1. The Expanded Value Added Statement Accounting for the Value Added by Volunteers Laurie Mook OISE/University of Toronto November 15, 2004

2. SOCIAL ACCOUNTING CERTIFICATE Agenda: November 15, 2004 10:00 - 10:20The Expanded Value Added Statement 10:20 – 10:35Exercise 1 10:35 – 11:00Discussion 11:00– 11:30Exercise 2 11:30 – 11:50Discussion 11:50 –12:00Presentation next class!

3. SOCIAL ACCOUNTING CERTIFICATE Overview of Presentation  Value Added and Expanded Value Added  The Expanded Value Added Statement  Case Study of Canadian Red Cross, Toronto Region

4. SOCIAL ACCOUNTING CERTIFICATE 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

5. SOCIAL ACCOUNTING CERTIFICATE Pasta Sauce Example

6. SOCIAL ACCOUNTING CERTIFICATE

8. GOURMET PASTA SAUCE

9. SOCIAL ACCOUNTING CERTIFICATE $1.00 $2.00 $3.00 Raw Materials Value Added (primary outputs) Final Product

10. SOCIAL ACCOUNTING CERTIFICATE Non-profit example

11. SOCIAL ACCOUNTING CERTIFICATE Nutrition program  Office supplies  Ingredients for meals

12. SOCIAL ACCOUNTING CERTIFICATE Nutrition program  Instruction  Preparation of meals  Assistance with shopping and meal preparation  Follow-up

13. SOCIAL ACCOUNTING CERTIFICATE Nutrition program  Knowledge of nutrition  Improved planning preparation  Nutritious meals  Better health

14. SOCIAL ACCOUNTING CERTIFICATE Raw Materials Value Added Final Product $1000.00 $1050.00 $2050.00

15. SOCIAL ACCOUNTING CERTIFICATE Raw Materials Value Added Final Product $1000.00 $1050.00 $9600.00 $11650.00

16. Income Statement For the fiscal year Revenues 100 Expenses(85) Profit 15 VALUE ADDED BY VOLUNTEERS WORKSHOP

17. Income Statement For the fiscal year Revenues 100 Ext. G&S (35) Employees (25) Investors(10) Amortization(10) Govt. (5) Profit 15 VALUE ADDED BY VOLUNTEERS WORKSHOP

18. 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 VALUE ADDED BY VOLUNTEERS WORKSHOP

19. SOCIAL ACCOUNTING CERTIFICATE Calculation of Value Added  Value of services – Materials/Outside Services Purchased = Value Added OR  Materials/Outside Services Purchased + Value Added = Value of Services

20. SOCIAL ACCOUNTING CERTIFICATE Value Added Statement

21. SOCIAL ACCOUNTING CERTIFICATE 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

22. SOCIAL ACCOUNTING CERTIFICATE 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

23. SOCIAL ACCOUNTING CERTIFICATE Key Findings  1,506 volunteers contributed an estimated 63,568 hours in the year of the study, or 32.6 full-time equivalents (FTE)

24. SOCIAL ACCOUNTING CERTIFICATE Key Findings: Volunteer Hours

25. SOCIAL ACCOUNTING CERTIFICATE Key Findings

26. SOCIAL ACCOUNTING CERTIFICATE Key Findings: Volunteer Hours

27. SOCIAL ACCOUNTING CERTIFICATE Key Findings

28. SOCIAL ACCOUNTING CERTIFICATE Key Findings  The volunteers in this study contributed $98,218 in non-reimbursed out-of-pocket expenses

29. SOCIAL ACCOUNTING CERTIFICATE Key Findings: Out-of-pocket Expenses

30. SOCIAL ACCOUNTING CERTIFICATE 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

31. SOCIAL ACCOUNTING CERTIFICATE 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

32. SOCIAL ACCOUNTING CERTIFICATE

35. Expanded Value Added Statement

36. SOCIAL ACCOUNTING CERTIFICATE Expanded Value Added Statement

37. SOCIAL ACCOUNTING CERTIFICATE Expanded Value Added Statement

38. SOCIAL ACCOUNTING CERTIFICATE Expanded Value Added Statement

39. SOCIAL ACCOUNTING CERTIFICATE Expanded Value Added Statement

40. SOCIAL ACCOUNTING CERTIFICATE Expanded Value Added Statement

41. SOCIAL ACCOUNTING CERTIFICATE Expanded Value Added Statement

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43. 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.

44. SOCIAL ACCOUNTING CERTIFICATE 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

45. SOCIAL ACCOUNTING CERTIFICATE DISCUSSION

46. SOCIAL ACCOUNTING CERTIFICATE 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?

47. SOCIAL ACCOUNTING CERTIFICATE EXERCISE 1

48. SOCIAL ACCOUNTING CERTIFICATE Employees 6. Total number of employees in the organization: a) Full-time 60 b) Part-time ________; Full-time equivalents of part-time employees ________

49. SOCIAL ACCOUNTING CERTIFICATE 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

50. SOCIAL ACCOUNTING CERTIFICATE 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

51. SOCIAL ACCOUNTING CERTIFICATE Financial Statements 11. In the last fiscal period, what were your organization’s total expenses (to the nearest dollar)? $5,700,000

52. SOCIAL ACCOUNTING CERTIFICATE Financial Statements 12. 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 $2,600,000 2. Taxes paid (e.g., property taxes) 3. Interest paid on long-term debt 4. Amortization/depreciation expense $200,000

53. SOCIAL ACCOUNTING CERTIFICATE 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).

54. SOCIAL ACCOUNTING CERTIFICATE 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.

55. SOCIAL ACCOUNTING CERTIFICATE 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.

56. SOCIAL ACCOUNTING CERTIFICATE 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.

57. SOCIAL ACCOUNTING CERTIFICATE Selected findings  If you include volunteer contributions in your Value Added Statement, the value added shown by your organization increases by 33%.

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60. EXERCISE 2

61. SOCIAL ACCOUNTING CERTIFICATE  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

62. SOCIAL ACCOUNTING CERTIFICATE 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!

63. SOCIAL ACCOUNTING CERTIFICATE 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?

64. SOCIAL ACCOUNTING CERTIFICATE Further thinking  Read and try to answer the questions at the end of chapters 6 and 7

65. SOCIAL ACCOUNTING CERTIFICATE That’s it!