Payroll deduction, the ability for employees to voluntarily give from their paycheck to a nonprofit of their choice, accounts for the highest median dollar amount donated by employees, according to CECP’s 2010 Giving in Numbers. With workplace giving peaking during the last quarter of the calendar year, this edition of CSRinsights aggregates various insights related to how participation, risk, cost and global payroll programs can be improved through technology and third-party partnerships to drive employee engagement, corporate giving and overall community impact.
1. Aggregate and Map Employee Giving Preferences
A wide range of differences exist amongst the types of employees choosing payroll deductions as an option for charitable giving (e.g., young versus old, retail versus technology, conservative versus progressive, etc.). When boiled down, it really starts with the preferences and expectations of employees. Generation X possesses different preferences than Generation Y (also known as Millennials).
Consider the following example: Generation X-ers embrace technology and conduct purchasing research online, though their actual processing action occurs more so offline. Their preferences must be guided differently than today’s twenty-something Millennials to which, at some extent, view anything inaccessible by mobile phone as unacceptable.
Food for thought: More than two-thirds of employee donors want expanded options when contributing their time and income through the workplace, according to the Center on Philanthropy.
Here are a few suggestions:
- Take the time to understand the diversity, and therefore, expectation of your employee base. Map those expectations to specific preferences.
- With the aggregate of all your employee preferences in hand, understand (specifically) where you want your programs to be. Map out your vision and determine where concessions may need to be made.
- Communicate this vision internally with all employees and leadership. Paint the picture of where your current program sits and where you envision it to be in the future. Most importantly, demonstrate how this maps to the overall strategy of the company.
2. Expand Charitable Options while Reducing Risk
Today’s technologies can deliver turnkey solutions for improving participation in workplace giving programs, reducing risk and expanding charitable options. In fact, 73% of companies raised more money after expanding workplace giving options, according to LBG Research Institute. Because online giving systems expand options and provide flexibility, they are increasingly becoming the preference for employees. However, some administrators may have a few concerns before fully committing.
A recurring concern involves the vetting of charities. Administrator’s assume that the more you expand charitable options, the more difficult it is for an administrator to manage. On the contrary; technology has the ability to reduce the legal risk involved with tax-deductible donations. By integrating the IRS Publication 78 list and systems like LexisNexis Bridger Insight, the system quickly scans against 42+ terrorist watch lists. Thus, employees can securely select and give to organizations from valid nonprofit databases without worrying where their money is going.
Another concern rises in the aforementioned point between differences in employee preferences, particularly with the older X Generation or employees that simply do not have access to computers at work. Indeed, this is a preference worth listening to and your third-party vendor should listen as well. Allow those employees the ability to sign up via papered sign ups. Or, hold training sessions that can teach employees how to access and sign up for payroll deduct.
3. Deliver Greater Efficiency at a Reduction of the Cost
Advances in technology, combined with increased services through banking partners, evolved the payroll deduction process leading to reduce time and cost for completing a transaction. It’s no longer necessary to physically print payments on check stock you deliver to your vendor, who then stuffs, stamps, and mails each payment as your ‘paying agent.’ Far more automated today, the utilization of electronic payments and bulk processing is delivering greater efficiency at a noticeable reduction in cost.
Today’s current SaaS (software-as-service) providers of payroll deduction services deliver platforms that streamline campaign pledges, nonprofit selections, matching grant applications, and even absorb any of the related customer support. In addition, today’s platforms deliver more eco-friendly payment methods by utilizing Automated Clearing Houses (ACH) payments. Not only does ACH save paper on check stock and envelopes, but also financially by negating the cost of a stamp (which has risen by 36% since 2000, from $0.33 to $0.45 in 2012). Similar to how one may schedule an online payment via their personal bank, ACH payments deliver donations in a short amount of time, a more secure manner, and at a reduced cost.
The progression of the overall process enables companies to issue single payments from the aggregate of the donations made through the platform. Instead of a fee for each employee deduction made (digitally) to the system, companies now only have to pay for the actual payments being issued to each non-profit organization. For example, if during a response to a disaster 500 employees donate via payroll to the American Red Cross, a single payment will be issued with only one fee to be assessed — the fees directly associated with issuing the single payment.
4. On the Horizon: Expand Payroll Giving Globally
Yet to be developed is the all-encompassing payroll solution that can satisfy the needs for every employee around the world (an increasing need for multinational organizations). Specific country restrictions on data privacy, general decentralized internal data services, language barriers, and the ongoing need for specific vetting requirements makes it unrealistic to apply ‘what works’ in the United States to the international workspace.
However, progress is being made – literally -one country at a time. And in many cases, payroll deductions outside of the U.S. will face a myriad of obstacles, some of which include: international vetting of organizations, processing of payments in a manner that is cost justifiable, and properly communicating the program initiatives within each native language.
Some suggestions for expanding payroll deduction programs globally:
- Gain a very clear understanding of the expected rate of participation by your employee base. Survey the general level of interest on a region-by-region basis and use this information during the construction of your go-forward plans.
- Fully detail the parameters of your payroll deduction program – any internal limitations, the strategic objective, and any other requirements that may be worthy of consideration. Your plan, partially shaped by employee expectations, will outline the capabilities you can offer to each office and each employee globally.
- Execute your program according to the overall capabilities of both your own organization, as well as, that of your service provider. Nothing is wrong with a phased approach, and often times, a tiered rollout can help to accommodate for any transition and/or adoption resistance you may encounter along the way.