Opinion: The volunteer conundrum for charity reports

Ray Jones, accountancy policy adviser at the Charity Commission

It's beyond question that volunteers make an immense contribution to the voluntary sector. Measuring and describing that contribution in the reports and accounts of charities is just as vital. But finding a way to do that in a clear and comprehensible way is proving difficult.

Peter Hepburn in this column (Third Sector, 27 October) called on the Charity Commission to act on volunteer accounting, but did not explore the reasoning or opportunities created by the approach of the committee on the Statement of Recommended Practice, or Sorp.

The question faced by the committee was how to convey the information in accordance with fair value accounting principles, but without creating a new burden of record keeping. This, as the Sorp consultation has reminded us, is something that large parts of the sector are anxious about.

The first challenge is a reasonably accurate recording of volunteers' time. This would then have to be converted into a cash equivalent, which would increase the disclosed income for many small charities, and bring thousands of them into the audit and examination regime with its associated costs.

The key issue the Sorp committee has to overcome is how to convert volunteer time into a 'fair-value' cash equivalent. To achieve fair-value accounting, each charity would need to demonstrate that the value it attaches to volunteers is the price that they would need and be willing to pay to get equivalent input from paid staff.

But would it be right for one charity to show a governance cost four times higher than another one, because it has a trustee body of 12 as opposed to three? And would a charity shop be happy to take on a couple of extra volunteers, significantly changing its cost profile and making its running costs appear higher than another shop that relied on a smaller number of paid staff?

The Sorp consultation has clearly supported better and fuller disclosure of the volunteers' contribution, and this is an opportunity the sector needs to take. It allows charities to include a description of that contribution, and even, if they wish, go so far as putting a financial value on it.

But including it in the accounts, with all the pitfalls and costs that would entail, would be a step too far.

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