A new report reveals that the business sector has been slow to take up the payroll giving concept. Rick Millen looks at the reasons why.

A new report reveals that the business sector has been slow to take up the payroll giving concept. Rick Millen looks at the reasons why.

Payroll giving is an easy, effective and meaningful way for businesses to support the nonprofit sector. Yet new research shows that Australian businesses have been slow to embrace the scheme.

Three major organisations establish and administer payroll giving schemes in Australia: The Australian Charities Fund (ACF), Charities Aid Foundation (CAF) and United Way. Whilst they have reported a slow but steady increase in the number of nonprofits adopting schemes, the question still remained as to why many businesses have been reluctant to get involved.

In late 2008 ACF, United Way and CAF joined forces with PricewaterhouseCoopers and the Centre for Social Impact to conduct research into payroll giving programs.

The research was conducted in two ways: businesses known to have payroll giving programs were surveyed using an online questionnaire. Additionally, 150 companies drawn randomly from Australia’s 2,500 largest employers were surveyed. Telephone interviews were conducted with the person responsible for corporate social responsibility or community relations programs.

Key Findings

The resultant Giving Business report confirms that payroll giving is poorly understood by Australian workplaces. Nearly two thirds of Australian businesses without an established payroll giving scheme were not aware that such a scheme existed.

Among those organisations with established payroll giving programs, the research confirmed a low participation rate amongst employees: more than 50% of businesses estimated a participation rate of less than 10%.

Another third of businesses had less than 5% participation, however one in ten firms boasted employee participation of 25% or more.

Over half of participating businesses estimated their donations through payroll giving (excluding matching gifts) were less than $50,000 over the 12 months prior to the survey. Around a third raised less than $20,000, while a small proportion of businesses (4%) raised $400,000 or more.

A review of sector and survey data suggests the average annual donation per employee in 2004 was $190.

Barriers Cited by Business

The study crucially examined the perceived barriers to introducing payroll giving programs and the perceived barriers to expanding existing programs.

One third of businesses with an existing scheme identified limited time and resources as a major barrier to expanding their programs. The same number also reported that payroll giving was a low business priority. These findings demonstrate that senior management support is critical to the success of programs. Another third said that staff preferred to exercise other forms of charitable giving.

Among those businesses without a payroll giving program, the overwhelming reason given for not establishing a scheme (38%) was that it was too administratively complex, although three in five of the surveyed organisations with an active program dedicate less than 5% of a full time equivalent staff member to administering it.

The results of the research identify the potential for a much greater take up rate for payroll giving schemes by Australian businesses. The perception that schemes are difficult to set up and run sits at odds with the reality of implementing a successful scheme.

Case Study

PricewaterhouseCoopers (PwC) has established a payroll giving model that is simple and cost effective to run, and can easily be replicated by other organisations interested in helping employees make charitable donations.

PwC has had a payroll giving scheme in place since 2002. Twenty seven per cent of employees make a recurring monthly donation through the scheme to 23 charity partners.

With the click of a button, staff can elect which charities they would like to donate to and how much, using a customised database. Thereafter PwC’s foundation team downloads the data and forwards this on to the PwC accounts team (a process which takes no more than half an hour per month) to process. No additional paperwork is needed.

It can be used for fundraising events, for example Movember or World’s Greatest Shave, and for emergency appeals. In response to the recent bushfires in Victoria, PwC was able to build a database allowing staff to donate to the appeal with just one click.

CEO Mark Johnson launched the appeal by email mid-morning on Monday 9th February. In ten days some 3,500 people (69% of the PwC population) made a pledge, raising over $650,000 (including firm matching). The sense of pride generated amongst employees that they were able to move so quickly and, together, make such a significant contribution was palpable.

Payroll giving is a win for all concerned: businesses, employees, nonprofits, and the broader community. This research has provided an insight into the drivers of success for implementing or expanding a program and the enormous potential for expanding payroll giving in Australia.