Workplace giving programs are in the spotlight as a tool for reaching Australia’s national target for philanthropic giving. This donation method does present real opportunities – for the socially responsible employees and businesses, and for the NFPs that receive their generosity.
Prior to the election it was pledged that an Albanese Labor government would “work to double philanthropic giving by 2030 by engaging collaboratively with the charitable sector.” As Andrew Leigh, Assistant Minister for Competition, Charities and Treasury, noted in a pre-election press release, this target would simply “bring charitable donations as a share of GDP into line with countries like New Zealand”. Late last year he recommended more action to support workplace giving programs, saying, “The sooner we can remove barriers to workplace giving, the better our whole community will be.”
Official workplace giving programs, also known as “payroll giving”, have been around in Australia for many years, and this new focus may result in greater engagement.
How workplace giving works
An Australian employee donates a portion of pre-tax salary under a giving program. The employer then matches that contribution. The employee donation is reported through the employee’s tax return, using the “workplace giving” category.
The ATO records for 2020–2021 suggest that around 4.3 million Australians have a workplace giving program at their place of work. Around 4.7 per cent of these workers participate in a program. On average they give $258 per annum. Interestingly, employees of micro-businesses were most generous, contributing $714 per person on average, compared to government employees at $169 each.
Potential growth to benefit NFPs
In the USA more than 49% of nonprofit respondents identified workplace giving as a growth strategy for their organisation.
At a recent roundtable with the Business Council of Australia, Assistant Minister Leigh said that “Workplace giving in Australia isn’t living up to its potential, but applied correctly, it could help get Australia to its charitable giving target by 2030.”
Does it work well in other countries?
In New Zealand, where it is known as ‘payroll giving’ employees inform their employer of the charity they want to donate to, as long as it is on the list of inland revenue approved organisations. NZ Inland Revenue figures show that over the past decade payroll giving donations climbed to $71 million per annum in 2022 (from $2.3 million in 2011).
In the UK it is estimated that more than a million people donate to charities through “payroll giving”. More than 8500 organisations facilitate the programs for their employees to donate. An estimated 2 billion pounds has been raised for charitable causes through payroll giving.
February 2023 will be Payroll Giving Month, celebrating 35 years of payroll giving in the UK.
In India, where corporate social responsibility laws require companies to give 2 per cent of their profits to charity, it is estimated that payroll giving will grow at 30% and 50% annually. Microsoft India’s Corporate Giving Campaign is one of the largest corporate giving programs in the world. It is based on three aspects – the employee contributions via payroll, the Microsoft Match program and an Employee Volunteering Policy.
In the USA, a survey of employers found the majority of companies (66%) have an ‘open’ matching gift program, which means that employees can donate to most non-profit organisations and the company will match that contribution. (Source: America’s Charities Corporate Benchmarking Analysis). The surveys suggest average employee participation in employer matching gift programs is 10% in the USA. This compares to about 4.7 % in Australia. A survey of approximately 1,200 workers across the U.S. by Fidelity Investment, found that: 42% of respondents said it was important for employers to match employees’ charitable contributions through a workplace giving program. Among millennials, it was 75%.
The US trends suggest that in Australia will also see an increase in workplace giving in the future. With the younger demographic notably more motivated by corporate social responsibility, as they start to replace older members of the workforce the take up of workplace giving should increase.
Next Dimension Accounting will stay across Workplace Giving updates and work with our clients to ensure they are able to take advantage of donations received through this method. We can also assist with setting up Workplace Giving programs and if you would like to find out more please get in touch.
