Pay and Benefits

Payroll giving or Give As You Earn (GAYE) is a way in which employees can make regular tax-free payments to charity directly from their pay. It can provide a low-cost yet effective aspect of corporate social responsibility (CSR) strategy, which an increasing number of companies are striving to develop. By making it easy for staff to give to charity, employers can also demonstrate their generosity and strengthen their brand at the same time. 

 

As donations are deducted before tax, every £1 an employee gives will only cost them 80p, while higher rate taxpayers will only pay 60p. From April 2010, a £20 donation would only cost £10 for those paying the new 50 per cent super-tax. This means that the charity receives your donation and the tax you would have paid on this amount. 

 

Workplace Giving UK’s Managing Director Peter O’Hara says: “It’s a contemporary way to donate to charity. It is tax efficient, especially for the higher rate taxpayer. It is easy to give this way and it is flexible, so any charity can be nominated.”

 

 

Charities lose a staggering £100 million every year through ineffective giving. But a GAYE scheme helps to counter this by allowing them to budget and plan ahead. Employees can support their favourite charity, from the British Heart Foundation to their local hospice – and they can give as little or as much as they want. Staff can even give to more than one charity with only one deduction from their pay. There’s also a tremendous buzz and feel-good factor about GAYE, which can help to enhance a company’s profile. 

 

“It shows employees that you’re a good and generous employer,” adds Peter.  

 

 

There is a certain lack of understanding about payroll giving, with many employers believing that implementing a scheme is expensive and involves endless administration. The reality is that setting one up is simple, with very little administration and cost involved.

 

The first stage will be to sign up with one of the reputable payroll giving agencies, which are also charities. Find a list of approved agencies on the HM Revenue & Customs website at www.hmrc.gov.uk/businesses/payroll-giving.htm. If your organisation plans to introduce the scheme, you will make regular deductions from employees’ salaries via your payroll system, which will need to be set up for payroll giving.

 

There are no extra tax forms to complete and the payroll giving agencies take care of most of the administration. However, most of them charge about four per cent from the amount donated to cover these admin costs.

 

If you want the charities to receive all of your staff’s donations, you can arrange to pay the administration fee yourself. Deduct the amount requested by the employee after working out and subtracting their National Insurance contributions, but before applying PAYE. Then pass on the donations you have deducted to your selected agency, which will distribute the donations to your employee’s 

chosen charities. 

 

Finally, it is crucial that every company decides which department should look after payroll giving. The responsibility can rest with either payroll, HR or CSR. 

 

 

“Our most common problem continues to be lack of awareness of the scheme among employees and some high-profile employers,” says Peter. Many workers are not aware that their companies have payroll giving in place, so it’s down to employers to promote it in a bid to get a higher take-up. 

 

“Employers need to actively promote it as much as they can – via the intranet or through regular communication channels,” adds Peter. “A payroll giving agency can come in to speak to staff.” 

 

Most employers find that a simple communications campaign to promote workplace giving will pay dividends. Conwy Council set up such a scheme in 2006 but with little promotion. Only five workers signed up to it. In November last year, the council relaunched the programme by arranging for visits to 10 workplace sites, as well as setting up a dedicated email campaign and writing an article for its newsletter. Following the campaign, the scheme was taken up by 50 members of staff. 

 

Retailer Henderson Group’s payroll giving scheme is publicised every six months to increase uptake by staff. Over the past year, the Group says it has raised more than £141,000 for charity. 

 

“We price match every employee’s donation and we also pay the administration fee,” says Henderson Group Payroll Manager Martin Alywood. “In the past year, we have increased our uptake by 17 per cent, with 752 employees now donating,” he added.

 

 

Your staff must be free to choose to which charity they can give donations to. The designated payroll giving agency will give employees charity nomination forms to complete which will be given back to them directly and confidentially. Some employers choose to double or add to their employees’ donations. Businesses can also arrange for representatives of charities to come into work to discuss the benefits of the scheme. 

