The last decade saw the Indian corporate sector thrive as never before, and as a direct consequence of this growth more and more people are joining the corporate workforce. As stated recently in the Economic Times, in spite of an economic growth of 15% year on year, the country still has 37% of its population below the poverty line. Of course, during such a time, the question of ‘giving back to society’ has been raised every now and then. Although we have witnessed many wealthy and high net worth individuals giving away huge sums of money to set up individual trusts and family-led foundations, the question remains there for the Indian middle class, which has been decently earning a living but not actively giving back to the society.
In 2007, a study by the McKinsey Global Institute suggested that over the next two decades, the country’s middle class (a population estimated to be around 300 million) will grow economically from 5% of the country’s population to over 40%, to create the world’s fifth-largest consumer market. India has also been one of the very few countries that has not been adversely affected by the economic downslide that brutally plagued many of the established economies. Hence, over these years, India’s economic growth has really ensured that the average earning and spending capacities of the middle-class workforce increase. And so again we come back to the same question: with basic necessities and borderline luxuries taken care of, can the middle class working individuals really afford to ‘give back to the society’?
Given the conservativeness of the Indian spending behaviour, most of the middle class workforce viewed charitable giving as an unwanted, flashy deed committed by people who would normally have an extra income pipeline. Though there were no qualms about spending for religious purposes or giving to beggars on the street, giving to a charity or NGO would almost always be the last thing for the middle class to care about. In addition to this, most people from the middle class are too busy negotiating the rat race and don’t usually find the time, energy or capacity to look out for trustworthy organizations to give out their ‘very hard earned’ money (which was typically meant for savings) to. Hence, this set of people seemed just not interested in such charitable deeds. In such a scenario, an idea that projected simplified giving in small amounts and could yet create an individual philanthropic impact for the people was much needed to steer the middle class workforce towards philanthropy. In 2007, with the introduction of payroll giving as a simple, tax-effective and impactful opportunity to contribute towards one’s community, middle-class working individuals started to keep aside a small portion of their wages to give back to the society.
Globally, United Way (now present in 45 countries) has been the largest network of payroll giving. In India, payroll giving has been institutionalised successfully by GiveIndia. In just 4 years, GiveIndia has spread its payroll giving wings to engage over 40,000 employees working in more than 150 for-profit businesses, channelling over $ 4.6 million to its listed charities. Through payroll giving, an employee is able to choose the timeframe, cause, project and contribution on a totally voluntary basis. GiveIndia also sends the employee a feedback report, which details the way that the donation has been used by the beneficiary. What’s more, to make sure that the most deserving charities get the funds, only those charities that clear restrictions of credibility and transparency are enlisted.
This giving model coupled with processes of credibility, transparency, flexibility, ease and diversity in choice has worked wonders for the earning individuals from the middle class. The system has different attractions for different individuals. With the advent of payroll giving, a BPO (business process outsourcing) employee could afford to give away $2 each month from his/her salary of $150; meanwhile, an investment bank executive who works 11 hours each day and can barely find time for anything else could give back as easily to the society with just a couple of clicks from the back of the desk. All in all, participating in payroll giving has inculcated a philanthropic side within the participating individuals, educating them about the existing inequities in the society and perhaps leading them to then pursue more associated and effort-based forms of giving such as volunteering.
Several companies implementing payroll giving also match their employee’s contribution, which further enhances the employees’ enthusiasm towards participation and gives the organizations more opportunities for extending employee engagement initiatives. On a tangential note, this has also resulted in the employees feeling much better about their jobs and the organizations they are a part of.
One can much confidently state that payroll giving is a strong model of giving which has been working extremely well within the context of the Indian middle class, and it is here to stay as more and more organizations are steadily turning towards it. More recently, CAF India too launched its payroll giving programme called Give As You Earn (GAYE), and in future not just non-profit institutions, but also several for-profit organizations will be looking in to charting their own payroll giving institutions. After all, with corporate India becoming just as conscious towards independent and responsible giving as its global counterparts, the spread of payroll giving in the next decade would be hard to ignore.
Priyanka Saha is manager of marcom for the payroll giving team at GiveIndia