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Posted by Sarah Brown on 26 Sep '14

Volunteering – good for the country, good for business, good for people and good for charities

{img_title} This blog is based on a fascinating speech "In giving, how much do we receive? The social value of volunteering" given by Andrew G Haldane, Chief Economist, Bank of England. All their speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx

How volunteering is good for the country

In it obviously their initial focus was on the economic impact which is pretty impressive. The Office for National Statistics (ONS) calculates that frequent, formal volunteering produced just short of £24 billion of economic output in 2012. This would be equivalent to 1.5% of GDP. That is sizable. It would make volunteering one of the most important industrial sectors in the UK, producing twice as much value as the agriculture sector and about the same amount as the telecoms or the insurance and pension fund sectors.

Add in informal volunteering and the ONS estimate it at almost £19 billion – not far off the contribution from formal volunteering the extent of participation in voluntary activities in 2012, based on the Community Life Survey. Looking at hours worked, this equates to just over 2 billion hours per year spent formally volunteering. To give you some context, that is just under one hour per week for every person over 16 in the UK. It is 5% of the total hours worked in the UK by paid employees. It is equivalent to 1.25 million full-time equivalents (FTEs), or double the number of paid FTEs in the voluntary sector. Put differently, there are around the same number of FTE volunteers in the UK as there are paid employees in the manufacturing, construction and estate agency sectors combined. Indeed, the only industrial sectors with a larger UK workforce are wholesale and retail services, education, health and social work. And it does not end there. It is estimated that another 170 million hours a year are volunteered by people less than once a month. And to this estimate of formal volunteering should be added measures of informal volunteering. According to calculations recently released by the ONS, informal volunteers provide anywhere between 1.7 and 2.1 billion hours of extra help each year. .

So, all in, volunteering in the UK might amount to as much as 4.4 billion hours per year. That is 1.7 hours per week for every UK adult aged over 16. It is not far off 10% of the total hours worked by all UK paid employees. Around 44% of respondents had done some form of formal voluntary work over the previous 12 months and 29% volunteer formally at least once a month. This means around 15 million people in the UK volunteer ‘frequently’.

How it is good for people and businesses

The 2006/07 Helping Out survey of volunteers found a range of benefits including enjoyment, satisfaction and achievement, meeting people and making friends, broadening life experience, boosting confidence, reducing stress, improving physical health and learning new skills. The balance of benefits differs across individuals. For example, younger people are most likely to highlight the importance of acquiring new skills and enhancing employment prospects, while older volunteers see the benefits from increased social interaction and improved health. But enjoyment and satisfaction rank high across all volunteer types.

Perhaps the most authoritative method is to use national surveys of well-being and life satisfaction alongside data on the characteristics of the survey participants. This approach lies behind the recent report by Fujiwara et al (2014). This report estimates the impact of various factors, including formal volunteering, on an individual’s life satisfaction.
Their results provide a relatively clear ranking of what factors really matter for well-being. Health (physical and especially mental) comes at the top of this well-being league table, followed by employment prospects. On the next rung down, however, sits volunteering. In terms of personal well-being, this puts volunteering on a similar footing to playing sport. If you were wondering where watching TV would come in the well-being list I can tell you – close to the bottom. Indeed, watching TV is found to detract from well-being.
It is possible to translate these into monetary-equivalent values – the money an individual would need to be given to increase their well-being by the same amount. On this evidence, you would need to be compensated around £2,400 on average per person per year for forgoing the opportunity to volunteer.  That is a very significant sum for the average person, whose median annual salary was only £22,000 in 2013.

If you multiply that per-person benefit by the 15 million or so regular volunteers, you get a private benefit of volunteering close to £40 billion per year.  If you added in non-regular volunteers, you would get a larger number still. In other words, adding together private and economic benefits roughly doubles estimates of the value of volunteering, to something perhaps closer to £100 billion per year or about 6% of the total GDP.

The Centre for Mental Health estimates that the economic and social costs of mental health problems are huge. The health and social care costs alone are worth over £20bn, the associated output losses £30bn and the human costs over £50bn. So anything that improves mental health, even in a small way, can make a big difference to social welfare.
Volunteering is typically found to have a positive impact on mental health – for example, by enhancing social integration and engagement.  Certainly, that is what volunteers themselves say. Remaining active and socially engaged can be particularly important for older age groups, post-child raising and post-retirement.

