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Institute returns £4m ‘underspend’ to Government

Institute returns £4m ‘underspend’ to Government

The Institute of Fundraising has returned £4m to the Office of the Third Sector after it failed to spend almost half the £8.3m set aside for promoting payroll giving to small and medium sized enterprises (SMEs).

Tina Steele, payroll giving project manager at the Institute, said there had been a deliberate ‘over budgeting’ on the scheme. “What the Government – and the Institute – wanted to do was make sure it didn’t run out of funding so to have something in reserve was a prudent way of looking at it”, she said.

It could have been run on a first come, first served basis, but it was more realistic to make sure there was some money over and above what was budgeted for. She said the situation that arose could be viewed as too careful budgeting.

Asked what could have been done differently to use the funds Steele said:

“With hindsight Government and Institute of Fundraising would have liked another year to make the most of what had been achieved. We would have seen more of an opportunity to encourage SME companies to get involved, but some of them didn’t get engaged with the scheme until the last three months.”

The scheme had two parts: one to engage SMEs in payroll giving grants programmes (which exceeded its target by signing up 3,380 employers) with a grant of between £300 and £500 to cover start-up costs; and the other to match any gift of up to £10 by an employee for six months. It was the second part of the programme that fell so short. The budget was originally for between 32,000 and 70,000 sign-ups, but only 18,000 employees took advantage of the match-funding element.

Steele said that if the scheme had run for a further year there was no doubt the whole budget would have been used up. She also pointed out that it is sometimes difficult to get employers to promote a payroll giving scheme because it is voluntary and not mandatory.

She also said that the majority of SMEs had elected to run their own schemes rather than using a professional fundraising organisation (PFO) to run it for them. We would always advocate that any employer with more than 100 employees uses a PFO. They can do everything much more quickly and efficiently, she said.

Peter O’Hara, managing director of professional fundraising organisation Workplace Giving UK, said he was very upset that the money was not going to be used for payroll giving, although he was glad it would be used for other charitable purposes. Some employers – and some charities – still see it as over complicated. Charities don’t view it as an easy way to fundraise, he said, but it is the most tax-effective way to do so, particularly for higher rate taxpayers.

Bill Lane of payroll giving agency South West Charitable Giving said that he feels payroll giving is “steadily” becoming better understood by employers. “It takes a long time to get anything like this established,” he said. “Payroll giving will steadly grow and I think in 20 years it will be the norm for anyone in work.”

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