Volunteer work and charitable contributions

February 19, 2002

Free Market Foundation

In his State of the Union address, President Bush called “for every American to commit at least two years 4,000 hours over the rest of your lifetime to the service of your neighbours and your nation.” That works out to around 80 hours a year for every adult.

By some counts, the average American is already volunteering that much.

According to a survey by the Independent Sector, in 2001 the average American including non-volunteers who gave money donated 81 hours to voluntary activity.

Counting the value of voluntary labour, the non-profit sector accounts for around 6 percent of national income 65 percent more than President Bush’s slimmed down budget spends on non-military discretionary programmes.

In 2000, 44 percent of Americans volunteered for youth programmes, charities, religious organisations and other causes. Harvard University economist Richard Freeman has concluded that the standard model to explain why people volunteer their time and efforts is too limited.

The standard model holds that the “price” of volunteer work is the opportunity cost of individuals’ time the earnings one foregoes.

As a person’s wage rises, he or she finds volunteering more expensive which should discourage volunteering compared with donating money.

But Freeman finds that although a high opportunity cost discourages some people from volunteering, on average those who volunteer are better paid and more likely to be employed than those who do not.

Overall, there is little evidence that people cut down on volunteer work when their labour market opportunities improve or that they view cash contributions and volunteer time as substitutes.

Source: Alan B. Krueger (Princeton University), Economic Scene: The president wants Americans to Volunteer to Pick Up the Slack in Social Services. But Will That Be Enough? New York Times, February 7, 2002; based on Giving & Volunteering in the United States 2001, Independent Sector.

For text http://www.nytimes.com/2002/02/07/business/07SCEN.html
For Independent Sector report http://www.independentsector.org/PDFs/GV01keyfind.pdf
For more on Volunteerism http://www.ncpa.org/pd/social/social10.html

RSA Comment:
Americans are more philanthropically-minded than any other nation. When the economist Walter Williams visited South Africa some years ago he mentioned that Americans are responsible for 60% of the worlds total charitable giving.
Eustace Davie, Director, FMF.

FMF Policy Bulletin\12 February 2002