payroll giving myths
Myth – it will be costly The answer to this is up to the organisation itself. Other than the admin time, which research shows to be around thirty minutes per month, there are no other unavoidable costs once the scheme is set up. Administration costs vary between individual payroll giving agencies, but an average would be between 2.5–4% of each donation per month, so an average donation of £10 per month could cost as little as 25 pence in administration fees, which can be deducted from the amount donated. So there goes that final myth; payroll giving does not have to cost a lot, either financially or in terms of staff resource.
However, research does show that an organisation’s employees are more likely to join a payroll giving scheme if their employer makes some kind of contribution. Remember though that any matching payments or costs associated with running the scheme can be offset against profits, thereby reducing the corporation tax liability. Three ways in which employers could contribute to a payroll giving scheme are: l the organisation pays the administration fees l the organisation pays the administration fees and matches the first donation of each payroll giving scheme member, and l the organisation pays the administration fees and matches payroll giving member donations.
What’s stopping you? So there we have it, all the myths have been busted. Payroll giving is a safe, easy and tax efficient way for employees to donate to charity. It does not need to cost a lot and there is very little administration involved for an employer. Furthermore, there are payroll giving agencies and professional fundraising organisations that are ready and willing to help employers set the ball rolling.
Setting up a scheme If you’re now thinking about the possibility of introducing a scheme in your organisation, considering the following factors could increase the likelihood of it being successful. l Donor characteristics – Look at the workforce. Research shows that women are more likely to give than men and this has remained the case for many years.
Chart 2
Age is also a factor when determining who is most likely to give, with women aged between 45–64, and over 65 being the groups most likely to donate to charity. Giving also varies according to occupation, with those in managerial and professional occupations more likely to give than those in routine and manual occupations. l Awareness of tax reliefs – Although there is little evidence of any strong link between levels of tax benefits and levels of giving, it has been suggested that this is down to employees’ lack of knowledge of the tax benefits donating through payroll can bring. l Awareness – Unless a scheme is well-promoted many employees remain unaware of its existence. So it follows that lack of knowledge about the existence of the payroll giving scheme is another factor affecting donations. Payroll giving schemes have huge potential but only if more people are aware of their existence and understand the tax benefits. It has been said that the best schemes, raising
the most funds for charities, are those where effective and creative promotions are available and awareness of the scheme is high. But this is the part that puts people off; employers do not have the time or resources to start promoting Payroll giving, but is there another way? l Professional fundraising organisations (PFOs) – The role of a PFO is to engage with employees, raising awareness of a company’s payroll giving scheme and the benefits it affords. During research undertaken by the CIPP, all the payroll giving administrators questioned recommended that employers should engage the services of a PFO. The PFO will maintain momentum, ensuring annual awareness campaigns which may otherwise flounder if left to the organisation to arrange alone. And the best part – it is free! A PFO does not charge the engaging organisation any fee as it is funded by the charities it supports. You can find a list of PFOs through the Association of Payroll Giving Organisations.
PP
More information The CIPP has recently published a research paper which gives more advice on how to set up an efficient, effective Payroll giving scheme. The paper is available to download from the CIPP website:
www.cipp.org.uk/en/cippnews/index.cfm/ payrollgivingresearchpaper.
Information is also available from the following websites:
l The Association of Payroll Giving Organisations
www.apgo.org.uk/index. php?ID=1&stylesheet=style l HM Revenue & Customs
www.hmrc.gov.uk/charities/tax/giving/payroll.htm; www.
hmrc.gov.uk/businesses/giving/payroll_agencies.htm.
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