What is Payroll Giving? (And Why Does it Matter?)

What is Payroll Giving? (And Why Does it Matter?)
What is Payroll Giving? (And Why Does it Matter?)
June 28, 2022
Employee Giving

Americans donate billions of dollars to nonprofits each year via workplace giving programs. While in the past the donation process may have been inconvenient and cumbersome, today technology platforms integrated with payroll systems provide convenience that improves the experience for the donor and the recipient. Payroll giving, which refers to deductions made right from an employee’s paycheck, can greatly improve the adoption of your employee giving programs and their impact on the nonprofits they benefit. Here’s a look at payroll giving and how to leverage technology to make it easy.

How Does Payroll Giving Work?

Payroll giving simplifies charitable donations in the workplace. Just as 401K contributions, healthcare premiums and the cost of other programs are deducted from paychecks, charitable donations are also taken out. There is one key distinction between deductions like 401K contributions and payroll giving. Many deductions are taken out before taxes, but payroll giving is an after-tax deduction. This can be good news for your employees. Because these contributions are taken out after taxes, workers can claim them as deductible when they file their personal taxes at the end of the year. In fact, their W2s should include a comprehensive record of how much they donated to charity via payroll giving during a calendar year.

The 3 Benefits of Payroll Giving

Why should companies encourage payroll giving? The answer is simple: Payroll giving creates a number of benefits for the organization, for employees, and for the community. Those benefits include:

  1. Ease of giving: There’s no check to write or credit card to run. Employees simply approve one-time or recurring gifts, and they are deducted automatically.
  2. Greater impact: A pledged gift through workplace giving allows the nonprofit to plan for the gifts and allocate those funds as needed. Additionally, there are no credit card fees.
  3. Increased engagement: Employees feel more engaged at work when they participate in CSR efforts. In fact, workers who participate in corporate giving programs have 75% longer tenures at their companies. Payroll giving makes participating in those CSR efforts far easier.

You can spend a great deal of time trying to manage giving programs manually. Or, you can seek out a technology partner that makes payroll giving easy — and that helps your organization maximize the benefits of payroll giving.

What to Look for in Payroll Giving Technology

Because payroll giving can truly increase your employee engagement and community impact, it should be a key consideration in your evaluation of workforce giving platforms. To that end, be sure the platform you select enables payroll integrations with leading platforms such as ADP, Paychex, Paylocity, and others. Bright Funds offers this plus more. If you’re ready to make payroll giving accessible for your employees, discover how Bright Funds can help. Schedule a demo.