Payroll giving: Make it a GAYE day

One way for employers to show their caring and sharing side is to make it easy for staff to donate to charities. The give-as-you-earn scheme enables this to be done via payroll. Scott Beagrie reports.

Many of us would happily join a company that has been recognised as having the most generous workforce in the land. The measure for this accolade is not how many rounds staff at high-street jeweller Beaverbrooks buy each other at the pub, but rather how many of them donate to charity through the payroll.

The family-run firm won two awards at the National Payroll Giving Excellence Awards last month, including the ‘best in show’ award after the payroll giving scheme it introduced a year ago saw a 25% take-up rate from staff in just eight months (see case study, opposite).

Payroll giving, or Give-as-you-earn (GAYE), was introduced in the UK in 1987 and allows employees to donate to charities from their pre-taxed earnings. The employee receives tax relief on the donation at the point of deduction, which makes it a cheaper way for employees to support a charity of their choice.

So, based on 2008-09 rates, a charity would receive a £10 donation at a cost of £8 to a basic rate taxpayer, or £6 for individuals in the higher tax bracket. Employers will often match the funding provided by employees. According to HM Revenue & Customs (HMRC), £104m was raised through UK payroll giving schemes in 2008-09, with about 1,300 charities benefiting. Although this represented a slight drop on the previous year’s figure of £109m, that figure followed a surge from £89m in 2006-07.


To some extent, payroll giving is a win-win initiative for everyone involved. It has a positive effect on employer brand and provides a low-cost and easy-to-implement strand of a corporate social responsibility (CSR) strategy; it provides employees with an affordable way to support their charity and, by dint of this, strengthens team spirit and increases the feel-good factor. Finally, of course, the nominated charity is also assured of receiving regular donations.

While other forms of fundraising have suffered in the recession, payroll giving has increased. Lee Grant, tax-effective giving project manager at the Institute of Fundraising, says that GAYE helps staff and employers continue to support charities in difficult times. “Employers can be seen to tick the CSR box without putting their hand in the corporate purse.”

Nevertheless, an independent review of payroll giving, carried out by Strategy Complete on behalf of the Institute of Fundraising, found that less than half of the UK’s workforce is covered by payroll giving schemes offered by employers. And while the numbers are steadily increasing, the review points out that the system is a long way from fulfilling its potential. Barriers to growth identified by Strategy Complete include preconceptions about bureaucracy, slow processing of donations and data, high levels of attrition as donors switch jobs, and difficulties in both the marketing to and reaching employees.

Raising the profile

Peter O’Hara, managing director of Workplace Giving UK, a professional fundraising organisation, believes many of the adverse comments in the review were based on charities’ perceptions rather than those of employers’, but admits that there is still work to be done to raise the profile of payroll giving in general, as well as within companies. He suggests that employers can over-complicate the issue through a lack of understanding. “They think it’s difficult and admin-heavy to operate, but once an employer is operating a scheme they find this isn’t the case,” he says.

Implementation of the scheme is relatively straightforward. An employer or pension provider signs up to one of a number of HMRC-approved payroll giving agencies (PGAs), which run the scheme on their behalf. Employees opting to participate fill out part of a form that authorises their payroll department to deduct the specified amount to the charity or charities they want to support and this is sent to the PGA. The agency is then sent the deductions and makes the payment to the various charities within 60 days.

PGAs will typically make a small administration charge for each deduction to cover costs, although an employer may choose to pay this on the donor’s behalf. Susie Nicholas, charity and wellbeing manager at Beaverbrooks, says her payroll department reckons payroll giving is the easiest scheme it administers, especially compared to dealing with benefits schemes such as healthcare and cycle to work.


Some employers also ask a professional fundraising organisation to help market the scheme. Whether you choose to seek external help or not, it is crucial that someone from within the company owns and champions it. Payroll giving can fall entirely within different job remits, such as comp and bens, payroll, CSR, or HR, but irrespective of the individual departments involved in the initiative, it is important that ownership falls to one department, so the scheme can be properly promoted, says O’Hara. “It doesn’t need a lot of work, it just needs someone to champion it.”

A lack of clear communication about the potential benefits of schemes is highlighted by some as one of the barriers to success. Karen Thomson, associate director of policy, research and strategic visibility at the Institute of Payroll Professionals, which ardently supports and promotes payroll giving, says that it often slips under the radar. “[Employers] must put a proper communication strategy in place and they can do it in several ways,” she says. “For example, they could put more information about it on payslips.”

Grant adds that this year’s excellence awards, backed by HMRC, show how imaginative some employers are at marketing the schemes. “Some companies run competitions and prizes – for instance, if you sign up you can have a director’s parking space for a week or you get to throw sponges at the senior management team,” he says.

Case study: Beaverbrooks

High-street jewellers Beaverbrooks has a long heritage of supporting charities. One of its stated aims is “enriching lives”.

The company, which has 830 staff and 65 stores across the UK, encourages employees to take part in fundraising and sponsored events and it also matches any money raised by its people for charity. Each year, Beaverbrooks contributes 20% of its post-tax profits to charity, so the decision to introduce payroll giving was “another string to the CSR bow,” explains charity and wellbeing manager Susie Nicholas.

Beaverbrooks introduced the scheme last year with the assistance of professional fundraising organisation Workplace Giving UK, and in the first year the company was able to boast a take-up rate of 31%, generating £37,000 for about 100 charities. “We’re supporting a huge selection of charities from national ones to smaller, local ones. Enabling our people to support their own favourite charity has been key for me,” says Nicholas.

The achievement brought two awards at this year’s National Payroll Giving Excellence Awards: Best launch and best in show. This success is partly due to the thorough marketing and communications exercise of the scheme. For the launch, Beaverbrooks arranged for representatives from Workplace Giving UK to visit each of its 64 stores.

“It’s great that we’ve won awards as an organisation, but they belong to everyone in that 31% [take-up rate]. It’s good for our image as an employer and we want other employers to see the success we’ve had with it,” says Nicholas. “If all employers did it, it would make a gigantic difference.”

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