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Katie Johnson, Institute of Fundraising, looks at how to make the most of Payroll Giving - now in its 22nd year
 Payroll Giving is now in its 22nd year and is arguably going stronger than ever. In fact, while other sources of charitable income are waning, the tax-effective donation mechanism has recently been declared to be ‘recession proof’.
The past 12 months have been increasingly difficult for businesses of all types. Across all sectors, companies have struggled financially and many have succumbed to closures or redundancies, but charities and not-for-profit organisations have been hit in more ways than most. Uniquely, alongside a drop in donations, there has been a marked increase in demand for the key services that voluntary organisations provide.
Over half of all charities admit to being affected by the recession. In fact, in the past year, donations to the UK’s 170,000 registered charities have dropped by a massive £1.3bn. Notably, 774,000 fewer adults donated to charity in 2008/09 and the average monthly donation from an individual has dropped by £1. All this has left many charities with a severe shortfall in funds.
Against all odds
Payroll Giving is arguably bucking this trend, early figures suggest that there has been a small rise in donations of 0.2 per cent. In fact, the number of new donors has remained constant, at around 60,000 per year. Positively, this allows charities to maintain some stability and gives them the power to predict income and plan ahead.
Payroll Giving has a much lower attrition rate than many donation mechanisms. This can largely be attributed to the ease of giving and the fact that the donor gets a substantial tax relief on their gifts. The donation is a pre-tax reduction, reducing the amount of income tax taken from the donor’s gross pay. This means that a £10 donation generates a tax relief of £4 for a higher rate tax payer and £2 at the basic rate. Consequently, it costs less to give more.
Whilst the benefits of Payroll Giving to charities are evident, it also holds countless benefits for donating companies. At a time of economic uncertainty, Payroll Giving is, quite simply, an ideal way for companies to demonstrate their corporate social responsibility at minimum cost to the organisation itself.
Commitment to the causes
From an employer’s perspective, there is barely any cost or administrative resource incurred in setting up a scheme and administration fees are deductible from profits for tax purposes. The mechanism is a great way for businesses to demonstrate commitment to the causes that their employees care about, which has also been proven to aid retention and recruitment of staff. It also enables businesses to create an environment in which a sustainable income stream for charities can be established.
Employers’ efforts are recognised annually through the government funded Quality Mark Award scheme. Companies that achieve a one or five per cent take-up amongst their staff are award bronze or silver certificates to recognise this. If an organisation obtains a 10 per cent take-up and proves to have made an extra effort to encourage the scheme, either through a promotion, matched funding or covering the admin fees, then they are eligible for ‘gold’ status.
One such organisation that has achieved ‘gold’ and reaped the benefits is high street jewellers Beaverbrooks. In the last year, their employees have donated £37,800 to 99 different charities via Payroll Giving. They launched their scheme in May 2008, with a target of achieving a 10 per cent employee take up in order to qualify for a Gold Quality Mark Award. However, within just eight months, over 25 per cent of their staff were donating through their payroll. The company’s pound for pound matching of donations proved to be a powerful incentive for employees to join the scheme. All of this has gone a long way to boost their reputation as responsible and philanthropic employers.
Their efforts have been ultimately recognised by the judging panel of the National Payroll Giving Excellence Awards. Held annually at HM Treasury, this prestigious event showcases the best examples of UK employers’ commitment to Payroll Giving and charitable causes. Beaverbrooks has beaten a record number of entrants this year to make it on to the final shortlist for the Awards.
This year’s event, held on 5 October, was hosted by two government ministers and heavily attended by journalists from both national and trade press from across a variety of sectors. Involvement in the scheme has therefore instantly given Beaverbrooks positive publicity, reaching audiences that they have never before had contact with.
In such difficult financial times, a push to make your company stand out from the crowd as a responsible employer may be the key to survival and success. It is easy to sign your organisation up to Payroll Giving and immediately take advantage of the benefits that charitable giving can offer.
For more information
Tel: 0845 602 6786
Web: www.payrollgivingcentre.org.uk |
