As we approach the season of goodwill, charitable organisations can expect to see an upturn in donations. This will inevitably lead to renewed calls from the general public for charities to introduce more convenient donation methods.
38% of us are more likely to donate in the festive season
According to new research undertaken by First Capital Cashflow, more than one in three (38%) people said they are more likely to donate to a good cause during the run up to Christmas.
Breaking the results down further, we found that 41% of women are more generous during the festive period, compared with 35% of men. The survey findings also showed that younger people are the most inclined to give money to charity at Christmas – 43% of 18 to 24-year-olds said they were more likely to donate at this time of year, closely followed by the 25 to 34-year-old category (40%).
So, what’s the problem?
Too many charities don’t offer convenient payment options
Statistics published by the UK Payments Council and cited by the Charities Aid Foundation (CAF) last year indicated that as many as nine out of 10 charities did NOT accept Direct Debit payments.
More than one in four people (26%) who took part in First Capital Cashflow’s survey said they were planning to set up a Direct Debit in order to make regular payments to their favourite charity. However, a sizable chunk of these donors will be unable to do so because so many charities still rely on antiquated systems.
It’s no secret that younger members of society are particularly keen to use technology in order to make their lives easier.
Research published by YouGov and the CAF in July 2016 showed that almost one in three young adults (18 to 34) want to make a charitable donation via an app in the next 12 months. Only 8% of people have donated in this way thus far, whereas 53% of people have used an app for banking purposes.
This shows that the demand for new technology is there and it’s vital that charities cater for this.
The stats confirm that cash is on the way out
Finding new supporters is one of the biggest challenges that charities face. As such, once organisations have found someone who is keen to give money to their cause, it’s imperative that they make it as easy as possible for them to donate on a regular basis.
This is where technology plays its part.
The aforementioned YouGov and CAF report highlighted the point that we’re fast becoming a “cashless society”. It revealed that 66% of adults now have contactless cards, which has resulted in 34% of this number carrying less cash.
While we’re probably still a long way from seeing cash become obsolete, the latest annual Payments Survey published by the British Retail Consortium (BRC) showed that a tipping point has been reached. Indeed, just 47% of all retail transactions were made with cash in 2015 – down from 52% the previous year.
This was the largest percentage annual drop for five years, meaning overall cash transactions have dropped by 20% since 2011.
It reinforces the point that charities that still rely heavily on cash are potentially missing out on vast sums of money.
Which charities stand to benefit from new payment technology the most?
Some charities, particularly larger ones, are already leading the charge on digital donations.
Cancer Research introduced ‘contactless giving’ windows in a selection of its stores last year, allowing passers-by to make a £2 donation with just one tap of their card (as reported by Econsultancy here).
It’s vital that smaller organisations catch up.
First Capital Cashflow asked the British public which charities they’re most likely to donate to in the run up to Christmas.
The top five results were…
- Homeless charities
- Medical/health-focused charities
- Animal welfare organisations
- Environmental charities
- Arts & Culture bodies
While this is by no means an exhaustive list, it’s a good indication of which non-profit organisations can expect to see a spike in donations during the festive season.
Do they have the resources and technology in place to cope with this extra activity? Time will tell…
Why Direct Debits are a long-term solution for charities
The Charity Direct Debit Tracking Report, cited here by the Institute of Fundraising, confirmed that the cancellation rate for Direct Debit donations is falling all the time.
The report found:
- There was a record-low cancellation rate in 2014 (2.67%)
- This was followed by the next-lowest cancellation rate in 2015 (2.89%)
- This was the first time the cancellation rate had fallen below the yearly average of 3%
- The figure stood at more than 4% in 2008/09 (at the height of the economic recession)
- Things are looking good in 2016, with January’s cancellation rate standing at 2.64% (the lowest cancellation rate for this particular month since records began in 2003)
Clearly, more people who are signing up for a Direct Debit with a charity are maintaining their donations over a prolonged period of time.
This can only make life easier for non-profit organisations who rely on regular contributions.
Make key strategic decisions while reducing costs and admin
One of the biggest misconceptions about modern payment technology, such as Direct Debit solutions, is that they are expensive to maintain.
Helen Hannah, Commercial Director at First Capital Cashflow, explained that as well as giving your supporters a much easier way to make donations, Direct Debit systems can also help charities to significantly cut down on admin:
“We’ve seen from our own research and some of the stats from the likes of the CAF and BRC that people are far more likely to make charitable donations if they are able to do so digitally. In 2016, organisations that still insist on using cash are missing out in more ways than one.
“Not only are they potentially losing money, they’re also unable to gain access to crucial data and insights that can inform their wider strategies. Direct Debit Management solutions allow you to provide clear, detailed reports to senior figures, enabling them to identify trends and make key decisions.
“Data can be pulled quickly, removing any arduous manual admin processes that have previously cost charities time and money. It’s particularly important to have technology in place during peak giving periods. We’ve found that 38% of people are more likely to donate at Christmas, which is a lot of extra transactions that need to be processed.”