Charity donations via payroll catching on

01:51, Jul 05 2010

Employers, employees and charities alike have welcomed a new payroll giving scheme.

The scheme took effect in January this year and allows employers to deduct donations from workers' pay, and reduce their PAYE tax by the appropriate tax credit, and send donations to employees' chosen charities.

It seems the idea is catching on.

Preliminary research conducted last year by Foresee Communications, which offers a payroll giving advisory service to employers, showed few employers had heard of the scheme and even government departments were unaware of it.

However, since then the Office of Community and Voluntary Sector, Philanthropy New Zealand and Inland Revenue have taken up promotional campaigns, all employers have been sent information from Inland Revenue, internal promotions within government have been successful and major employers such as Inland Revenue and the Ministry of Social Development have started offering the scheme to employees.

Many non-profit organisations and charities are exploring this new form of giving and Foresee Communications says there are good numbers at the workshops it runs.


Director Heather Newell says organisations such as Greenpeace, Barnardos, Oxfam and Amnesty International have investigated various collaborations to push promotional opportunities with both corporates and existing supporters.

"It's early days yet but it's most gratifying to see a very positive response from many quarters," says Revenue Minister Peter Dunne.

"I think this scheme has the potential to make a real difference . . . this really is a vehicle that makes generosity and kindness practical and simple to apply."

Under the payroll giving scheme, individuals can claim one third of every dollar they donate up to the value of their total annual income. Previously, refunds were limited to $630, no matter how much an individual donated.

Businesses can now claim a tax deduction of up to 100 per cent of their charitable donation to the maximum value of their annual net income before taking into account the deduction. The benefits of the latest legislation operating through the tax PAYE system allows people to receive the tax benefits of their donations each payday, without having to present donation receipts.

Mrs Newell says one of the key factors to promoting payroll giving to employers will be an understanding of the benefits they receive.

Research undertaken in New Zealand in recent years shows that employees feel good about an employer who supports a cause they believe in.

However, Mrs Newell says the most effective way to ensure the success of the scheme will be through promotions and marketing to businesses.

"The role played by payroll software providers will be vital in assuring employers that the benefits outweigh the costs."

Wellington-based iPayroll was the first company to launch a payroll-giving solution for its customers.

So far it provides the details of 11 charities on a drop-down menu on its website, among them the Cancer Society, Life Flight Trust, Arthritis New Zealand and Family Planning.

iPayroll managing director Martin Gleeson believes eliminating administrative time and effort for employers - iPayroll does all the work on their behalf without charge - not to mention potential frustration, will ensure that its giving service is successful.

The Dominion Post