Opinion: Payroll makes the rich richer

Lisa Harker, chair of the Daycare Trust but writes in a personal capacity

This month, the Government is launching an initiative to encourage small and medium-sized companies to set up payroll giving schemes. The Home Office will be offering companies a grant of up to £500 to set up systems so that employees can donate a percentage of their wages to charity.

The Government is also offering to match donations for six months up to a maximum of £10 per month. With these kinds of cash incentives there's now no excuse for smaller companies to claim that payroll giving is just too costly for them.

But there is one flaw in the Government's strategy: the charities that benefit. Many of the existing payroll schemes offer employees a list of beneficiaries to choose from. More often than not, they are the usual suspects - household names that already scoop up the lion's share of donations.

One third of the sector's income now goes to just 0.1 per cent of charities.

The problem is largely about public awareness - relatively few charities are very well known, and while employees are free to donate to whichever charity they choose, when asked to make a choice most people can only bring a handful of names to mind.

But there are also logistical reasons. Smaller charities do not have the marketing resources of their larger counterparts. They are often unable to justify spending time and money producing promotional materials. Meanwhile, the better known continue to become better off.

Organised regular giving is on the increase at a time when overall levels of giving seem to have stalled. If smaller charities are not going to lose out, steps must be taken to redress the imbalance.

The Government has shown its mettle in terms of fostering a giving culture.

It now needs to consider how to spread the benefits of giving more widely.

A new initiative is needed to support small and medium-sized charities to take advantage of payroll giving by providing marketing support and ensuring that company employees can gain access to information about them via the Guidestar website when it goes live next year.

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