A systematic review of the international literature by Casiday et al (2008) assessed 43 longitudinal, cross-sectional and qualitative studies of the impact of volunteering on mental health. It found that volunteering reduced the incidence of depression, stress, hospitalization, pain and psychological distress. It is difficult to put precise numbers on those benefits. But Fujiwara et al (2014) find that, on average, the well-being benefit from relief from depression or anxiety is worth around £37,000 per year. And New Economy Manchester (2014) estimate that the average cost of treating those suffering from depression or anxiety is around £956 per year.  Even a small effect from volunteering on mental health could deliver large benefits. For research has shown that people tend systematically to under-estimate the positive effect for them of giving to others. In an experiment, people were randomly assigned $20 to spend, either on themselves or others. Those who were told to spend it on others subsequently reported significantly higher subjective well-being afterwards, contrary to their expectations  before.This means that volunteer army would possibly be larger still if individuals had greater self-awareness of the private benefits of volunteering. 

In the speech they gave a simple example. Consider a volunteer who helps out a charity providing support services for the homeless. Is the value of this activity captured by the hours spent volunteering? By the amount it would have cost to hire that person to provide that help? By the amount that person themselves benefit from volunteering?
All are important, but they would still potentially significantly under-estimate the value society should place on this activity. That is because homelessness comes with wider collateral costs, for the individual most obviously, but also for society generally: the reduction in employment and income prospects; the accompanying increased risk of criminal activity and addiction to drugs or alcohol; and the increased risk of physical and mental health problems.

All of these take a very significant toll on the homeless individual. But they also tax the public purse, through increased social security, criminal justice and health spending. And that is before you even get to the wider social costs of, for example, criminality and addiction on families and societies. These costs are a form of societal externality.

Volunteers help increase social impact 

The social value created by reduced homelessness is a potential multiple of the cost of the labour input to volunteering. What was great was that the speech was not using a hypothetical example as last year, Pro Bono Economics(PBE)  brought together a team of volunteer economists from Oxera Consulting with the charity Centrepoint which works with homeless young people in London. Centrepoint were keen to evaluate quantitatively the social benefits of their work. So the Oxera team sought to capture the benefits of reducing homelessness in getting young people into employment or training, preventing them from re-offending, treating their mental health issues and reducing their substance misuse. An important subset  of the social costs of homelessness.
The study published by PBE last year suggested that, for every £1 spent by Centrepoint, there was a societal benefit of at least £2.40. Or, put differently, Centrepoint delivered a social return on investment of 140% over a five year period. This was very much a lower bound estimate.

This is not miles away from estimates from a recent City of London study. This found that, when a business invests £1 in employability-related employee volunteering, the social return is over £11 for society.

How it might be good for charities?

Ignoring volunteering just thinking about all the work that charities do research by New Philanthropy Capital in 2012 found that 25% of charities surveyed, and nearly half of those with income below £100,000, do not measure their impact at all. Given that charities with income below £100,000 make up roughly 80% of all general charities, this means there is a huge number whose activities are not evaluated. This means that the impact of volunteers can’t be measured.

How new forms of volunteering are good for charity – could you do this?

It is not surprising that time is the most cited barrier to volunteering .  But technology, as in every other aspect of life, can improve the efficiency of matching in ways which can stretch time.

Recently a number of charities with support have started what the NCVO have called “micro-volunteering”. For example, “Help from Home” is an initiative to encourage micro-volunteering by allowing people to donate as little as 5 minutes to a worthy cause. For example, you can spend a few minutes describing photos to improve a blind person’s experience of a museum, play an online game in aid of scientific research, or write an email to a sick child. Tasks are given a ‘pyjama-rating’ to drive home the message that it is easy to volunteer.

Here in the UK, the National Citizen Service (NCS) was introduced in 2011. It recently passed the milestone of 100,000 young people having taken part. This scheme runs outside term time for 15-17 year olds and combines opportunities to take part in adventure activities with social action projects. The evidence so far suggests this scheme, as well as being enjoyable, increases the chances of participants subsequently volunteering.

And who are these volunteers?

The volunteer army is a diverse one. Volunteering is slightly more prevalent among older people and slightly less prevalent among people of child-rearing age. But all age groups make a significant contribution. Women and men are broadly equally likely to volunteer. And there do not appear to be major differences in volunteering across ethnic minority or socio-economic groups.

Numbers of volunteers appear to be stable. Here is some evidence of cyclicality in volunteering, with it falling at the start of the recession and rising during the recovery. A recent report suggested that volunteering numbers had reached a ten-year high. It is possible this upward trend will continue. An ageing population will boost older cohorts where volunteer participation rates are high. And among younger cohorts there is evidence of a behaviour shift, with participation rates having doubled in the past decade.

Taken together, these patterns suggest that volunteering is tightly-woven into the UK’s social fabric – a fabric which is large, diverse, international and potentially growing.

Here is the link to the full speech if you are interested.
All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx