Employee donations

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If you have good links with an organisation then actively exploring Payroll Giving is a must – it is low cost and highly tax effective!

Payroll Giving is an underexploited area of fundraising. As a tax framework in operation to help charities it started in 1987, and has risen from £1million per year to approaching £90 million now. It is highly cost effective for the employee donors and very cost effective as a fundraising method for the charity. Furthermore once signed up donors stay loyal, often for 10 years or more.

The payroll giving scheme

Payroll Giving is a flexible scheme that enables employees to donate to any UK charity straight from their gross salary (before tax is deducted), and to receive tax relief of up to £4 for every £10 donated. 

It is a tax-effective way for an individual to make a regular gift to one or more charities directly from their salary. It provides UK charities with a regular reliable income stream, allowing them to plan ahead and budget for the future. It is easy to set up and donations continue automatically, often for many years. Further details of how the scheme works can be found at the Tax Effective Giving website.

The donation is simply a pre-tax deduction that provides the donor with instant tax relief at their highest rate of tax. It costs a basic rate taxpayer £8 to make a £10 gift through Payroll Giving, and a higher rate taxpayer just £6 for the same £10 gift. 

How to make payroll giving work for you

You have to work through a Payroll Giving Agency which will handle and advise on the procedures involved. The largest is CAF and a full list to choose from is on Payroll Giving Centre.

The same site also gives advice on how to promote the scheme to companies and employees, but essentially you have to get in there and persuade managers and employees to give support.

Companies often match their employees’ donations and there is a Quality Mark Awards scheme that is funded by Government and issued by the Institute of Fundraising for certain participation levels. The National Payroll Giving Excellence Awards is an annual event held at HM Treasury that showcases employer excellence Payroll Giving.   

Payroll Giving also offers charities a unique way to combine fundraising and building donor relationships with corporate community investment.

Useful links

• CAF Give as You Earn toolkit - make your campaign a success.
• Payroll Giving Centre has information for charities, donors and employers.

Have your say

Talk to others about employee donations on our Fundraising forum.