Fundraising news, ideas and inspiration for professional charity fundraisers

Payroll Giving or Gift Aid?

Posted on 29 March 2008 at 3:21 pm
Viewing 13 posts - 1 through 13 (of 13 total)
  • 29 March 2008 at 3:21 pm #3096

    How do we introduce these two schemes when discussing corporate relationships?

    I’ll lay my cards on the table for debate. I work as a payroll giving advisor with Workplace Giving UK for a couple of days each week.

    However, before I started this form of fundraising I concentrated on making sure that Gift Aid donations were maximised with a few local charities.

    The two schemes have got me thinking now because Payroll Giving seems to have become the poor man in corporate fundraising land.

    For instance..

    I recently spoke to an ex premiership footballer when talking about his charity golf day.

    It turns out that he often donated to a number of charities during his career; sometimes as much as £10k in one go.

    While he knew about the Gift Aid benefits from his donations, having been asked to sign Gift Aid declarations, he didn’t know that he could reclaim Gift Aid on his tax return. His £10k donation for example would have saved him £2300 in tax.

    He then expressed alarm, at never being told about Payroll Giving. His £10k donation for example would have only cost him £6k!

    So, the questions are these:

    Are we giving best advice when chasing the Gift Aid £?

    How do we make the pitch and make the two schemes sit side by side instead of against eachother?

    Thoughts apprecaited


    31 March 2008 at 9:25 am #10404

    Hi, Jason

    Purely anecdotally, I think the simplicity of Gift Aid means that Payroll Giving will always be harder to sell – by the time I have explained to you that your donation will be deducted after National Insurance but before tax, saving you 22% 0n the cost of your donation but still giving the Charity the full net benefit (less the amount my PGA takes for administration) you’ve already lost the will to live, or at least fallen asleep.

    Gift Aid is so simple – tick this box and Uncle Alastair will add 28% on top of what you’re giving – that anyone can grasp the concept.

    My personal preference would be to revert to old-fashioned bottom-line payroll deductions with Gift Aid – simpler for the company too.

    Employment mobility also makes Payroll Giving much more difficult. In my youth you could canvas a worksite with a degree of confidence that most of the workforce would still be there 10 years later : where could you do that now?

    Having said all of that, few of us have the privilege of discussing donations strategies with the super-rich, and the rules in that area of the stratosphere may be different!



    Gerry Beldon FInstF
    Director, 26-01 CIC

    7 April 2008 at 5:35 pm #10418

    Thank you for your thoughts Gerry; much appreciated.

    I agree with your comment about people moving from job to job. It has been one of the more common excuses for not donating during my presentations/pitches.

    In the long run however, I do think we owe it to all our donors to explain about tax effecient giving a little more than we do already.

    For example:

    How many of us encourage donations via tax returns? My understanding is that this option is seldom used, with most charities having not even registered with HMRC to allow their charity to be included on the HMRC list.

    Last week I held a presentation to 82 Barclays pensioners at one of their lunch meetings. While plenty asked if payroll donations had to be included in their tax return, none knew of being able to donate any overpayment on their tax return, yet nearly all delighted in telling me that Gift Aid was staying at 28p!

    I know it’s a tough one to call; just how much time do we all have in asking for the money? But, in my opinion, if we are seeking to build relationships with our donors for the long term, isn’t it better to ask plenty of questions at the start to ensure best advice?

    Thoughts appreciated,


    9 April 2008 at 9:27 am #10421

    Hi, Jason

    A good point – it’s interesting that you have the time to discuss the options in your presentations – I think most of us probably spend most of our pitch time talking about the cause, and the “ask” gets stuck on the end as a bit of an afterthought.

    At the risk of opening a can of worms, should we be obliged to give Best Advice, as an Independent Financial Adviser is?

    Gerry Beldon FInstF
    Director, 26-01 CIC

    13 April 2008 at 9:55 am #10435

    Thank you for your comment Gerry; apologies for not replying sooner.

    At the risk of being slightly controversial…

    During the next fortnight I will telephone 100 charities and ask the following question:

    “I am looking to donate £10 per month to you; can you send me the details to do this?”

    I’ll try to make it a fair spread across the sector, i.e. large charity, medium and small.

    While I run the risk of being included in the mailshot campaigns for 100 charities in the future, it should be interesting to see what information comes back.

    I’m here to be shot down as I’m willing to suggest that the results will be as follows.

    100% Direct Debit & Gift Aid Declaration

    2% Payroll Giving Authorisation form included as well.

    So what? What’s the point Jase?

    Well, I’m also willing to suggest that if you asked all those working for your favourite charity, who were 40% taxpayers, how they donated to the charity, they’d all say by direct debit so that their donation was boosted by Gift Aid.

    The difference between Payroll Giving & Gift Aid is in THE ASK, as Gerry points out.

    Let me ask you this.

    “I want you to donate to my charity and save up to 40% every time you donate?”

    How many times have any of us asked that quaestion to a donor?

    That’s the ask for payroll giving. Offering a donor the opportunity to save while donating gets results.

    “You would be interested in saving and donating. Great. I can tell you that you qualify for a 20%/40% saving.”

    I don’t have to spend a great deal of time talking about the charity work, just how to donate and save.

    I’ll post more as I get some results. In the meantime have a go at offering the discount on donating to the next person you talk to. They’ll have never heard of it and you will quickly find out if they are a higher rate taxpayer.

    If they are a HRT, chances are that they will hold a senior position within a company who you can approach for further support; information a direct debit won’t give you.

