The small things we could do to get more out of payroll giving

By John Copps 4 July 2011

Payroll giving is something that us Brits are really bad at. With a rate of just 4% there is no doubt that we perform dismally, particularly when compared to other countries. (In the US it is 35%.)

Last week, HM Treasury Minister Justine Greening told the Institute of Fundraising conference that she is looking into improving this – one of the splurge of ideas from the recent Giving White Paper.

Undoubtedly the most urgent priority is to increase the measly rate of take-up among British employees but the Minister also says that they are keen to look at ‘not just in the big ticket items, but the smaller areas that can make a difference’. Such small ideas are in vogue following the fashion for ‘nudging’, a concept in behavioural economics made famous by Richard Thaler’s book.

Here’s a list of three small things that I think could make a difference in payroll giving:

1. Committing a percentage of income, rather than a fixed amount – I signed up to NPC’s payroll scheme back in 2004 but I’m ashamed to say that although my salary has risen, my contribution hasn’t because I have never bothered to change it. By making payroll giving a percentage of my income then I would automatically be giving more today.

2. Deferring payment – I recent read an (unpublished) research study that showed that if you ask donors to defer their payments then they have a tendency to give more. This is because we all have a tendency to value our future income much less than the money already in our pockets (to use the economic jargon, we heavily discount future costs). By asking donors to defer their initial donation by a couple of months, the overall amount given might be increased.

3. Tell us what our colleagues have contributed (anonymously) – there is some evidence that knowing what others have given leads to a ‘bidding up’ of donations. Additionally, if we know that others are contributing then we are more likely to do so ourselves.

It is difficult to say what these measures might be worth if implemented. But as the government begins its campaign to increase the take-up of payroll giving, it would be wise not to ignore the small things.