Analysis: Will a consultation on payroll giving help it to take off?

Peter O'Hara, managing director at Workplace Giving UK, is enthusiastic about the scheme's future

Peter O'Hara
Peter O'Hara

- This article was corrected on 7 November; please see final paragraph

Ministers heaped praise on payroll giving and its potential to attract new donors at an event at the Treasury last week.

Speaking at the National Payroll Giving Excellence Awards, Nick Hurd, the Minister for Civil Society, labelled  the scheme an "intriguing, enthralling and untapped" resource for charities.

The recently appointed Economic Secretary to the Treasury, Sajid Javid, said payroll giving was an excellent way to create a "giving culture", especially among young people starting employment and those returning to work.

Payroll giving is in its 25th year and donations are at an all-time high – £118m was raised among the 735,000 workers who signed up to the scheme last year.

But as Cathy Pharoah, professor of charity funding at Cass Business School, points out, that figure is less than some major charities generate in a year, and fewer than 3 per cent of UK employees have ever given through the scheme. 

"Payroll giving has grown very slowly indeed," she says. "There have been a number of reviews acknowledging that it is multi-layered and involves coordinating various agencies, which makes it more difficult to get off the ground. It’s a clunky scheme."

Employees are recruited to schemes by professional fundraising organisations that visit companies, and transactions are handled by specialist payroll giving agencies. Donors can decide whether their details are passed on to the charity.

The numbers:

£13 Average monthly donation through payroll giving in 2011/12

£1.2bn Amount raised by payroll giving since its launch in 1987

2% The proportion of charity income derived from payroll giving, according to research by the Institute of Fundraising

Joe Saxton, co-founder of the research consultancy nfpSynergy, agrees that the scheme is convoluted. "Politicians of all political parties have this obsession with payroll giving and why it does not work better," he says. "I don’t know why it gets such lavish praise." He says that payroll giving is more expensive than other fundraising techniques – about 5 per cent goes to the payroll agency – and makes it hard for charities to contact donors directly.

The government plans to launch a consultation on payroll giving before the end of the year that will seek new ideas for reinvigorating the scheme.

Saxton is sceptical: when he was chair of the Institute of Fundraising between 2005 and 2008, it undertook a review that found a number of fundamental problems. "Payroll giving stops when you stop working at the company, there are intermediaries and companies don’t like promoting payroll giving," he adds.

But Peter O’Hara, managing director at the fundraising organisation Workplace Giving UK, is enthusiastic about the scheme’s future, although he is frustrated that it has not changed in 10 years.

"Payroll giving needs administrative changes to improve how it works at the back end: we could speed up the time it takes for the money to move through the system and make it simpler for people to sign up," he says.

O’Hara believes that the government should "put its money where its mouth is" and encourage its own employees to get involved. He points out that government departments have less than 5 per cent of their workforce involved in the scheme. He adds that charities also need to encourage more of their staff to donate through the payroll.

Linda Minnis, chief executive of the payroll-giving agency Charities Trust, says that the government could help by running a payroll awareness campaign.

"The more payroll-giving agencies and the government can create awareness, the more opportunity there will to be to unlock the potential of payroll giving," she says.

- The article says that £118m was raised among the 735,000 workers who signed up to the scheme last year; the 735,000 is the total number of workers that gave through the scheme during the year.

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