The cost-of-living crisis is hitting the charity sector as fundraising becomes more challenging, with fewer people able to afford to donate to charities. However, a social enterprise founded almost 24 years ago provides a revenue lifeline to charities and helps organizations fulfill their ESG (environmental, social and governance) responsibilities by enabling employees to donate the pennies from their paycheck to charity.
Since its inception, Pennies from Heaven has raised over £6 million. Its ingenious model has stood the test of time, with steady growth in donations, even during the global financial crisis and ensuing recession of 2008. Now, with organizations under increasing pressure to tackle environmental and social issues, the scheme allows employers to create massive change from small change.
Pennies From Heaven was founded by Anthony Law and Angus McCallum, who came up with the idea after watching the movie Superman III. In it, Richard Pryor’s character, computer programmer Gus Gorman realizes that everyone’s paychecks are rounded down to the nearest cent while the extra fractions of cents are dropped, so he programs the computer to pay them to him.
Law and McCallum turned the concept on its head and made it a force for good. “We believed that with no donation greater than 99 pence, it was a small enough amount for individuals not to miss, yet collectively, those pennies could make a huge difference,” says Law.
It wasn’t until 1999, when the pair took redundancy from their senior roles in the global insurance industry, that they could turn their idea into a reality.
“We were very clear that 100% of the money raised would go to the charities chosen by the companies,” says Law. “Our income would come from charging companies a fee to set up the scheme to take the pennies out of the payroll system and distribute the donations monthly,” says Law. “We also provide audit trails and help promote the scheme to the marketplace.”
Launching their innovative idea was a laborious process in the pre-digital age, with hours spent in libraries compiling handwritten spreadsheets of prospective companies and their contact details and hours on the road meeting them. Within a few months, they had secured their first, Barclays Bank, and their list of employer signees quickly began to grow.
Pennies From Heaven is charity neutral; the employers select one or a basket of charities to donate to. Some choose a corporate partner, often one of the larger national charities; others designate local charities for their local offices. Over 850 charities have benefited from funds raised via Pennies from Heaven.
Typically, it works with organizations with a minimum of 750 employees, but increasingly smaller companies are looking to adopt the scheme. As well as private sector companies from across all industries, public sector bodies, including NHS Trusts and local councils, have signed up to the scheme. An annual award scheme provides employers with an external recognition of success, with a bronze award for signing up 10% of the workforce, silver for 15%, gold for 20%, and platinum for 40%.
CEO Kate Frost says: “The average is 22%, but in a large organization with a great communications team and strong engagement strategy, that figure is 40% to 50%, and that hasn’t changed, even during the pandemic. Once someone signs up, they don’t tend to stop. They have no reason to because they are giving a small amount.”
An organization’s social position is increasingly critical in terms of not only attracting customers but also hiring and retaining employees. Not surprisingly, demand for a scheme that makes it easy to donate to charity and makes staff feel good about it is rising.
Frost says: “People want to do what they can to help, and there is growing pressure on companies to be seen to do something practical to tackle social issues like the fuel crisis and the cost of living crisis. ESG credentials are no longer a nice to have, but crucial for organizations across the board.”
The number of new employer signups is set to grow by 20% in 2023, with funds raised increasing at a similar rate annually. Pennies from Heaven is on track to raise £700,000 in 2022, moving ever closer to its goal of raising £1 million yearly.
“We are a social enterprise, but we need to start thinking a bit more commercially,” adds Frost. “If we want to raise £1 million a year, we also need to grow, and we need more people to help us reach more clients.”
Overseas expansion of the model is also being considered. “We have done some research on that, and there’s no reason why it can’t work in any country,” says Frost. “The currency, the rounding up, and some of the legislation are different, but we would love to see it working in other countries.”
Sadly, Angus McCallum passed away in 2004 and didn’t get to see the legacy of his Superman-inspired idea, but reflecting on the success of Pennies from Heaven, his cofounder and non-executive director Anthony Law, says: “It’s about making it easy for people to donate and feel good about doing it, and as a result, we are all winners; companies, charities, and people.”