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Simon Parsons looks at Payroll Giving in the Big Society

'Giving' in the Big Society

As part of the Big Society push and the Every Business Commits Forum, Prime Minister David Cameron has committed to the aim of making it easier for “workers to give money to charity automatically” through their payroll, with a year long awareness campaign to support payroll giving, asking businesses to promote it to their employees.

With the re-launch of the national Payroll Giving Awards to be held later in October, the Government are working with the Institute of Fundraising to encourage employers nationwide to increase employee giving. David Cameron and his cabinet have pledged to give at least one day a year for voluntary causes and charitable work, and are encouraging all Civil Servants to do the same.

In the United States around a third of employees donate through payroll giving, where the UK equivalent figure is only around 3%.

Payroll giving is available to both employers and pension payers and provides a way for individuals to make regular payments to charities directly from their payroll. Payments made through payroll giving are deducted before tax is deducted. This means that employees are given tax relief on their donation immediately and at the highest rate of tax that they pay.

Any giving donation is passed through to an HMRC approved Payroll Giving agency (charities in their own right) who then distribute the monies to the chosen charities. Payroll giving is simple to operate although there are some costs which can either be covered by the employer or taken as a cut from the donation.

Britons are amongst the most charitable in the world; it is considered that 73% donate to charity in some way accounting for around £10.6 billion pounds. Most of the donations are made directly to charities and through Gift Aid.

The current payroll giving operation can however be bureaucratic. When people move jobs and employers, they have to register again to donate. This alone has contributed to an estimated £71 million being lost to charities between 1999 and 2007. As part of the push, new initiatives will be explored to make administration simpler.

The Every Business Commits Forum is exploring the operational barriers that are preventing small and medium enterprises (SMEs) from implementing their own giving schemes. This may result in HM treasury providing time-limited grants to enable payroll giving schemes to be established. Other ideas with the aim of making payroll giving the norm are to be explored such as ‘Pennies from Heaven’ (which enables employees to donate the odd pennies of their pay each period).

The Government White Paper ’Giving’ also introduces a number of technology initiatives that will enable citizens to undertake voluntary work and donate to charities more easily. Initiatives include cash machine (ATM) donations, easing of Criminal Record Bureau checks, and mobile giving through text messages and applications.

Chair of the Governments’ Giving campaign lay the current low participation rates firmly at the feet of business bosses:

The take-up of payroll giving is low because employers do not actively promote their schemes to their employees. If directors would divert a tiny bit of time…to promoting payroll giving and set an example by personally contributing…the amount raised would increase dramatically.Lord Joffe