The agency would be a non-departmental public body that "could resolve many issues around clarity, audit and access to payroll giving", the institute's report says. But there should first be a detailed review of the benefits of the current multi-agency competitive system, it adds.
The report, Review of Payroll Giving, reveals discontent among employers and third sector organisations about the service provided by payroll giving agencies, which are responsible for transferring funds from payroll givers to charities.
Complaints focused on delays of up to nine months in transferring donations, payments being made to the wrong charities, donors being misidentified as dormant and charities receiving incomplete and inconsistent data about donors.
The report, by consultants Vanessa Potter and Jon Scales, suggests problems arise because payroll giving agencies have contracts with employers and not charities. It recommends the implementation of an external system to monitor agency standards and performance and an official review into their management.
The inquiry found wide support for universal mandatory payroll giving, partly to solve the problem of 'portability' that arises when donors move to employers that do not operate payroll giving.
But it says the Government and employers would be likely to resist a universal system. Instead, it recommends that employers should have to set up payroll giving if any employee wants it, and says pension providers should be required to operate giving systems.
Bill Lane, joint chief executive of the agency South West Charitable Giving, said the report had "not looked closely enough at the present situation, not looked carefully at past history and the development of the scheme and not improved any conflicts of opinion that may already have existed between the institute, the agencies and the professional fundraising organisations".