News story

Government and charity sector commit to boost Payroll giving

Payroll giving allows UK tax payers to donate to charities straight from their wages or pension on a tax-free basis.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

Priti Patel signs the memorandum of understanding.
Priti Patel signs the memorandum of understanding.

The government today (Tuesday 24 March) signed an agreement with charity representatives and payroll giving agencies to raise payroll giving’s performance and profile, and enable charities to make best use of the scheme.

Payroll giving allows UK tax payers to donate to charities straight from their wages or pension on a tax-free basis. Payroll giving agencies then collect donations and pay out the money to charities.

Today’s payroll giving memorandum of understanding aims to increase transparency and clarity in information sharing between the government, charities and payroll giving agencies, so charities improve their payroll giving programmes and ultimately increase donations.

The memorandum includes an agreement to work towards a standardised disbursement report provided by payroll giving agencies to charities.

Currently, charities can receive reports from multiple agencies in different formats. As part of the memorandum, agencies will now start standardising their formats towards an agreed template to reduce the administration costs for charities and increase clarity.

The memorandum also includes a commitment to help charities find out the most successful avenues for recruiting donors. Payroll giving agencies will submit their donation figures to a database via an online portal. The data will then be collated and presented into a report, which will be available online.

Exchequer Secretary to the Treasury, Priti Patel, said:

Charities provide an invaluable contribution to our society and receive strong support from the government including tax relief on donations.

Payroll Giving is one of the most effective ways for donors to give money to good causes on a tax-free basis, and more than a million donors use the scheme each year.

The government has consistently supported ways that make it easier for people to give and this agreement will help charities and agencies get the most out of the payroll giving scheme to help more money go to good causes.

Chief Executive of the Institute of Fundraising, Peter Lewis, said:

We welcome the introduction of this memorandum of understanding for payroll giving.

Our members have been consistent in their belief that more and better data and transparency in the payroll giving system is needed so that charities and fundraisers are able to grow Payroll Giving income across the UK.

I’m particularly pleased that this memorandum has come about through consultation and engagement with payroll giving agencies and charities talking together and agreeing the terms of the document and the standardised reporting mechanisms.

Payroll Giving is dependent not only on the generosity of employees and the commitment of employers, but also on the successful relationship between charities and payroll giving agencies.

This memorandum will help to standardise that relationship and give everyone a greater depth of information on what’s happening with payroll giving which will allow charities to better plan fundraising campaigns to grow this important source of voluntary income

Payroll Giving Manager at Save the Children and Chair of the Payroll Giving Special Interest Group, Mervi Slade, said:

The IoF Payroll Giving Special Interest Group welcomes the memorandum as the long-awaited first formal agreement between charities and payroll giving agencies.

A standardised approach to payroll disbursement statements will reduce administration, with the potential to provide charities with more information about their supporters.

In turn, this will allow charities to communicate more meaningfully and effectively with their supporters.

We also really look forward to seeing the bigger picture that will emerge from the more in-depth sector-wide annual reporting from the PGAs. The PGSIG and others pushed for this in order to bring greater credibility and transparency to Payroll Giving in the UK.

The government previously consulted on ways to improve payroll giving and its response made several commitments for action including passing regulations to reduce the handover time from 60 to 35 days, which has already come into effect.

The government also committed to a service level agreement (SLA) between PGAs and charities, and this has today been implemented as a memorandum of understanding (MoU).

Published 24 March 2015