Increase in payroll giving donors ‘could not have happened in one year’
Howard Lake | 16 January 2014 | News
There is confusion over what might have caused an apparent surge in payroll giving in the last financial year, with one expert saying the reported rise would have been impossible in just 12 months.
And HM Revenue and Customs – which compiled the information – has implied that much of the increase might be accounted for by changes in data reporting by payroll giving agencies.
Updated figures released by HMRC at the end of December showed that there were 1.02 million donors enrolled on payroll giving schemes in 2012/13 – the first time the number of people donating through their salaries has reached this milestone in any one year – making total donations of £155 million.
That represents an increase of 31% on the £118 million given through this type of fundraising in 2011/12 and a 39% increase on that year’s 735,000 donors.
But initial figures released by HMRC last summer recorded that amounts donated through payroll giving had increased by just £6m in 2012/13 to £124 million, while the number of donors stood at 750,000 – a two per cent increase on the previous year.
While the revised results have been welcomed as good news by many involved in payroll giving, the revised version of the HMRC report – UK Charity Tax Relief Statistics 1990-91 to 2013-14 – says only that the figures “may” represent an “actual increase”, and qualifies the increase in donors as “apparent”.
The HMRC report says: “The increase in the number of donors seen in 2012/13 may represent an actual increase in the use of payroll giving. However, at the same time, there has been a substantial change in the data systems used by some payroll giving agencies, which may also help to account for the observed increase.”
HMRC adds that the jump in figures “may well be connected” with its own change in reporting procedures from quarterly to annual returns in 2012/13.
Confusion over what has led to increase
If the HMRC figures are taken at face value, there is a lack of consensus as to what might have caused the increase.
Tina Steele – the former payroll giving specialist at the Institute of Fundraising – said that the IoF’s payroll giving special interest group (SIG) has contacted HMRC to “try to get to the bottom of the situations regarding the revised figures”.
She said:
“There is no way that the increases reported could have been achieved in one year. Hopefully we will get a comprehensive response from HMRC to the request for clarification. I also think that the figures quoted over the previous years are accurate. I used to receive all the figures on a quarterly basis and am reasonably sure that there was no mis-reporting.”
Advertisement
A spokesperson for payroll giving agency Charities Trust said the agency had not changed its reporting procedures at all.
“We don’t know what this change has been caused by. We have sought clarification from HMRC and we’re waiting for them to come back to us.”
Bill Lane, director of payroll giving agency Charitable Giving, said that while there had definitely been an increase in payroll giving, the general feeling among charities and agencies was that “HMRC has got it wrong”.
Underlying ‘steady growth
HMRC concludes that, because of the “turbulence” around data collection this year, focus should be on the “underlying behavior” of “steady” growth.
There has been a steady increase in the number of donors giving through their salaries over the past 20 years – climbing at a steady rate from 280,000 in 1990/91. The only other time there has been a sudden jump in the numbers of donors and total donations was between 1999 and 2001, when donations made under the Children’s Promise were included.
The number of donors appears to have plateaued between 2007 and 2012 before 2012/13’s sudden hike. In this five-year period, the average number of payroll giving donors varied between 720,000 and 758,000, (with an annual average of 738,000 donors), making average annual donations of £110 million.
But this does not satisfy critics of payroll giving such as Joe Saxton, who says there are “structural problems” with payroll giving – such as charities not owning contact information for donors – that any rise in numbers of donations or donor won’t fix.
“We need to disentangle ‘workplace’ giving from payroll giving,”
he said.
“Promoting regular giving by Direct Debits in the workplace would give charities more control and would be cheaper to do.”
He added that it was “worrying that HMRC doesn’t know how to count the number of payroll giving donors accurately”.
HMRC told UK Fundraising it could not provide any further information over and above what it has already published.
About Howard Lake
Howard Lake is consultant editor of UK Fundraising. He founded the site in 1994 and successfully sold it in 2022. As director of Giving X Ltd he is exploring growing giving on a massive scale.
He is the founder of Fundraising Camp and co-founder of GoodJobs.