Consider a diehard Democrat volunteering for the Obama campaign. He's perfectly willing to spend six hours knocking on doors (for free), because he enjoys spreading awareness and bonding with his fellow Democrats. But to hire someone to do it (for minimum wage), he'd have to donate ~$50, which he might not be willing to part with. So in this case it's much better for the individual to volunteer than donate.

Yes, I was restricting consideration to social value contributed to others; it's true that if you factor in both social value to the volunteer and to those helped, it can be better to volunteer than donate, even if the same wouldn't be true if one didn't factor in one's own well-being.

It's also better for the Obama campaign, because they'll get more mileage out of someone who did the work for fun than someone who was primarily motivated by the cash.

This falls into the category "the volunteer can do a better job than an employee hired with $X, where $X is the earning power of the volunteer."