    Comments welcome.


    13 April 2008 at 10:01 am #10436

    You and Gerry are absolutely right that the method and content of the ask is critical. I look forward to hearing if your hunch about the response is right. I reckon you’re right, but would love to hear that payroll giving gets a better promotion from the charities you contact.


    14 April 2008 at 9:31 am #10437

    I’m starting to get quite excited about this – the results will be fascinating.

    Did you ever hear Ken Burnett talking about his “Mystery Shopper” experience? He sent £5 to a number of charities (20? Howard may remember) with a note to say “I am a little old lady who has heard about your work. Please send me further information.”

    The results were something like :

    4 sent an acknowledgement
    2 sent begging letters
    his “little old lady” got six appeal letters from charities which weren’t on his list.

    The remaining 14 didn’t reply at all!

    I know the numbers may be out, but the principle is correct, and I can tell you it woke up the conference hall!



    Gerry Beldon FInstF
    Director, 26-01 CIC

    14 April 2008 at 1:43 pm #10438

    I sent five emails last night, and I am delighted to release the first batch of results.

    5 x Standing Order/Direct Debit forms with Gift Aid attachments for me to download, sign and return.

    0 x Payroll Giving

    More to follow.


    20 April 2008 at 9:29 pm #10447

    The results from the first full week of the payroll giving experiemnt are in.

    In between everything else I have been doing this week, including hosting a Prince for the last two days, I have only been able to contact 46 charities asking for details of how to donate my £10 each month.

    Of these 46 approaches I have had 26 replies, with the scores as follows,

    26 Gift Aid/Direct Debit/Standing Order forms.

    2 Payroll Giving

    Sadly some of the Gift Aid replies included charities who I already fundraise for via Payroll Giving as reported at the start of this thread.

    Need I go on?

    Well, yes as a matter of fact.

    You heard it here first, but payroll giving is about to get a bit of treatment by a Dragon.

    Duncan Bannatyne and Anne Snelgrove (Labour MP) are adding their weight to a campaign to raise awareness of Payroll Giving, which launches on May 19th 2008.

    Are we all ready? Seriously?

    Are we all donating tax effeciently? Are we ready for the influx of calls from our supporters, corporates and donors saying,

    “I didn’t know about payroll giving, I saw something with Duncan Bannatyne….”

    Wise up everyone; payroll giving is coming to bite you all hard.


    21 April 2008 at 8:15 am #10448

    I seriously doubt that anyone’s going to be bitten by payroll giving other than people who persist in flogging this dead horse. Yes, it’s useful where you have a strong relationship with a company whose workforce has slow turnover. But the reason why payroll giving hasn’t taken off (and why charities don’t offer it very often) is that most people want to separate their giving from their work, and people who are still pushing it as an unfairly neglected giving tool are ignoring that.

    It’s a solution to a problem that hasn’t existed since Gift Aid came in, and Gift Aid has currently gone from being level with it on tax efficiency to being a few percent more efficient. For the majority of charities (and I know there are some it does work well for) pushing payroll giving is wasting their precious donors’ time on something they already know the donor is unlikely to be interested in, for no benefit to donor or charity.


    21 April 2008 at 7:39 pm #10453

    Rewinding a little, the debate isn’t why payroll giving hasn’t taken off. Apologies if I strayed a little with my comment last night.

    The debate is about best advice.

    I’ll throw another example into the ring.

    On Sunday I was invited to attend a charity football match at a Blue Sqaure League Football Club.

    I had the pleasure of meeting the Board of Directors at the club together with a few ex footballers attempting to show us that they hadn’t lost their footballing skills, despite putting on the odd lb or two.

    The Chairman (or Woman in this case) was pleasantly surprised to hear that her charitable donations could be paid through her paypacket with a 40% discount. Unsurprisingly, no-one had told her about payroll giving until I met her.

    As a result of this five minute conversation, where I made the ask – ‘Would you like to save 40% on your charitable donations….’ I now have an invite to see all her staff at the global company she runs.

    Having already committed the football club to the charity I was representing for next season, I believe I have gone a long way to giving something back for the football clubs committment.

    Hopefully, during the next couple of months the profile given by Anne Snelgrove and Duncan Bannatyne, will prompt business men and women, such as those I met yesterday, to introduce payroll giving to their staff. After all payroll giving is offered as a staff benefit by the employer, not the charity.

    The challenge for a charity is to make sure that all their corporate supporters have a payroll giving scheme in place; thus ensuring that should a donor move from one job to another they will be able to continue to donate through their pay.

    In my opinion, charities that chose to ignore ‘best advice’ for their donors run the risk of losing them altogether.

    All I’m saying is that we, as industry professionals, should be prepared to offer best advice.

    30 April 2008 at 9:09 am #10469

    “My personal preference would be to revert to old-fashioned bottom-line payroll deductions with Gift Aid – simpler for the company too.”

    In what way is this simpler for the company?

    5 May 2008 at 3:11 pm #10476

    Hi, Heather

    With GAYE the company has to deduct the donation after NI, but before tax – causing an extra line of calculations for the payroll office! The company also has responsibility for collecting and sending on the donations to the Agency.

    If I had access to a workforce I’d rather ask for standing orders/direct debits with Gift Aid – then the money keeps coming when the workers move on, and the company’s only involvement is letting me in to canvas. And I don’t lose a fee to the Agency Charity!

    But only my own thoughts, you understand…



    Gerry Beldon FInstF
    Director, 26-01 CIC

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