What is Payroll Giving
Payroll Giving allows employees to contribute towards charities like Reach For A Dream by giving their employers permission to deduct it from their salaries.
This is a very convenient way for them to make tax efficient contributions towards a cause of their choice.
How Payroll Giving Works
In order to start a Payroll Giving Scheme, the employer needs to subscribe to the Reach For A Dream Donor Payroll and will be issued a Donor Code for this account.
The employees can then choose to sign up for the scheme by completing a consent form to authorize their deductions. The Payroll Department (HR) simply deducts the money from the employee’s gross salary, and the Payroll or Finance Department will then transfer the collected donations to the Reach for a Dream Foundation.
The foundation will issue a thank you letter and annual Tax Exempt receipts (Section 18(a) Certificate) to each Payroll Giving Donor.
Benefits Of Payroll Giving
Payroll Giving is an easy, tax efficient way to contribute towards the Reach For A Dream Foundation. There are no administrations costs going to an external party and every cent of the funds will go towards fulfilling the dreams of children countrywide that are fighting life threatening diseases. The system is easy to opt in and out of, giving the donors full control over their giving.
Benefits for charities
Payroll Giving creates a sustainable income stream for the charity, making it easier to budget and plan. The donation goes straight from the individual’s account into the Reach For A Dream bank account.
It’s a way to communicate with and get to know donors (although donors can choose to remain anonymous). This way the charity can build a relationship with them and employers.
Benefits for individuals
- Their taxable income is reduced.
- Individuals can give as much or as little as they want and for however long they want.
- Section 18A’s are offered annually for all contributions so that they can reap tax benefits when doing their returns.
- Individuals don’t have to try to remember to make regular contributions – it will automatically be sent to Reach For A Dream on their behalf for as long as they choose.
- It allows individuals to give to a registered charity without leaving their desks – they get to feel good while doing good.
Benefits for employers
- It’s quick and easy to set up and run – there are virtually no set-up costs for signing up to the scheme.
- It’s a way to show commitment to a cause that the employer and the staff care about.
- Minimal admin with low running costs.
- An easy way to meet your CSR objectives.
- Increase staff morale.
- A simple and effective way of being part of a worthwhile cause.
- Section 18A’s are offered annually for all contributions.
- You are able to claim for Socio-Economic Development points for your organisation’s B-BBEE scorecard
Payroll Giving Contracts
Why do Employers need to sign a Payroll Giving Contract?
By signing a contract, the employer commits to making deductions on behalf of employees that wish to participate in the scheme and to forward these monies to the charity every month.
This agreement will secure the partnership between the company and Reach For A Dream and will provide all the necessary information for an audit trail for pre-tax payroll deductions. The agreement is very simple and contains all the relevant information needed to comply with pre-tax deduction legislations.
Payroll Giving Form
Employees need to complete a Payroll Giving Form to authorize the employer to make deductions from their pay. Employees simply complete one form, identifying Reach For A Dream as their charity of choice, and indicate how much they wish to give and for which period. Copies of the completed forms are submitted to Reach For A Dream to maintain a database and verify promised funding.
What Does the Employer Have to Do?
Once a month, employers need to forward employees’ payroll deductions to the charity, including a list of people that have donated and the amount they have deducted during that period.
This is a great way to keep records, to ensure that each employee receives a Section 18A certificate and to give them feedback about how their contributions were used. These receipts and feedback will be given annually.
What Happens if an Employee Wants to Remain Anonymous?
All donors have the opportunity to donate anonymously if they prefer. Reach for A Dream will ensure that their information remains confidential. No additional contact will be made unless it’s initiated by the individual.