The number of employees donating to charity through payroll giving has declined by 13 per cent since 2020, new research has found.
The Charities Aid Foundation has warned that charities are “missing out on millions” through payroll giving, as its new research shows that the number of employees donating through the scheme and the total amounts given is declining year on year.
The number of employees using payroll giving to donate fell from 591,000 in 2020 to 516,000 in 2022, data from Payroll Giving Monitoring Services UK shows.
The report adds that while household incomes and the UK population have been gradually rising, the amount donated through payroll giving has not kept pace.
CAF’s analysis of the more recent available figures shows that the total amount donated to charities has fallen by 7 per cent year on year – falling from a total of £137m in 2021 to £128m in 2022.
The research finds that only about 4,000 organisations provide the opportunity to donate through payroll giving, but there are more than 45,000 employers in the UK that would offer the scheme.
A total of 30 million UK employees could be eligible to participate in payroll giving, CAF said.
CAF said that while the number of individuals donating in this way was declining, the average donation amounts have been on the rise. In the first quarter of 2023, the average amount of a monthly donation was £33.62, up from £26.67 in the same period the year before.
The report suggests that this is likely driven in part by employees who were previously giving smaller amounts now stopping their donations entirely due to the cost-of-living crisis.
CAF’s own monthly UK Giving Survey of about 1,000 people, run by YouGov, found that younger employees were more likely to donate through payroll giving.
In both the 16-24 and the 25-36 age groups, 36 per cent of those asked said they would be likely to donate via payroll giving in the future.
This was compared with just 21 per cent of both the 45-54 and the 55-64 age groups.
But CAF found that younger people were also more likely to say that they could not afford to give through payroll giving, with 45 per cent of those aged 16-24 saying this.
Half of those aged 25-30 and 35-44 also said they could not afford to give through payroll giving, compared with just 21 per cent of those aged 55-64, the oldest age group surveyed.
The research finds that younger people were more likely to be incentivised by matching initiatives. Of those surveyed, 65 per cent of 16- to 24-year-olds and 66 per cent of 25- to 34-year-olds said they would be more likely to donate through payroll giving if their employer matched their donation.
CAF also warned that there is low awareness of payroll giving among eligible employees, finding that just 36 per cent of those asked said they had heard of payroll giving, with 59 per cent saying they had not.
Neil Heslop, chief executive of CAF, said: “It’s concerning that the number of employers and employees taking advantage of this valuable benefit is declining. Payroll giving provides an incredibly powerful platform for companies to support their giving in the workplace and can be a lifeline for charities at a time when their incomes are squeezed.
“That’s why we would like to see a renewed and joined-up focus on promoting payroll giving from providers, employers and the government. For individuals who can afford to give, it’s a simple way to donate regularly or even on an ad-hoc basis to causes that matter to you.”