Making big social change from small change

by Ana Lopez

The cost of living crisis is hitting the charitable sector as fundraising becomes more challenging, with fewer people able to afford to donate to charities. However, a social enterprise founded nearly 24 years ago provides a source of income for charities and helps organizations fulfill their environmental, social and governance (ESG) responsibilities by enabling employees to donate the pennies of their paychecks to charity.

Since its establishment, Pennies from heaven has raised over £6 million. The ingenious model has stood the test of time, with steady growth in donations even during the global financial crisis and subsequent recession of 2008. As organizations face increasing pressure to address environmental and social issues, says the scheme enables employers to effect huge change from loose change.

Pennies From Heaven was founded by Anthony Law and Angus McCallum, who came up with the idea after seeing the movie Superman III. In it, Richard Pryor’s character, computer programmer Gus Gorman realizes that everyone’s pay is rounded down to the nearest penny while omitting the extra fractions of pennies, so he programs the computer to pay them out to him.

Law and McCallum turned the concept on its head and turned it into a force for good. “We felt that without a donation of more than 99 pence, it was a small enough amount that individuals wouldn’t miss out, but collectively those pennies could make a huge difference,” says Law.

It wasn’t until 1999, when the couple resigned from their senior positions in the global insurance industry, that they were able to turn their idea into reality.

“It was very clear to us that 100% of the money raised would go to the charities chosen by the companies,” says Law. “Our revenue 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 bring the scheme to market.”

Launching their innovative idea was a painstaking process in the pre-digital era, with hours spent in libraries compiling handwritten spreadsheets of potential companies and their contact details and hours on the road meeting them. Within a few months they had landed their first, Barclays Bank, and their list of signing employers began to grow rapidly.

Pennies From Heaven is charity neutral; the employers select one or a basket of charities to donate to. Some choose a business partner, often one of the larger national charities; others designate local charities for their local offices. More than 850 charities have benefited from funds raised through Pennies from Heaven.

It usually works with organizations with at least 750 employees, but increasingly smaller companies want to apply the scheme. As well as private sector companies from all sectors, public entities including NHS Trusts and local councils have also joined the scheme. An annual awards scheme provides employers with external recognition of success, with a bronze award for enrolling 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 a strong engagement strategy, that figure is 40% to 50%, and that hasn’t changed even during the pandemic. Once someone signs up, they’re not stopping anytime soon. They have no reason to, because they give a small amount.”

The social position of an organization is becoming increasingly important, not only to attract customers, but also to hire and retain employees. Not surprisingly, the demand for a scheme that makes it easy to donate to charity and makes staff feel good about it is increasing.

Says Frost: “People want to do what they can to help, and there is increasing pressure on companies to be seen doing something practical to address societal issues such as the fuel crisis and the cost of living crisis . No longer a nice-to-have, ESG credentials are critical for organizations across the board.”

Applications from new employers will increase by 20% in 2023, with funds raised increasing at a similar rate annually. Pennies from Heaven is on track to raise £700,000 by 2022, moving ever closer to its goal of raising £1 million annually.

“We are a social enterprise, but we need to think 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 customers.”

Expansion of the model overseas is also being considered. “We’ve done some research on that and there’s no reason why it couldn’t work in any country,” says Frost. “The currency, the rounding and some of the legislation are different, but we would like it to work in other countries.”

Sadly, Angus McCallum died 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 co-founder and non-executive director Anthony Law says: It’s easy for people to donate and feel good about it, with the result that we are all winners; companies, charities and people.”

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