Calculating the real value of your time in 2009

A fundraiser friend of mine had an entire month hijacked from her professional life recently. Instead of working on the projects she and her staff had planned for, they got sucked into the planning and coordination of an event that an important board member launched at the last minute. When it was over, the event had raised six figures thanks to their efforts, but other fundraising priorities (the ones they’d planned for) had suffered for lack of attention.

Although the event was an income-producer, it also clearly drained valuable resources. In the end, she found herself wondering how to measure the ROI (return on investment) for the project in a way that might meaningfully account for everything her staff put into it — not just the hard (external) costs.

Ever try to figure out the value of your own time? You might find it useful as you decide which projects to keep in-house, outsource, or discard altogether in 2009 and beyond. Here’s how you do it:

1. Figure out your total cost to the organization.
 Staff person’s salary + taxes + benefits (insurance, etc) = total cost to organization. If you’re not sure what your benefits are worth or what the organization pays in tax and social security-related overhead, there’s likely someone in your accounting/operations team who can tell you. Ten percent is often a safe ballpark for the taxes your organization pays on top of your salary, but this figure will vary based on where you work.
2. Figure out how many hours you actually work each year.
 First, figure out how many weeks you work each year by subtracting the number of vacation and sick days you get plus the number of days your office is closed for holidays from 52. (Most people end up working 40-48 weeks per year). Then, multiply the number of weeks you work against the number of hours you work in a typical week (for most, that’s 40 hours — or 35, if you take a formal lunch hour). If you want to be really accurate, adjust these hours down to reflect your own level of productivity (for instance, if you’d guess you’re actually productive at work 90% of the time, then account for 90% of the hours.
3. Divide your total cost to the organization into the number of hours you work each year. Although this number won’t be 100% exact, it will give you a relatively accurate sense of what your time costs the organization.

Here’s an example:

Sally is paid $65,000 in salary. With benefits (her insurance costs $400 per month, or $4,800 per year) and taxes ($6,500 per year, or 10% of her salary), she costs the organization she works for $76,300 annually.

Sally’s company is closed for big holidays like New Year’s Day, Thanksgiving, and a handful of religious and bank holidays — totaling 15 days in a typical year (3 weeks). In addition to those holidays, Sally gets 3 weeks of paid vacation, and another 5 sick or personal days — so her total number of working weeks is generally 45 per year.

She works, on average, a 40-hour week. Forty hours per week x 45 weeks = 1800 hours worked over the course of a year. She figures she’s productive about 85% of the time, which brings her number of productive work hours down to 1530 per year. When we divide 1530 into $76,300, we get an hourly cost of $49.87 to the nonprofit Sally works for.

As you plan ahead, consider the value of your time — and that of your staff.

Using these figures in spreadsheets that calculate income versus expenses to determine return on investment can be particularly useful. When my fundraising friend did, she found that, despite the event’s income generation, the net was significantly lower than the organization hoped, and the value of her staff’s time might have generated more income for the organization overall if they’d worked on other projects. These calculations may prove handy when deciding which projects to maintain and which to cut.