Payroll Giving is a simple way for employees to make regular
gifts to charity directly from their pay before tax is deducted,
thereby reducing the cost of them making regular gifts to
charity. It is also known as Give As You Earn (GAYE) or
The advantages of payroll giving include:
- Once they have signed up most employees continue giving whilst
they remain with their current employer, therefore it provides a
regular, reliable, unrestricted source of income
- It is easy for the donor to set up
- As the gift is pre-tax it costs the donor less
- It is good for employers to offer as part of their Corporate
The amount donated by payroll giving is continuing to grow, with
£114 million donated in 2010/11 by 720,000 employees. Over
8,000 employers in theUKhave a payroll giving scheme in place.
How it works - Payroll Giving Agencies
For an individual to make a donation to charity by payroll
giving their employer first of all has to sign a contract with a
payroll giving agency (PGA). Payroll giving
agencies are themselves registered charities that are approved by
HMRC to administer payroll giving.
Currently there are 14 PGAs to choose from across the UK.
Most PGAs make a small administration charge for carrying out this
service, however WCVA has entered into partnership with one of
these agencies, Charitable Giving, whereby WCVA will pay the
administration charge meaning that all of an employee's donations
will go to their chosen charity. For more information on the
charitable giving scheme see the Charitable Giving website where you can
download an Employers Pack which includes the contract which needs
to be signed.
For an employer to get started with payroll giving the first
step is to complete and return the contract. In response to
Clause 3 "It is agreed that the administration charge will be paid
by ..." tick "Another organisation" and enter WCVA in the
box. Once the contract has been signed thePGAnotifies HMRC,
this means that the employer can begin to deduct donations from
If you haven't already got a payroll giving scheme in operation
in your own organisation then setting one up is one of the best
ways of understanding how it works in practice.
How it works - Employees
For an employee to sign up they simply complete a
Donation Choice Form distributed by the employer
and state how much is to be deducted each month. Once
completed the forms can be given to the payroll officer or if the
employee would prefer to keep their instructions confidential they
can send the form directly to Charitable Giving, in which case the
employee simply notifies the employer of the total donation to
deduct from earnings.
The same form can be used to begin payroll giving, to cancel an
instruction or to make alterations to their instruction.
- Employees can make donations to any recognised charity, church
or charitable organisation.
- They can give to as many organisations as they wish.
- The minimum donation is £5/month or £1/week.
- Payroll givers give £7-10/month on average.
- Employees can choose whether they wish for their details to be
passed onto their chosen charities.
How it works - the tax relief
Since deductions are made before PAYE tax, employees receive all
the tax relief for the donation at their top rate of tax. For
example, a £10 donation will cost a basic rate taxpayer £8, a
higher rate taxpayer £6 and the highest rate taxpayer only
Promoting payroll giving
There are three broad options for promoting payroll giving:
- Employ aprofessional fundraising organisationto promote payroll
giving to employees on your behalf as one of a basket of charities
that they promote;
- Set up apayroll givingconsortiumof charities in your local
community to appeal collectively to local employers;
- Or Do-it-yourself
Do it yourself
You should make every effort to promote Payroll Giving yourself
and make contact with employers where you have contacts, or who are
likely to be interested in your work. The advantage of this
approach is that you are promoting your own cause and a more
direct, personal appeal is likely to be more persuasive.
Promoting payroll giving - Benefits for an
- As part of an employer's Corporate Social Responsibility
- Enhances the employer's public image
- Demonstrates community involvement
- Shows support for the causes that matter to employees
- Aids in the recruitment and retention of staff, as employees
like to work for a caring employer and the scheme is considered a
- Boosts staff morale
- Receipt of a Payroll Giving Quality Mark and, where target
employee participation levels are met, an Award
- Potential eligibility to enter the government supported
National Payroll Giving Excellence Awards
- Any costs incurred in setting up a scheme and promoting it to
staff, may be offset against Corporation Tax as tax deductible
- Little administrative burden, low cost to set up and
Payroll Giving Quality Mark
The Payroll Giving Quality Mark recognises and rewards
organisations for making Payroll Giving available to their
staff. Once organisations set up a Payroll Giving scheme, they
will automatically receive a certificate as well as the Quality
Mark logo for use on letterheads, websites and other company
The Quality Mark acknowledges Payroll Giving has been
implemented and demonstrates (both within the organisation and
publicly) that the organisation is committed to the good causes its
employees care about.
Depending on the take up of the scheme, employers may be
eligible for a Bronze, Silver, Gold or a Platinum Quality Mark
Award. For more information about the Payroll Giving Quality Mark
Awards see www.payrollgivingcentre.com.
National Payroll Giving Excellence Awards
The National Payroll Giving Awards Event is held
annually in the autumn to celebrate the efforts of employers,
charities and professional partnerships in promoting Payroll Giving
in the workplace. Any employer who has achieved a Bronze, Silver or
Gold Payroll Giving Quality Mark Award Certificate is eligible to
apply for entry to the National Payroll Giving Awards.
The Awards and Event are funded by HM Government, organised in
conjunction with the Institute of Fundraising and administered by
the Payroll Giving Centre. The Payroll Giving Quality Mark Awards
Certificates are issued annually to employers with a Payroll Giving
scheme in place and achieve specified levels of participation.
Payroll Giving Consortia
Some employers do not allow individual charities into the
workplace to promote their causes. Usually, this is either because
the employer is concerned about setting a precedent of allowing
charities into the workplace or sees no relevance to the approach
being made by that particular charity.
So what is likely to appeal to such an employer? The development
of charity consortia, particularly those formed by small local
charities operating within a defined geographical area, can be a
particularly appealing proposition for businesses.
Not only does the option of presenting a consortium to employees
to support through Payroll Giving appeal to employers but in the
workplace the opportunity for an individual to give to a number of
causes with one donation is also very popular.
For further information on setting up a Payroll giving
consortium see the WCVA Information Sheet. For an example of a
charity consortia in Wales see www.swanseacharitypartnership.org.uk.
Professional Fundraising Organisations
A Professional Fundraising Organisation (PFO) is an organisation
which promotes payroll giving to employees. They undertake
workplace campaigns and represent a 'basket of charities' for
employees to select from. Currently approximately 80% of all new
payroll givers in the UK are signed up by PFO canvassers. The Association of
Payroll Giving Organisations represents both Payroll Giving
Agencies and Payroll Giving Organisations.
To find out more about how to get started with Payroll
Giving book onto one of Giving Wales popular
Introduction to Payroll Giving training