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The merits of payroll donation
Nikhil Menon, Outlook Money | October 24, 2007
Giving, charity and generosity have always been pet themes for poets, prophets and philosophers alike. But talking about charity is one thing and acting on it quite another. The most common refrain one gets to hear is: "I wish I could do something, but I have so little time!" And so we con ourselves into believing that there is nothing that we can do except sign a cheque or donate clothes the next time a tsunami or earthquake pulverises some part of the country.
Nothing could be further from the truth. What if we told you there is an easy way to not just donate a sum of money from your monthly salary to the charity of your choice, but also to track how every rupee has been spent - that too from your desk? Think it's a scam? It isn't. It's called payroll giving (PRG) and several Indian organisations have already adopted it for their employees.
Cause and effect. PRG is a highly successful corporate practice in India. Organisations like GiveIndia, United Way, and Charities Aid Foundation, which are affiliated to various NGOs and charities, run comprehensive programmes for clients who want to include PRG in their corporate social responsibility (CSR) strategy, but don't know where to start.
If you think a PRG programme is a good idea, all you need to do is approach your boss or the management and let them get in touch with one of these organisations. Once the programme has been set up in your organisation, you can get started. Every month, your employer deducts a specified sum from your salary and hands it over to the organisation for disbursal to the designated charity. All donations are completely voluntary and you have full control over the amount you want to give.
You will receive regular updates on how your money has been spent and the impact that your contribution has made. For instance, if you sponsor a child's education, you will be informed of his or her progress through school. Besides the feedback, the accountability and transparency (not to mention the tax benefits: either 50 per cent or 100 per cent under Section 80G, depending on the NGO you choose) built into the process also help assuage fears about one's money being misused.
You can also reduce or increase the amount every month, depending on your circumstances. All you have to do is to notify your employer, who in turn gets in touch with the organisation that is managing the programme.
Size doesn't matter. PRG has found favour with companies of different shapes and sizes. HDFC Bank [Get Quote], for instance, has been partnering GiveIndia on payroll donation since 2004. At the moment, the bank has 1,500 employees from across its offices on the programme. Recruits are informed about the programme and given the option to be part of it. The bank matches employee contributions to the rupee and the total donation averages around Rs 5.5 lakh to Rs 6 lakh a month.
On the other end of the scale is NICO Med, a 110-man pharmaceutical firm, which launched its PRG programme about two months ago on an employee's recommendation. Its monthly pay donation adds up to around Rs 20,000. Mangesh Joshi, senior HR manager, NICO Med, says, "We were looking for ways to broaden the range of our CSR activities and this seemed ideal. Though we have only just started on this journey, I think it's great for us as employers to be able to offer this facility to employees who want to give back to the community in some way."
Accenture's Employee Giving Program, launched in 2006, enables employees to support ongoing projects in childcare and education and also channelise contributions towards relief and reconstruction work during emergencies.
Rekha Menon, executive vice-president, India Geographic Services & Human Capital & Diversity, Accenture India, says: "Our PRG initiatives benefited about 11,000 children each in FY06 and FY07. Through this programme, we try to reach out to our employees and ensure that those interested in serving the underprivileged can do so easily, effectively and under the aegis of the organisation they work for."
Ties that bind. Sometimes, instituting a salary donation programme throws up unintended bonuses. Since an individual can start off PRG with as little as Rs 100 or Rs 200, it encourages participation. Not only that, as the process matures, the positive spin-offs enhance the company's employer brand. The company is able to engage its employees better and earn their trust and loyalty.
Mohan Krishnan, vice-president (CSR), IMRB International, believes that people are more willing to be part of a payroll contribution mechanism monitored by an external agency - rather than an opaque system - since they feel more comfortable with it and also because their contributions are confidential. "If the employer were to ask for donations through an openly circulated e-mail, a lot of people may not pay up or may feel sceptical about it. It may even trigger a contribution one-upmanship war," says Krishnan. About a third of IMRB's employees have signed up for the programme, generating an overall average monthly contribution of Rs 30,000.
Donation of a portion of one's salary is something that benefits the employer, the employee and the community at large. Therefore, it is very important to proactively drive PRG through the rank and file of an organisation. At HSBC, for instance, an initiative called 'Kuch Dil Se' drew nearly 500 employees, who raised around Rs 7.3 lakh this year. The management has received very positive feedback from the staff on the programme and is now looking at PRG as a first step towards creating a long-term engagement for employees with the bank's CSR programme, which includes numerous voluntary activities.
Doing the math. Managing a large-scale programme like the ones at HDFC Bank, Accenture and HSBC isn't all that easy. It is important to consider the hitches that could arise during implementation in the early stages. Unmesh Brahme, vice-president (group public affairs & corporate responsibility), HSBC India, says the bank chose to work with GiveIndia because its online giving facility allows participants to manage their contributions online, while "most other organisations do it offline".
But what happens when an employee switches companies? In a scenario where a person moves from a company that has a PRG programme to another one that doesn't, PRG consultants allows him to continue contributions from his bank account. Mathan Varkey, who oversees the PRG programme at GiveIndia, clarifies, "If the person has a bank account with ICICI Bank [Get Quote] or Citibank, he can contribute every month from his bank account. He can also continue to make one-off donations through GiveIndia (minimum: Rs 500), and pay through a credit card, cheque or through online banking." This means your workplace might change, but your contributions will never suffer.