Spirit of giving needs bigger boost

Coastguard NZ has encouraged volunteers to approach employers about payroll giving. Photo / Supplied

Despite its launch in a blaze of publicity eight months ago, payroll giving has failed to get off the ground, as employers and their intermediary payroll and software companies drag their heels.

Some are point blank refusing to offer the service.

Payroll giving enables salary and wage earners to have donations to their favourite charities deducted directly from their pay, and to receive a 33.3 per cent tax credit automatically. For example, for every $3 donated a $1 tax credit is applied, meaning only $2 is taken from a person's wages.

The charitable sector is enthusiastic about the benefits but the reality hasn't yet matched the promise of the Government's initiative.

So far only 1135 employees in 227 workplaces have taken up payroll giving. That is just a small fraction of the number of businesses and organisations in New Zealand. Philanthropy New Zealand expects a total of $2 million will be paid to charities through payroll giving by the end of this year.

Leading the way in rolling out the system is the Ministry of Social Development (MSD), which has 130 employees in the scheme. One of the more imaginative ways that MSD staff members have used the system is to lessen the pain of paying school fees. Staff members are able to drip feed their school fee payments over a term, or the entire school year - paying a third less up front because they are automatically refunded the tax on every payment.

Employees of many other organisations have not been so lucky.

Elliot Strange, managing director of web company Signify, jumped at the chance to encourage his 20 employees to take up payroll giving only to find that the company's MYOB Payroll software couldn't handle it.

"We've had such a nightmare with MYOB and we literally haven't been able to do anything about [it]," said Strange. "When politicians actually do something good for society, not to have the support of these [payroll] companies is ridiculous."

MYOB said this week the next version of its Payroll product for smaller employers would be available "in the coming days" and would support payroll giving.

A few payroll software and service companies such as iPayroll and SmartPayroll were quick off the mark with solutions, Philanthropy New Zealand executive director Robyn Scott said,

The Payroll Giving Foundation is in contact with the other 80 providers around the country encouraging them to find a solution.

Some charities have taken it upon themselves to encourage participation.

Earlier this month Coastguard New Zealand launched a campaign to get its volunteers to lobby their employers.

Likewise the Payroll Giving Foundation had set up a form on its website that anyone could complete, founder David Living said. The completed form generates a PDF document containing all the necessary information for people to print and take to their employer. The website is www.payrollgiving.org.nz

Charities have also had teething problems with the system at their end. Many were concerned they were not told the name and contact details of the donor, Living said.

"At present you are not seeing the hungry child you are feeding," Living said. "[Charities] need to provide some engagement with donors in the model."

In the case of schools, it makes for an administrative nightmare if they don't know who the school fee payments are coming from.

Living's organisation has launched a project called DonorView, which aims to take the information from payroll companies and convert it into data that can then be fed automatically to charities.

Painless way to support favoured charity

Policy analyst Jane Tier has given to a number of charities over the years, but settled down into regular donations to Oxfam. "I like the work that it does."

When her employer, the Ministry for the Environment, began offering payroll giving earlier this year she saw the logic in giving straight from her pay, so signed up and cancelled her direct debit. She still gives the same monthly sum to Oxfam but it comes out of her pay fortnightly.

"It is a lot better than direct debit," Tier says. "I always had to remember it was coming out every month. I would think: 'What has happened?', when the money went out of my bank account. Now I don't notice it at all."

She used to claim her tax back at the end of each financial year. "It was nice to get a lump sum, which I'm not going to get any more."

But now Tier gets the automatic tax refund, so less money leaves her account.