (example follows). Slide 11

12 Example: Dollar Value of Queensland Volunteers labour hours Queensland Government report The Economic Value of Volunteering in Queensland A report commissioned by the department of Communities Updated Report May 2008 The calculation of the economic value of volunteering in Queensland is important because it can emphasise to government and policy makers that voluntary work makes a significant contribution to the Queensland community (page 3) opy of report is on your Workshop CD resources.: The average labour cost of a Publicly Oriented Welfare Volunteer Hour from this table is $24.92 per hour (by mathematics: $451m divided by 18.1m annual volunteer hours) Qld report p.17. Slide 12

13 How community co contribution (in kind volunteers direct services labour) is shown in the financial statements. XYZ ORGANISATION INCOME AND EXPENDITURE BUDGET FOR YEAR ENDING 30 JUNE 20X5 XYZ ORGANISATION INCOME AND EXPENDITURE BUDGET FOR YEAR ENDING 30 JUNE 20X5 Item Actual Per Cent 20X5 INCOME Cwlth service agreement $ 162, % State Govt service agreement $ 180, % Donations received $ % Service charges $ % Membership fees $ % Interest rec'd $ 1, % TOTAL INCOME $ 344, % EXPENSES Audit fees $ % Salaries and wages $ 233, % Client Support consumables $ 18, % Insurances general $ 5, % Other costs $ 45, % TOTAL EXPENDITURE $ 301, % NET SURPLUS/(DEFICIT) $ 43, % Item Actual Per Cent 20X5 INCOME Cwlth service agreement $ 162, % State Govt service agreement $ 180, % Donations received $ % Community Co Contribution (In kind volunteers' direct services labour) $ 35, % Service charges $ % Membership fees $ % Interest rec'd $ 1, % TOTAL INCOME $ 379, % EXPENSES Audit fees $ % Salaries and wages $ 233, % In kind volunteers' direct services labour (Community Co Contribution) $ 35, % Client Support consumables $ 18, % Insurances general $ 5, % Other costs $ 45, % TOTAL EXPENDITURE $ 336, % NET SURPLUS/(DEFICIT) $ 43, % Slide 13

14 Thank you for your participation CORPORATE SYNERGIES AUSTRALIA PTY. LTD. A.B.N P.O. Box 545 BEROWRA. N.S.W Phone: (02) Slide 14