It never ceases to amaze me how often nonprofit leaders give away their expertise and their time – for free.
Here’s just the most recent example I’ve encountered.
A leader of an education nonprofit, let’s call her “Amy,” was approached by a group of funders who wanted to start a similar program in a different city. They had already identified a potential leader of the effort, but this leader, let’s call him “Mark,” was pretty inexperienced in working with school districts and in managing a large scale nonprofit effort.
So the group of funders asked if Amy would be willing to help Mark. This would involve Amy sitting in on some community meetings and providing one-on-one coaching on a regular basis to Mark.
Because Amy’s nonprofit also received funding from some of these funders, she felt obligated to comply. And let me be clear, Amy was offered absolutely no compensation for her time, effort and expertise.
There are several things wrong with this situation.
First, although this group of funders found tremendous value in Amy’s expertise, they did not assign any financial value to that expertise. They sought her out, and indeed already determined that their effort would be hampered without Amy’s guidance. However, they also assumed (perhaps subconsciously) that this nonprofit leader was so passionate about the education space, that she would be more than willing to donate her time.
Second, Amy herself did not assign a financial value to her time. She was complicit in the funders’ assumption that, while her time has huge social change value, it has no financial value. But the two must correlate. Amy’s time is a limited resource. And thus she must calculate the financial value of that resource.
But, third, nonprofit leaders don’t necessarily have the tools to calculate the value of their time.
In the hopes that other nonprofit leaders don’t get caught in Amy’s predicament, here’s a quick three-step process for calculating the financial value of your time as a social change expert, based on the financial value your organization assigns to your time.
- Determine Your Annual Cost: Take your annual salary and add the monetary value of your annual benefits (healthcare contribution, social security contribution, etc.). Typically benefits are calculated at an additional 25% of your salary. So, if your annual salary is $85,000 you would multiply that by 1.25 to get the total of your salary plus your annual benefits: $85,000 x 1.25 = $106,250.
- Determine Your Hourly Cost: Then, divide that salary + benefits number by the average number of working hours in a full-time position (so 52 weeks a year at 40 hours per week is 2,080 hours per year). I know you probably work more than 2,080 hours in a year, but this is just a general full-time number of hours. So, in this example, your hourly rate would be $106,250 / 2,080 = $51.08. Or $51 per hour, just to make it easy.
- Determine Your Hourly Value: If you are feeling bold, you can add a profit margin to this number, just as anyone who is paid to offer their expertise (lawyer, consultant, doctor) does. The idea here is that if someone pays you $51 for an hour of your expertise, you are only breaking even. But if you actually want to make a bit of profit that you can plow back into your organization, you could add in a little margin. So perhaps you round up to $65 per hour.
Now, you have a number you can use.
If Amy had been armed with such a calculation, when the group of funders came to her, she could have estimated the number of hours required (including community meetings, coaching, etc.) and then presented it to the funders. Perhaps the hours totaled 50 over the course of a 12-month period. This would have a financial value then of 50 x $65 per hour = $3,250, which I would argue is still a very conservative valuation.
So that group of funders would need to make a payment to Amy’s nonprofit (above their normal contributions) of $3,250 in order for her to agree to their request.
(And now that you have a way to calculate the hourly value of your time, you can also use it to determine the value of your time spent on other things — for example, fundraising activities like this.)
I can hear nonprofit leaders and funders gasping, “How dare you suggest that a nonprofit leader ‘charge’ a funder for her time.” And others might worry that funders would be offended by the request and end their other contributions to Amy’s nonprofit.
But shouldn’t nonprofit leaders be aware of (and transparent about) the costs embedded in how they are spending (and being asked to spend) their time? Nonprofit leaders and funders could then have a more illuminating conversation. Perhaps Amy’s group of funders won’t want to invest $3,250 in starting up Mark’s new nonprofit. If that is the case, then they probably weren’t very committed to the new effort in the first place. Far better to know that up front rather than after Amy sunk 50 hours into something that has nothing to do with her organization.
It’s time for nonprofit leaders (and their funders) to recognize the financial value of the social change expertise those leaders possess and invest accordingly.
Photo Credit: David Lofink
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Thanks for this important perspective, Nell. It’s not just EDs who can be quick to give away their time; their Boards are often equally or more complicit. This is the kind of thing that keeps nonprofits from being as effective as they could be. It happens all the time.
Besides considering the cost of staff time, staff should consider how free (or even paid) coaching or other activity supports their mission and strategic goals, and especially address the activities that the donated time will supplant. As it is, there usually aren’t enough hours in a day for most EDs and nonprofit staff to complete all that’s expected of them.
Thanks Kelly. Yes, absolutely boards are to blame in this as well. We have to place a financial value on the expertise our nonprofit leaders have, and put that expertise to its highest and best use!
If I wanted to charge for my time, I’d own a company in the private sector, as I had in my past. It’s about making a difference and improving people’s lives.
A consultant charges for their knowledge and time. I’m no longer a consultant. Now, I’m both honored and blessed to be of service. And our organization doesn’t charge when I help other organizations.
David, thanks for your comment. I absolutely agree with you that it’s about making a difference and improving people’s lives. But as a nonprofit leader your time is a limited resource, so if it is not being employed for your organization and its mission, that time should be compensated for by others. The money that a nonprofit leader would secure in this way would be plowed back into their organization, which means that there is more resources for the mission of your organization. Nonprofit leaders cannot be expected to work endless hours for their organization and other organizations, therefore by placing a financial value on their time and expertise we can figure out how to put it to its highest and best use.
There are parts of each opposing argument above with which I agree. The not-for-profit sector is and should be “special.” One way it is – to consider the broad mission we are on, something transcendent of my agency interests alone. Yet of course all parties – especially I -must be cognizant that time is the scarcest of resources and valuable, and thus trade off’s perceived or denied, do exist. Spending time on one thing of course ultimately militates against time and energy for another. Given all that, my rules of thumb –
Is a request consonant with my broad personal mission? And my agency’s?
Is the specific request large enough to cause any significant compromise of other valued pursuits?
How did the 2 above square against each other?
I have been part of and observed countless acts of charity – e.g. gifts of managers’ time. A good thing. Not strictly selfish or unselfish.
And I absolutely do value every minute, whether I or my agency is always and fully compensated is important, but secondary. When in doubt, and as possible, I try to opt for uncompensated
Thanks for your thoughtful comments, Steve. Let me be clear, I am not suggesting that nonprofit leaders become isolated and miserly with requests for assistance from others. I am a huge proponent of nonprofit leaders getting outside their own organizations’ walls and building diverse and robust networks with other organizations and leaders. However, what I am suggesting is that when others make significant requests of a nonprofit leader’s time that will take that leader away from the core work of their own organization then that leader’s organization should be financially compensated.