I would the "whys" in quotes

for emphasis and because of the awkward way it makes your eyes go back to see if you read the sentence correctly.

also: a question mark might be stronger at the end of your first sentence... Pam asked me why I was so interested in volunteering? You might also mention Pam's position.

This following is a weak paragraph because it does not start with the accident and there is nothing that ties the time management back to the accident in the thesis statement. The accident is just thrown in there and not supported by anything;

"Volunteering strengthens my personal development: I am learning how to practice time management. Time management is a skill that is developed over time, and I am getting better at it. I was involved in a head on collision on October 10, 2006. I was not injured in the accident, but my car was totaled. I learned how to balance volunteering, school and work while at the same time deal with personal drama. Volunteering for the administration department will allow me to feel a sense of empowerment and gain confidence stemming from experiencing something first-hand; also, it would reduce the feeling of isolation due to stronger ties. Volunteering for your department will help me to feel valued and appreciated."

You repeated yourself about "circle of friends" three or four times. I repeat things myself way too often so you are not alone...

If you want some marginally solicited advise,

see if you can cut your work in half. I know it will be difficult but in this way you can get rid of redundancy and weak sentences or paragraphs. Ask yourself if you can live without each sentence or paragraph and so on.

What you have left will begin to look like the intent of what you are saying.

Now... this is the difficult part...cut it in half again...

What is left is the gem that you would present to strangers...

I am inclined to have fifth or sixth drafts though so that may be way too much work for what you want to do with this letter...

Yah Bless