by Konstantin Schottenhamel
Employees in the US annually make more than four million US dollars in donations via their workplace. In the UK, Australia and other English-speaking countries, ‘workplace giving’ – also known as ‘employee giving’ – is very common. The basic idea is fairly simple: Employers provide their members of staff with a platform to facilitate workplace donations. That can manifest itself in a variety of ways. Donations can be collected through occasional fundraising at the workplace. But in English-speaking countries, the majority of donations is raised as periodical, tax-exempt donations directly deducted from the monthly wage.
And this is also one of the reasons why this idea still hasn’t really caught on in Germany. The German Federal Ministry of Finance has a policy of only allowing tax-exempt deductions from wages, so-called ‘wage donations’, as part of limited exceptions, such as during natural disasters.
That said, there are massive benefits of repeated and long-term employee donations – for all involved. The advantages for the social sector are obvious: The reliability of a donation that is automatically deducted from the monthly wage allows the recipient organisation to better plan their activities. A wage donation usually ends with the termination of employment. In the UK, such donations last over eight years on average (NCVO, 2010). Also, employee donations usually come without preconditions. The recipient organisations have full flexibility to use the donations independent of projects or invest them in internal capacity development. But most of all, workplace giving reaches new target audiences. Experiencing philanthropy in the workplace raises awareness of and provides access to potential donation recipients – thus turning non-donors into donors. Factors that otherwise have a negative impact on the willingness to make donations, such as poor education or being young become less significant within the context of the workplace (Agypt et al., 2012; Haski-Leventhal, 2013; Knight, 2003; Osili et al., 2011).
On the one hand, the entrepreneurial added value of wage donation programmes is fed by its social added value. Companies can focus their workplace giving programmes on objectives that are relevant to their “competitive context” (Porter & Kramer, 2002), e.g. educational opportunities at the manufacturing sites. On the other hand, successful programmes offer the publicity advantages of corporate philanthropy at a low to manageable cost, depending on the programme design.
However, the greatest entrepreneurial impact is made by the employees. In the English-speaking world, workplace giving has become an important component of recruitment strategies targeted at millennials (America's Charities, 2015). Like corporate volunteering, workplace giving promotes commitment to and solidarity with the company. This is particularly true for companies that 'match' their employees' donations, i.e. raise the employee's donation by a certain percentage. The employee takes the lead here, in that she decides where the money goes. Through such a mechanism, the company does not simply communicate interest and support for the employee's favourite social project. It also creates meaningful partnerships at the individual level of the respective employee with minimal financial outlay. Such an enhanced connection between company and employee has a positive impact on employee retention, work performance, absenteeism, general job satisfaction and motivation at the workplace (Mathieu & Zajac, 1990; Podsakoff, MacKenzie, Paine, & Bachrach, 2000; Riketta, 2005; Shaker et al., 2016; Van Knippenberg & Sleebos, 2006).
In Germany, skepticism is currently still prevalent. However, in addition to foreign companies active in Germany, German companies such as Daimler or SAP are also increasingly taking advantage of wage donation programmes. Little effort yields a great impact. Workplace Giving programmes can help companies structure the relationship between donating employees and civil society in such a way that maximises both entrepreneurial and social benefits.
Konstantin Schottenhamel studied history and economics at Humboldt-Universität zu Berlin and is now graduating in Public Policy at the Hertie School of Governance with a concentration in Management and Organisation.
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