Are you making the most of payroll giving?
Since its launch in 1987, Payroll Giving, or Give As You Earn (GAYE), has raised over £2 billion for good causes across the UK.
The government scheme, which enables PAYE employees to make regular donations straight from their pre-tax salary, has long been a reliable source of unrestricted income for many charities.
But new research by The Charities Aid Foundation (CAF) shows that the number of employees and employers taking advantage of the scheme has dropped sharply in recent years. And charities are ‘missing out on millions’ as a result.
According to CAF’s Payroll Giving Policy Briefing, the number of employees donating through Give as You Earn fell from 591,000 in 2020 to 516,000 in 2023 (a 13% decrease), and the total amount donated through the scheme dropped by 7%, from £137m to £128m.
It also revealed that just 4,000 employers (out of 45,000) offer employees the opportunity to donate through payroll giving.
Lack of awareness
The report attributes the drop in employee donations to the cost-of-living crisis. And suggests the poor take up by employers is due to a lack of awareness.
This is backed up by polling commissioned by CAF in November 2023, which found that 59% of people are unaware of Payroll Giving, pointing to a need to increase knowledge and understanding of the scheme among the general public and businesses.
Considering the scheme has been running for 37 years, why is awareness so low?
According to a government consultation on payroll giving, because it isn’t a priority for charities.
To quote the document, ‘charities do not normally prioritise Payroll Giving as part of their fundraising strategy. Many charities prefer to promote other modes of fundraising including, for example, regular donations through direct debit with Gift Aid added.’
The report says the scheme is not widely promoted for the following reasons:
there’s a lack of opportunity to build relationships with donors as they can donate anonymously.
there’s a lengthy delay between money being donated and charities receiving it.
gift aid can’t be claimed on donations as the money is taken at source.
A valuable source of income
Payroll giving may not be perfect, but it’s a valuable source of funding for charities like Barnado’s.
As Terry Stokes, Head of Payroll Giving at Barnardo’s explains:
“Payroll Giving offers a vital source of income to Barnardo’s. Our services are facing even greater demand against a backdrop of increased child poverty, so the consistent income we get from Payroll Giving enables us to better plan where we need to allocate our resources.
It’s an easy way for donors and companies to support their nominated charities and causes. Importantly for charities, with the tax relief coming at the point of donation, it removes the need to claim Gift Aid at a later date.”
If it’s benefitting Barnado’s, it can benefit you, too.
And let’s face it, at a time when income is squeezed across the sector, can you afford to leave money on the table? Thought not.
Here are two ways to grow your income through payroll giving.
Talk to your supporters
Make it clear that payroll giving is one of the ways people can support your work, just like the NSPCC has done on their website.
Include the message in your direct mailings, social media accounts, and supporter tool kits.
Signpost people to payroll giving schemes, like CAF Give As You Earn, and encourage them to talk to their employers about setting one up where they work.
Engage your corporate partners
Talk to your corporate partners about payroll giving.
Encourage them to set up a scheme and encourage employees to donate to your cause. And build payroll giving into your plan when pitching for new corporate partnerships. If the company doesn’t have a scheme, it’s a great way to kick off the fundraising while boosting their CSR credentials.
Got a fundraising vacancy? We’ve got the talent. Give us a call on 020 3750 3111 to find the perfect fit.