Make Way for Payroll-Giving

By Stephen Cronin

PhilanthropyAn estimated 60% of people in the US donate to charities. Compare that to 14% in India and 11% in China. Our neighbours in Nepal, Sri Lanka and Pakistan donate more to charity than us. The 2010 World Giving Index ranks India 134 out of 153 – one of the world’s fastest-growing economies is also one of its least charitable.

So how does India give? A substantial proportion of our giving is to religious institutions and it is anyone’s guess how other non-profits fare within this ethos. A look at the financial statements of an NGO sheds some light. Ad hoc, large donations contribute a significant portion of NGO funds. These donations are tagged to specific projects, events or geographies, be it a benefactor with a cheque of several lakh rupees to provide food for children or to provide clean water in one’s old neighbourhood.

While such contributions are important, they often do not take into consideration the management costs that an NGO incurs in organising the charitable benefit for the recipients. It is here that small, regular donations have a bigger role to play – a pipeline of stable unencumbered funding that allows the NGO to plan expenses and cash flows and sustain its everyday functions, and salaried professionals are best matched for such regular giving. As a salaried person, I feel that a convenient way for me to donate is as part of my employment, i.e., my company integrates ‘giving’ within the payroll processes through which an employee gets paid.

‘Payroll Giving’ is the entree to the world of philanthropy for employees, but taking up the offer is far more difficult than envisaged. What is it that makes a person actually give – not contemplate, not intend, but write out that cheque or click to sign up for regular giving? While the seeds of charity lie in the conscience or a poignant moment, it isn’t bereft of expectations.

And why should it be? Our middle-class background evokes in us the desire to want our hard-earned money to do some good, but that background also harbours prudence and caution. To persuade an employee to give, it is critical that the assurance of transparency and accountability in the process is apparent. A company with a visible role in this process creates a comfort zone by, in effect, ratifying the credibility of the NGO. Until the global financial crisis, companies propagated the culture of giving by matching the donations its employees made and, in some cases, double-matched them.

Once a person signs up, a small deduction from the monthly salary for a good cause makes it highly unlikely that they will cancel the donation soon, and people who manage payroll-giving share that the next challenge is to balance employee expectations. If you take a poll on what employees want from giving, expect a split between the depth (more money with fewer NGOs) versus width (more NGOs and more causes), a trade-off with no easy answer. If one maintains a strong due diligence, a long-term view, measurable results and a robust feedback mechanism, one can arrive at a moderately well-diversified yet strong cause-based portfolio, with 8-10 NGOs. The focus then should be to increase depth by engaging more individuals to donate to this select portfolio.

Clearly money has an important role in bringing about social change, but the traditional notion of giving can at times be self-limiting. It ‘involves’ individuals but does not ‘engage’ them as a part of the change. Focused on people as mere sources of money, traditionalists forego far scarcer resources: time, knowledge and expertise, capabilities that work best when offered within the realm of employment.

A survey conducted by a financial institution showed that more than 70% of its employees will volunteer if provided opportunities that matched their schedule. More than 50% will volunteer if the company matched their interest and skills to a cause – a more meaningful engagement. A company can encourage people to volunteer their time through events, skill-based opportunities or sabbaticals. Proliferation of this ‘more-than-philanthropy’ approach will make the act of giving more valuable, impactful and sustainable, and open the window for a ‘giver’ to evolve into a ‘citizen’.

Is it possible to garner all these forces of time, expertise and finance? An innovative way is to condense it to the lowest common denominator, money, by providing choices to donate, options to volunteer with the same choices and eventually monetising all of them. I believe this approach will enable individuals and companies to create a sustainable culture and engagement that will maximise impact for the NGO, the individual and, ultimately, the community.

( The Author is Head of Human Resources at Citi, South Asia )
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