The government has been urged to intervene as new research shows that payroll giving has declined by 7% year-on-year in the UK.
A report by the Charities Aid Foundation (CAF) shows that the total amount donated to charities via its Give As You Earn scheme fell from £137m in 2021 to £128m in 2022, the most recent year for which data is available.
The latest figures reveal that the number of employees using the salary sacrifice scheme has fallen by 13% since 2020 to 516,000, which is nearly 2% of the 30 million potentially eligible workers on PAYE in the UK.
CAF found that fewer employers are now offering payroll giving to their staff – around 4,000 out of more than 45,000 in the UK who could do so.
The Chartered Institute of Fundraising (CIoF) and CAF both said the decline in payroll giving was concerning and called on the government to help encourage more donations.
‘Concerning’ decline
CIoF director of policy and communications Claire Stanley said: “Payroll giving is such a valuable form of fundraising for our members, so it’s concerning to see it is not being utilised the way it could be.
“For those who are able to give, it’s tax-free so is even more relevant during tougher economic times.
“We are calling on the government – both current and next – to further enhance and promote incentives around payroll giving, highlighting the benefits of the scheme to employers and employees alike.
“Businesses can work with professional fundraising organisations or charity partners for support – who will handle the necessary documentation if payroll giving is promoted through initiatives like themed campaigns – and they could also offer to provide match funding opportunities for added motivation.
“It is a simple yet effective scheme that can hugely benefit charities with vital regular monthly incomes, allowing them to plan ahead with the funds they know are coming.”
Lack of public awareness
CAF also found 59% of people had not heard of payroll giving, which it said pointed to a need to increase knowledge and understanding among the general public.
Chief executive Neil Heslop said: “It’s concerning that the number of employers and employees taking advantage of this valuable benefit is declining.
“Payroll giving provides an incredibly powerful platform for companies to support their giving in the workplace and can be a lifeline for charities at a time when their incomes are squeezed.
“That’s why we would like to see a renewed and joined-up focus on promoting payroll giving from providers, employers and the government.
“For individuals who can afford to give, it’s a simple way to donate regularly or even on an ad-hoc basis to causes that matter to you.”
Government: ‘We strongly support payroll giving’
A government spokesperson said: “Charities are a vital part of our society, and the government continues to support them and their donors, including through the £1.6bn in gift aid paid to charities in the tax year ending 2023.
“We are currently working across government to further unlock the potential of philanthropy in the UK and celebrate those who give back to their communities.
“We strongly support payroll giving and are working closely with the Association of Payroll Giving Organisations to champion its National Payroll Giving awards, celebrating organisations dedicated to tax-free giving.”
