Charities could gain an extra £177m a year if more employees were offered the chance to sign up to payroll giving, according to new research by the Charities Aid Foundation.
A ComRes survey of 1,080 employees about payroll giving, commissioned by CAF as part of its ongoing parliamentary inquiry into giving, found that 31 per cent of respondents said they would like to give through their payroll if they were offered the chance.
A further 8 per cent said they would be "very likely" to sign up to payroll giving if it was offered to them.
CAF said that if those 8 per cent of people signed up to the tax-free giving scheme, it could represent more than two million workers donating a total of £177m a year to good causes.
This is based on each person giving £7.13 per month, which was the average amount those surveyed said they could see themselves donating.
The latest figures show that only one in 34 employees donate through payroll giving, and only 8,500 of the UK’s 4.8 million employers offer staff the chance to sign up to the scheme, which allows people to give to charity before tax is deducted from their salaries.
CAF, which is the UK’s largest payroll-giving agency, called on the government to "radically simplify" the system to make payroll giving more attractive to companies and employees.
Jeremy Bliss, head of corporate clients at CAF, said: "If nothing changes, the scheme will continue to flatline and eventually it will run out of steam. It needs revitalising to kick-start the scheme or it will continue to struggle."
He said payroll giving had not grown in 10 years and suffered from very low usage among young people.
"In my experience, the most common barriers are where there is a lack of awareness," he said. "People are confused about exactly what the scheme does and how it works.
"It also gives an intangible relationship with charities – people don’t feel direct involvement. They are giving through a very clinical, administrative process, which takes away some of the human feeling of doing something to make a difference."
Bliss said these barriers could be removed by providing a more engaged giving experience by looking at the technology and format used.
"Simplifying the infrastructure would help awareness and understanding," he said.
Bliss added that the onus was on everyone involved in payroll giving, including the charities, payroll-giving agencies and employers, to improve awareness and increase take-up.
The government is due to make an announcement in August in response to the Treasury’s consultation on how to improve take-up of the scheme.