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Charitable donations instead of bonuses? Employees seem to like it

Companies are giving their employees the option of donating to a charity instead of receiving a cash bonus

According to a recent study, a growing number of companies are giving their employees the option of donating to a charity instead of receiving a cash bonus (CBS News, 2017). One notable advocate of this approach is data storage company Box, situated in Silicon Valley, which recently swapped its previous programme whereby employees were offered up to a $7,000 bonus for referrals leading to new hires in favour of a scheme where employees are given the opportunity to choose a non-profit organisation to receive $500. The success of this approach has been evident, with a greater number of referrals as well as net savings and increased charitable giving within the company.

Whilst the suggestion that employees prefer charitable donations over cash bonuses may be surprising to some, a possible reason for its popularity is the potential for such charitable schemes to give employees the opportunity to celebrate donations in a way which does not happen when they donate privately themselves.

Moreover, a study carried out by psychology researchers from both the University of Chicago as well as Northwestern found that people do in fact gain greater satisfaction from giving rather than receiving, with respondents who spent money on others achieving sustained happiness over a five-day period, unlike those who spent money on themselves. This is a pattern which, according to previous research, is found across all income levels, indicating the potential of a charitable bonus system across organisational hierarchies.

Whilst a growing number of employers may be giving their workers the opportunity to donate, employees are reportedly also placing more pressure on their employers to have a greater social conscience, with corporate donations increasing by up to 8% from 2016-2017.

Although more and more employees are opting to work for companies that act charitably, such actions can also benefit the companies themselves through fostering a meaningful organisational culture which unites employees. There are also financial benefits to be reaped, as corporate donations allow companies a tax break.

However, changes in tax rates look set to cast uncertainty over the future of this approach, prompting a possible decline due to a decrease in the number of taxpayers claiming deductions for charitable donations.

Despite potential challenges in the future, statistics indicate an overall decline in the number of companies giving their employees cash bonuses, with 38% of companies claiming to instead be making charitable donations in 2017. This reflects a significant 7% increase from the previous year, suggesting that charitable donations look set to continue having a big impact on employee benefit programmes in the future.

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