As the discussion about entitlement reform ramps up, here’s something policymakers should keep in mind: With millions of people down on their luck the past three years, older folks have filled big voids in their communities and provided real economic value through volunteerism. Now we’re going to slash their benefits?
No doubt: We need to adjust the way we finance entitlements, especially Medicare. But maybe in the process we could partly offset any benefits cuts with a tax credit for volunteer labor. This might apply to the unemployed as well as to retirees who do something productive with their free time.
Nearly 19 million adults past the age of 55 – a quarter of all older Americans – contributed an average annual 3 billion hours of volunteer service from 2008 to 2010, according to The Corporation for National and Community Service, a federal agency that promotes volunteerism. These volunteers provided $64 billion of economic value annually.
Already, volunteers may deduct expenses related to their charitable activities. Typically this applies to equipment or supplies. They can also deduct transportation costs. But their big commitment is time. A standard volunteer hour is worth $21.36, according to Independent Sector, a consortium of nonprofits. That’s a hard number, but it is not deductible.
Most volunteers serve as mentors (17%) or tutors (18.5%), as fundraisers (26.5%), as food distributors (23.5%) or as general laborers or drivers (20.3%), according to Volunteering in America 2011. But a volunteer performing skilled service like graphic arts design, medical attention or legal representation might reasonably deserve a higher value.
Volunteer rates fell last year, which is further reason to consider a tax credit. We can never have too many helping hands. It may seem oxymoronic to pay for volunteer work, which is what a tax credit would amount to. But it is no more oxymoronic than the widely embraced concept of working in retirement.
This is just one more wall to tear down as we fight through the financial challenges of a weak economy and revision what life-after-work looks like. A tax credit for volunteers seems a good way capitalize on the goodwill of people with time and talent and a giving spirit, and to soften the blow of inevitable entitlement erosion.