The Charity Payroll Problem and How to Avoid It

14th January 2019

Charity Payroll Problem

Charities and not-for-profit organisations have a different set of issues and priorities when it comes to payroll, and the potential risk of mistakes and lack of compliance can lead to adverse consequences. So, what could be causing your charity issues?


Varying work and altering of staff


Charities commonly have a mixture of full time, part time and volunteers working for them and they all require different payroll and onboarding processes. Often in the charity sector, we also see that campaigning is higher at certain times of the year, so they may require more staff at that time. This means there will be irregular payslips and expenses payments for the volunteers, which can be hard to keep on top of.



The National Fraud Intelligence Bureau found that 50% of organisations had been affected by a fraud attack. This can be from phishing attacks to simply just employees claiming too much on their expenses. Charities are just as vulnerable to these threats as others and it is estimated to cost the charities in the UK around £1.9 billion. The commission found that these fraud crimes were made possible in charities because of poor challenge and oversight, no internal controls or, where controls did exist, not applying them consistently, and too much trust and responsibility placed in one person.




Charities have a lot of sensitive employee and donator data and often don’t have someone specifically dedicated to checking that they are keeping up to date with GDPR regulations. This could lead to huge fines, which for a charity would be devastating.


Volunteers might actually be employees


Charities often rely on volunteers, however, this actually means that they could be at a higher risk of inadvertently breaking the law. The government has stated that your volunteers could really be classed as workers if they get any payment, reward or benefit in any kind. This includes paying any expenses to the volunteer or the promise of a contract or paid work in the future. It is important that charities are aware of this to prevent breaking any laws or legislations.


Limited staff


As charities aren’t working for a profit, they usually can’t afford to have a dedicated payroll manager that is clued up on all the newest laws and legislations, and you often find people who are not qualified trying to take care of it. This can mean some issues can be overlooked and errors can be made, causing further more severe problems. Charities are already starting to investigate how they can change their payroll for the better. Acorns Children’s Hospice announced that it has automated its payroll process and also digitised human resources functions. “As a charity with limited resources, it is essential that our processes are as efficient as possible, so we can focus more time and activities on the children and families we care for,” said Becky Mallon, Head of Human Resources at Acorns Children’s Hospice.




Charities often start out incredibly small, growing rapidly and changing constantly. When your charity starts growing and you begin employing more people you need to make sure you are organised and have an efficient payroll system in place to be able to manage this increasing workload. Read our eBook below to see what could be preventing your charity growth. From a lack of time and strategy, to investment in people and failing to change systems and procedures, we have important advice to ensure that small charity growth won’t cause you a large business headache.



Using an outsourced provider can take away the stress of payroll and you can feel safe in knowing that it is being handled by trusted payroll professionals, freeing up more of your employees’ time to focus on other important things. IRIS FMP is an NCVO trusted supplier to the charity sector and work for many charities across the UK already, so you can be assured that we are an experienced provider that will help you focus on your charity’s objectives.


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