Is Payroll Giving Going to Survive?

Research carried out by the Charities Aid Foundation, "The journey so far … insights into 25 years of payroll giving", found £118 million was donated via payroll by 735,000 employees.


Only 3% of UK employees donated to charity through payroll in 2011/12, according to research by the Charities Aid Foundation (CAF)

There are 15 different Payroll Giving schemes that are approved and monitored by HM Revenue & Customs (HMRC) in the UK. The research sheds some light on who is currently giving to charities through their payroll - but is it the employees - for not being generous enough or having the cash available to donate or is it the companies who are to blame for not raising awareness of schemes within their organisations?

The under 30's were not surprisingly the meanest with 1.9% of under-30s in employment giving through payroll. The under 30's were put to shame by their older siblings - with 4.5% of employees aged between 30 and 49 donating through their payroll, and with 3.9% among those between the ages of 50 and 64 - we all have something to learn from this research.

Introduced in 1987, the payroll-giving scheme allows employees to donate to charities from their gross pay - ie before tax is deducted. The scheme offers some really nice benefits for those involved. For those making the donation from their payroll, the major benefit of Payroll Giving is the convenience; once an account is set up, donations are processed automatically until the donor instructs otherwise. For higher-rate taxpayers, Payroll Giving is the simplest way to receive full tax relief on donations because gifts are made out of pre-tax income. To illustrate just how cost effective donations and costs for employees on different tax rates can be, take a look at some of the examples below:

For additional-rate (50%) taxpayers, a pre-tax payroll donation of £10 costs the donor only £5.
For higher-rate taxpayers (40%), a pre-tax payroll donation of £10 costs the donor only £6.
For basic-rate (20%) taxpayers, a pre-tax payroll donation of £10 costs the donor only £8.

This research was published by the Charities Aid Foundation, Britain's largest provider of payroll giving, www.cafonline.org in December 2012 - and is entitled "The Journey so Far..... insights into 25 years of payroll giving" The research also found:

Donations through payroll giving have shown an annual growth rate of 9.7% since 1990/91.
Since 1998/99, the number of employers offering the option to staff has grown annually by 7.5%.
The average annual donation per payroll giving has swelled from £82 in 1990/91 to £161 in 2011/12.
The highest number of enrolled employers was 8,752 in 2007/08.
Between 1998/99 and 2002/03, overall annual donations via payroll giving trebled, rising from £42 million to £115 million.

Hannah Terrey, head of policy and campaigns at the Charities Aid Foundation commented: “Payroll giving has massive untapped potential to encourage people to make a regular contribution to the causes people care about. Many major organisations and their staff take advantage of this means of giving, but we need to do so much more to encourage millions more to give. We need to recruit a new generation of employees to get into giving as they earn, so they can build long-term links with charities and experience the joy of supporting a cause they care about.”

Nick Day, Managing Director of James Gray Associates added "Payroll Managers and those responsible for payroll and employee benefits have a huge communication challenge with payroll giving. The idea is simple and tax efficient but more needs to be done by organisations to promote their schemes as well as the benefits to their employees and chosen charities if payroll giving is to be sustainable in the future. Those responsible for payroll in organisations have an important role and moral duty to encourage payroll giving."

Source: CAF, Britain's largest provider of payroll giving, www.cafonline.org

Previous Page