Eighty-three per cent of millennials say they would be more loyal to a business that enables them to contribute to social problems.
Clearly, in today’s competitive talent market, there is an increasing need to offer engaging experiences to retain employees.
However, although most companies realise the importance of employee engagement, the majority find it very challenging to find something to actually engage employees with.
Payroll giving is something to consider – through our Give As You Earn (GAYE) scheme over 2,500 companies and their staff to give over £74m to charity each year. Since 1987, over £1.3bn has been given.
What is payroll giving?
Payroll giving is a scheme that enables your employees to give to any UK charity straight from their gross salary (before tax is deducted), and to receive immediate tax relief. Charities also don’t have to claim Gift Aid, so there’s less administration for them and they can plan and budget for the future based on the regular, reliable donations received through payroll giving.
How to get started
There are several reliable, accredited payroll giving providers in the market, each with their own unique offerings. Using my own scheme CAF as an example, we offer three ways for employees to give through their pay:
#1 – Direct to charity
Employees sign up online, choose which charity/ies they want to support and their donation is passed directly to their chosen cause.
#2 – Charity account
The donation is deducted in the same way but goes into an employee’s own personal account, which they can then access online and make onward donations. Donors can either set up standing orders to support charities of their choice or make ad-hoc donations, sponsor a friend or colleague or support a specific appeal.
#3 – Staff charity fund
Employees’ GAYE donations are pooled so that staff can make a more substantial donation to the charity/ies of their choice.
What are the benefits for the company?
#1 – Helps achieve wider CSR objectives
Payroll giving enhances existing corporate social responsibility activity; GAYE can be utilised as a tool to drive employee engagement and help achieve broader CSR objectives.
#2 – Creates positive PR
Demonstrates your company’s commitment to supporting the community to wider stakeholders and show employees that you care about the things that are important to them.
#3 – Serves as a differentiator
Provides external recognition for charity contributions through government-recognised quality marks to contribute to making you a preferred employer.
#4 – Helps you understand your staff better
The data generated provides companies with better insight into what employees care about, which helps to create a more driven and engaged workforce.
#5 – Simple to administer
Payroll giving offers a digital-friendly user experience to deliver online support for processing which means that you don’t need a dedicated person to administer your scheme.
What are the benefits for charities?
Payroll giving provides charities with regular, reliable donations that they do not have to claim Gift Aid on. This means less admin for charities, allowing them to plan and budget for the future.
What are the benefits for employees?
Payroll giving is a simple, tax-effective, hassle free way to give to charity. The system is easy to opt in and out of, giving donors full control over their giving.
How can we boost engagement around payroll giving with our employees?
There are various ways of increasing engagement around payroll giving. Some employers choose to match what their employees contribute via GAYE, which serves as a great motivation for employees, knowing their employers help support causes they care about.
A Professional Fundraising Organisation (PFO) specialising in face-to-face engagement with employees can bring life to a promotional campaign and boost sign-up.
How does it work for employees?
Payroll giving comes out of your salary after national insurance, but before tax. This means that you get tax relief on your donation that can be passed onto your charity. If you’re a higher tax rate payer, then this benefit increases.
Here’s an example of how it works:
You’re a standard taxpayer at 20 per cent and make a monthly donation of £20 to your chosen charity. When the money is taken from your salary, you’ll be paying £16 but the remaining £4 will be money you would have paid in tax and not seen in your wages anyway. So, in reality, it has cost you £16 to give £20.
What’s the difference between Gift Aid and payroll giving?
If you’re a UK taxpayer and opt to include Gift Aid on a direct donation, the charity can claim back an extra 25p from the government for every £1 you give. This is great for the charity, but they still have to reclaim the Gift Aid.
Payroll giving simplifies that process; the charity receives your gift straight from your salary before tax is deducted. This means that it not only costs you less, but the donation that the charity receives includes the tax relief, so they don’t need to claim Gift Aid back.
Whether you’re a huge multinational corporation or a smaller, private company, payroll giving offers your organisation a range of incentives. You can engage with employees on issues that matter to them, build your reputation as a responsible, forward-thinking employer, and enable charities to help the most vulnerable people in our society.
Klara Kozlov is head of corporate clients at Charities Aid Foundation