 

 

Royal Mail was one of the first organisations to set up payroll giving in 1989 and it now boasts one of the largest schemes in the country, having donated more than £40 million to charity in the last 18 years. More than a quarter (27 per cent) of employees make monthly payroll contributions and about 885 charities benefit from Royal Mail Group’s scheme and, of these, Help the Hospices is the lead beneficiary. 

 

A spokeswoman for Royal Mail says that it attributes its success in sustaining and growing its employee involvement in payroll giving to working with The Charities Trust and Payroll Giving in Action to “embed payroll giving within the DNA of the company by engaging its employees directly and enabling them to find out more about the scheme in person”. 

 

Meanwhile, the Whitbread Group also operates a successful payroll giving scheme, with about 10 per cent of its workforce getting involved. Yearly donations topped around £500,000 last year. The group relaunches the scheme annually with a promotion campaign in a bid to get more employees to give. Whitbread doubles the first donation of every new donor to generate more cash for charity and encourage staff to give. 

 

 

Currently, only 44 per cent of PAYE employees have access to a payroll giving scheme, but this generates more than £100 million for charity every year. 

 

As many employees and some employers are still ignorant about the existence of payroll giving, many in-the-know companies would like the Government to introduce a universal payroll giving scheme. In fact, the majority of organisation leaders would support such a move, according to GFKNop research carried out with the heads of 100 UK companies for the Charities Aid Foundation. A total of 70 per cent of those surveyed, all of whom operate a community investment programme, back the idea which would enable all PAYE employees to give tax effectively 

to charities. 

 

The Charities Aid Foundation Head of Policy and Public Affairs Hannah Terrey says: “A universal scheme could really help encourage many more people to get involved in regular giving and to continue to give when they move jobs.” 

 

The Charities Aid Foundation is in talks with businesses, charities and the Government to establish how a universal scheme could work. 

 

Company chiefs who already offer a payroll giving scheme felt it made employees more engaged and almost two-thirds (65 per cent) said that offering the scheme fulfilled a basic employee demand.

 

Hannah adds: “Payroll giving has existed since 1987 but its full potential has never been realised and if it is, millions more could be raised for charities.”

 

Case study: ASOS

Online fashion retailer ASOS first set up a payroll giving scheme in April 2009, providing employees with a basic introduction to it. The scheme initially got a four per cent take-up from hardcore givers, but ASOS was keen to generate more interest. 

 

Workplace Giving offered to promote the scheme within the organisation on 17 November last year by staging a small love-themed event in the reception area of their London and Hemel Hempstead offices. 

 

“This was great timing for us as we were just starting to ramp up our Corporate Social Responsibility strategy,” says ASOS Head of Corporate Responsibility Louise McCabe.

 

“We really love the fact that the scheme gives individuals the freedom to choose which charity they want to support.”

 

Before the event, ASOS and Workplace Giving came up with a hip and colorful poster campaign, which read: “Boys Love Girls who Give, Girls Love Boys who Give, Boys Love Boys who Give, Girls Love Girls Who Give.” The purple and pink posters were put up all over the office, including the kitchens and toilets. The company’s intranet contained the hard facts about how payroll giving is tax efficient. The posters also included the catchphrase: “Unleash your charitable side,” which referred to two guide dog puppies from charity Guide Dogs for the Blind Association, which came into the office to aid the promotional campaign. Employees enjoyed petting the pups and nine of members of staff were so taken with them that they immediately signed up to give to the Guide Dog charity. 

 

“We also gave out Love Heart sweets,” adds Louise. “We loved the schmaltzy theme. ASOS is a buzzing and generous organisation with generous employees and the whole event fitted in with our brand which is fun and relaxed.” 

 

For the first 60 employees who signed up, ASOS added an extra £10 to each of their chosen charities. And the first 20 colleagues who signed up were given a £10 sample sale voucher. The event ensured that the whole company got to learn about the scheme. “The day had a great buzz,” says Louise. “We didn’t want put across the message: ‘you must give to charity’, but we wanted to tell staff that if they wanted to donate to charity, this is a great time.” 

 

Since the event, an impressive 17 per cent of ASOS employees have signed up to give money to charity direct from their payroll.