What on Earth is Payroll Giving?
Payroll Giving has been around for ages, but this might be the first you’ve heard of it…
Dropping some coins in a charity bucket is practically second nature for most of us. Many of us donate via monthly direct debit to our favourite charity. We’re largely familiar with Gift Aid, even if we’re not entirely sure how it works. But in spite of predating Gift Aid by three years, Payroll Giving remains something of a mystery to most people.
The idea is simple: employees give a set amount to a charity of their choice each month directly through their pay, with tax relief being immediately applied. In practice this makes payroll giving one of the easiest and most tax-efficient ways to give. The scheme is run by the Government.
One of the reasons you may have never heard the term ‘Payroll Giving’ is that very few charities actively promote it. Any registered charity is eligible for the scheme, but few are signed up with Payroll Giving Agencies. Small charities should be doing amazing frontline work, not paperwork; many don’t have the resources to liaise with companies to secure donations through the scheme; it is simply too time-consuming to be worthwhile.
Fortunately, Norfolk Community Foundation’s position as both a charity and a funder of charities neatly addresses this dilemma. Ordinarily, employees pick a charity they want to support, and their employer arranges that charity to be paid through a Payroll Giving Agency. At Norfolk Community Foundation, we act as both an Agency to manage the scheme and a charity to which donations can be given. Firstly, this removes any admin costs. Secondly, our broad range of funds to direct your donation to means more of your money goes to causes you care about. Finally, because we provide funding to many of Norfolk’s smaller charities, we can let them get on with the great work they do without having to manage any of the administration.
The donations that come into Norfolk Community Foundation funds, such as the Love Norfolk Fund or the Sir Norman Lamb Mental Health & Wellbeing Fund, are then distributed to our voluntary, charity and social enterprise partners to affect real change in Norfolk communities.
Payroll giving is a great way to give. Your workplace may already have a scheme in place, and if they do not it is usually very easy to set one up. Still not convinced? Check out our myth-busters below…
Payroll Giving myth-busters!
1. Payroll giving costs me more.
Because your donations comes from your pre-tax pay, with the tax relief being applied after, you only pay 55-80% of you total donation.
2. Payroll giving is less effective than using Gift Aid.
Gift aid offers a flat 25% boost on top of donations. With payroll giving, employees on a higher tax rate get a full 40% boost on their donation. Additionally, charities do not have to claim this tax benefit back on Payroll Giving as they do on Gift Aid, as it is done automatically before it reaches them.
3. There’s a 5% charge on my donation.
Payroll Giving Agencies reserve the right to charge a 5% admin fee, but if you set up a scheme using Norfolk Community Foundation as your Payroll Giving Agency and choose donate to one of NCF’s funds, there is no admin fee at all – meaning 100% of your donation goes to a cause you care about.
4. It’s complicated to set up.
Whether you’re a charity or an employer, all you need to do to set it up is talk to one of the 22 UK Payroll Giving Agencies, such as Norfolk Community Foundation. If you’re an employee and your employer runs a scheme, all you need to do is ask to join it.