As a business owner, you’re often looking for ways to support community initiatives, while as an employer, you’re also looking for ways to boost employee engagement - all without breaking the budget. Luckily, there is a powerful tool that combines both these objectives, yet it remains significantly underutilised across Kiwi workplaces: payroll giving.
With PaySauce, showcasing this employee benefit has never been easier – requiring no effort from employers while delivering substantial value to employees, charities, and your own business.
What is Payroll Giving?
Payroll giving is a scheme that allows employees to make regular donations to IRD approved charitable organisations directly from their pay. Employees get tax credits for making donations to approved organisations, with a tax credit applied in the same pay. This is calculated at 33% of the total of the donation. This means for every dollar that an employee donates, they get 33 cents back immediately through reduced PAYE deductions.
A brief history of payroll giving
Payroll giving was introduced as a new tax credit system in New Zealand, with legislation designed to provide tax administration of the scheme while allowing flexibility in how arrangements are set up between employers, employees, and donee organisations. The scheme was created to complement the existing end-of-year donation tax credit claim system, making charitable giving more accessible and immediate for working New Zealanders.
The concept was straightforward: rather than waiting until the end of the financial year to claim charitable donation tax credits, employees could receive tax credits immediately through payroll giving, making the benefit more tangible and encouraging regular charitable contributions.
However, despite being available for over a decade, payroll giving remains one of New Zealand's most underutilised employee benefits. The primary barrier has traditionally been administrative complexity. Typically, employers or payroll administrators are responsible for setting up the deductions, and the employee has to provide the banking details of the charity to their employer first to get the deduction set up. The employee then needs to ask their employer or payroll administrator to make any changes, including stopping the deduction or changing the amount.
A massive missed opportunity
Here’s our main man himself, Asantha Wijeyeratne, featured in an article on this very topic in 2022! Payroll giving momentum peters out - BusinessDesk
Asantha has been advocating for payroll giving since its inception, and his ambition to see the charitable sector and employees be able to benefit more from this system has been fiercely embedded into the team here at PaySauce.
The statistics speak for themselves. Despite New Zealand having a generous spirit when it comes to charitable giving, payroll giving participation remains disappointingly low. This represents a significant missed opportunity across multiple dimensions:
For Employees: Thousands of Kiwi workers miss out on immediate tax benefits, instead having to remember to claim donations at year end or, more commonly, simply forgetting to claim altogether. Many employees who would like to give to charity find it inconvenient or struggle with the "out of sight, out of mind" nature of traditional charitable giving.
For Employers: Companies overlook one of the most cost-effective employee benefits available. Payroll giving can enhance workplace culture, boost employee engagement, and strengthen corporate social responsibility credentials without any direct cost to the organisation.
For Charities: Non-profit organisations lose out on a reliable stream of regular donations that could significantly boost their funding stability and allow for better long-term planning.
The underutilisation seems to stem mostly from perceived complexity and administrative burden. Many employers assume that offering payroll giving will create additional work for their payroll teams or don’t know how to create the deductions in the first place, while employees often aren't even aware the option exists.
Benefits to employers from payroll giving
Payroll giving demonstrates that you value social responsibility and support causes that matter to your employees. This alignment between personal values and workplace policies can significantly boost job satisfaction and employee engagement. When employees can easily support causes they're passionate about through their workplace, they often feel more connected to their employer and take pride in working for a socially conscious organisation.
Payroll giving can create opportunities for team building around shared charitable causes. Some companies organise workplace campaigns, charity spotlights, or matching donation programs, fostering a sense of community and shared purpose among staff members. This can strengthen workplace relationships and create positive talking points beyond day-to-day work tasks.
Unlike many employee benefits, payroll giving doesn't cost you anything to implement or maintain. There are no fees, no insurance premiums, and no ongoing expenses. It's a free employee benefit that can deliver significant value in terms of employee satisfaction and corporate reputation. And in PaySauce, you literally don’t need to do anything - the employee can manage it all themselves.
The PaySauce difference: Revolutionary self-service
Here's where PaySauce excels: taking typical payroll activities and shaking it up to better reflect what employees and employers really need. While payroll giving in other systems requires employers to set up and manage employee deductions, PaySauce has revolutionised the process with our self-service approach, allowing employees to set up their own donations via the mobile app.
Using the Payroll Giving feature in PaySauce, employees choose from a range of preloaded charities and their contribution is processed directly with each pay run, with their tax credit automatically calculated and deducted. Employees can choose to make one off contributions or regular payments.
Employees have complete control over:
- Which charities they support
- How much they donate
- When to start, stop, or modify their contributions
- Viewing their donation history and tax credit calculations
We do all the work
PaySauce maintains a charities register that employees can select from to make donations. We do the auditing and verification of each charity before they’re added to our register, ensuring that we’ve validated the bank details and charitable status. Each new charity that we add is another charity available for employees to send donations to!
All the tax calculations are handled automatically, ensuring employees receive the correct tax credits without any additional effort on behalf of the employer.
Why employees love it
Immediate tax back
Instead of waiting until the end of the financial year, employees see the tax benefit immediately in their next pay packet. This makes the impact of charitable giving more tangible and encourages ongoing participation. Schools registered as charities can be added to our register, meaning even school donations can be paid via payroll giving!
Effortless, flexible giving
Once set up, donations happen automatically with each pay cycle if the employee chooses - or they can make a one off payment when they want to.
With our self-service payroll giving, employees can adjust their giving as their circumstances change. They can increase donations during good times, pause them if money gets tight, or switch to supporting different causes as their interests evolve.
Transparency and tracking
PaySauce provides clear visibility into donation history and tax credits received, making it easy for employees to track their charitable giving throughout the year.
For employers using PaySauce, implementing payroll giving is essentially automatic. The feature is built into the platform, requiring no additional setup, no back and forth with charities, and no ongoing administration. Here's the simple process:
- Communicate the benefit: Let your employees know that payroll giving is available through PaySauce
- Provide brief education: Share information about how payroll giving works
- Step back: Employees manage everything themselves through the PaySauce mobile app
Givealittle releases new payroll giving product
I was on a call recently with our friends over at Givealittle to talk about their new payroll giving platform: another great opportunity in New Zealand to improve access to and awareness of the payroll giving scheme.
Their CEO, Lythan Chapman, told us: “Our aim is to highlight how Payroll Giving provides a low-effort, high-impact way for workplaces to support charities at a time when demand is rising and donations are under pressure.” We couldn’t agree more!
We’re big fans of what they’re doing, so you should check it out here: https://givealittle.co.nz/help/payrollgiving
The broader impact: Contributing to New Zealand's charitable sector
Payroll giving has a critical role to play in strengthening New Zealand's charitable sector. Payroll giving provides tax and administrative benefits for employees while giving them the opportunity to make a difference to a charity of their choice by donating directly from their pay. Regular, predictable donations help charities plan more effectively and create sustainable funding streams for important community work.
This is particularly important in New Zealand, where charitable organisations play a crucial role in addressing social issues, supporting vulnerable populations, and improving our communities. The more people that know about payroll giving and the more accessible it is, we can boost the resources available to charitable organisations.
The charitable sector needs reliable funding, your employees want convenient giving options, and your company can benefit from enhanced engagement and social responsibility credentials. With PaySauce making it effortless for you, there has never been a better time to unlock the potential of payroll giving!
