Payroll giving is widely regarded as having been a disappointment since its inception 25 years ago. The money it has raised for charity has risen steadily to £118m last year, but only 2 per cent of employers and 3 per cent of the workforce take part.
The government has been promising to shake up the system, and last week a Treasury consultation document outlined plans to allow the private sector to become involved in the hope of driving down costs and introducing more investment and innovation.
As well as removing the restriction that all payroll giving agencies must have charitable status, the consultation proposes to reduce processing time from 60 to 30 days, increase transparency and introduce standardised forms to make signing up simpler.
But the Institute of Fundraising believes the proposals do not go far enough. It wants a complete overhaul of the system by improving access, making it easier for charities to build relationships with payroll donors and making donations 'portable' when people change jobs.
Peter Lewis, the IoF chief executive, says the consultation fails to address these issues and doubts that bringing in the private sector will make the system more efficient; it could make things more confusing for employers, he says: "The consultation tries to address some issues, but falls short. It does not go far enough. It is not looking to transform the system."
Peter O'Hara, managing director of Workplace Giving UK, one of the professional fundraising organisations that are contracted by charities to promote payroll giving, says: "We are disappointed and quite frustrated. A lot of this has been discussed in the sector for two or three years and we regard yet another review with some scepticism, given that previous reviews have resulted in little or no action."
O'Hara says the consultation document fails to address the employee-donor journey: "Forty per cent of employees who want to sign up are unable to do so because their employers don't offer the scheme. We need to encourage employers to do so."
O'Hara says that the administration costs of the scheme have been no barrier to its growth, but he thinks commercial operators might bring new ideas.
Linda Minnis, chief executive of the Charities Trust, another of the 12 active payroll-giving agencies, says all profile-raising is a good thing, but questions whether private sector involvement is the whole answer. Significant investment would be needed from any firm getting involved, she says.
"How do you value what you do next when the key driver is profits?" she asks. "Payroll giving works on the tiniest margin. This might modernise payroll giving, but what would that mean? We have online platforms that the vast majority of corporate clients use, but there are other companies that still want to send paperwork."
Minnis is also concerned that one of the proposals - to create exit packs for employees explaining how they can maintain relationships with their chosen charities - could bring more red tape. "For many years we've asked the Treasury to put something in the P45 about this, but it's said no," she says. "We need to consider portability and we need to make sure we don't put more obstacles in the way."
Virgin Money and JustGiving are among the commercial platforms already eyeing payroll giving. A spokeswoman for Virgin Money says: "It remains something we are interested in." JustGiving says it will be contributing to the consultation. "Payroll giving is just one of many possible avenues we're considering at the moment," says a spokeswoman.
- Read Stephen Cook's editorial on private involvement in payroll giving