New proposals to make it quicker for charities to collect donations and easier for employers to encourage charitable donations using Payroll Giving have been announced by the government, with the Institute of Fundraising responding positively to the moves.

Following a consultation, the Government is to almost halve the processing time for donations from 60 to 35 days, allowing charities to access the money that has been donated more quickly.

The Government will create improved webpages that will provide an online presence for donors, employers, charities and Payroll Giving agencies.

The Government will be hosting a series of working groups, involving charities, Payroll Giving agencies and other stakeholders, to help Payroll Giving agencies and charities consider further improvements to the Payroll Giving process.

Payroll Giving enables individuals to donate money to charity directly from their salary via their employer, meaning that their donation is made free from income tax.

This means that the charity receives the full donation upfront, rather than having to reclaim the tax afterwards, as through Gift Aid.

In 2012 to 2013, Payroll Giving raised £124 million for charities from 750,000 donors.

Over £1.4 billion has been donated using this method in the last 25 years. However it is thought that the total amount collected could be considerably higher.

The economic secretary to the Treasury Sajid Javid, said: "The Government is strongly supportive of charities, and has introduced a number of measures to encourage charitable giving.

"Payroll Giving provides a unique way for employers to encourage and champion donations, and the government is committed to increasing the amounts raised through Payroll Giving.

Cabinet Office minister Nick Hurd added: "These are useful steps in making Payroll Giving work better for donors, employers and charities. They are part of our broader strategy to make it easier and more compelling to give.

"This support for Payroll Giving follows a number of measures to support the charitable sector by the government, including the Gift Aid Small Donations Scheme, the Cultural Gift Scheme, and introducing a reduced rate of inheritance tax for estates that leave a significant donation to charities."

This response follows a consultation that ran from January to April 2013, and took in views from charities, businesses, individuals, professional fundraising organisations, and Payroll Giving agencies.

IoF: Pleased to see Government has reaffirmed their commitment
The Institute of Fundraising responded positively to the Government action.

Daniel Fluskey, head of policy and research at Institute of Fundraising, said: “We are pleased to see that Government has reaffirmed their commitment to making Payroll Giving a success. It’s an area of fundraising which we believe could work better for employers, for charities, and for donors.

“We have long believed that more fundamental changes are needed to really allow Payroll Giving to achieve its potential. While the developments from this consultation won’t solve all the problems, they are a step in the right direction.

“It is particularly welcomed that Government have listened to the calls from us and our members and will be looking to introduce a ‘service level agreement’ between charities and Payroll Giving Agencies, as well developing useful web resources to support the scheme.”

Jane Banks, Payroll Giving manager at the British Heart Foundation and chair of the Institute of Fundraising’s Payroll Giving special interest group, added: “After months of hard work from all stakeholders we are glad to see that progress is being made.

"A portal that holds in one place those employers who offer Payroll Giving will make it easier for charities to fundraise and employees to give through their workplace.

“The IOF SIG committee look forward to working with the Government on the detail of the proposals and are encouraged by the direction taken.”

CTG: Concerned the proposals will not deliver
The Charity Tax Group (CTG) issued a statement, in which it said, it supported the stated desire to increase the current levels of take up: the two per cent of employers offering schemes and three per cent of employees donating.

However, CTG said it was concerned that the proposals set out will not substantially deliver the stated aims because they do not go far enough.

"The resources available for investing in Payroll Giving need to be focused on those areas that need attention – take-up, portability, simplicity and efficiency," said the statement.

It added: "While a number of the proposals outlined by the Government are welcome and will have a positive impact on payroll giving take-up we feel that the Government has missed the opportunity for a more radical approach than was set out in the consultation document.

"We believe that more needs to be done to give charities greater control over donor relationships through Payroll Giving.

"There also needs to be a much greater effort by the Government to influence the take-up by big businesses, particularly at senior management level.

"CTG supports the key principles of universality, connectivity and portability in a reformed payroll giving system, and many of these issues remain unaddressed."

Workplace Giving: Deeply disappointed
Though Peter O’Hara, managing director of Workplace Giving UK, expressed deep dissatisfaction at the Government changes: “Overall we are again deeply disappointed that the Government has missed a vital opportunity to make the changes needed to Payroll Giving.

"We were very sceptical when the Consultation was first launched and our worries now appear to be correct.

"The announcement in the reduction of days for processing donations will make no difference, overall 80% of donations flow through the current system within a month and the delays caused around the other 20% are due to employers not understanding their obligations with administrating processes.

"There is no mention of how the Government plans to deal with this. We made this very clear in our Consultation response, and are shocked that this was not understood by Government.

"If the Government have taken note of the portal idea Workplace Giving UK first put forward to them between December 2011 and February 2012 we think this is at least a step in the right direction for the scheme, but this may only be another online set of information that already exists rather than an interactive and engaging web presence that allows any employee to find out if their employer actually offers the scheme.

"Furthermore there was no recommendation covering the modernisation of the scheme to encompass new ways of giving through digital media."

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