Direct debit donations up by volume and value, say Rapidata
Howard Lake | 20 April 2010 | News
The number of direct debit donations to charity started growing again during 2008-2009, as did the total income, according to research by direct debit processing bureau Rapidata.
The company’s Charity Direct Debit Tracking Report 2010 indicates that regular giving is returning to pre-recession levels. The report is the first to offer benchmarked analysis for the period of the recession.
With data from 117 charities, the report reveals that the total amount generated through direct debit donations rose significantly in 2009 to just over £26 million, up by 18% from £22 million in 2008. There was also a substantial rise of 14% in the number of donations over the past year.
Average donations
For the first time, the Tracking Report contains details of the average amount that charities receive per direct debit donation. In 2008, the average monthly direct debit was £12.26. Last year, this fell slightly to £11.95, a drop of 31p (2.6%). Nevertheless, during 2009 54% of charities saw an increase in their own average gift level.
Grouping the participating charities, Rapidata found that charities working with children, young people and families now top the chart in terms of the highest average gift by cause at £13.11, while international causes attract the lowest level (£10.65). However, this could be changing: 68% of international charities succeeded in increasing their average gift amount over the past year and this segment reported the highest annual rise in average gift, yielding a 38% rise in the overall value of donations. While general social welfare and community charities achieved substantial growth in the volume of donations, they reported a decrease in average gift from 2008 figures.
Cancellation rates
During 2009 direct debit cancellation rates fall substantially throughout the year, returning to pre-recession levels, according to Rapidata, for the first time since June 2007. Cancellation rates began at 5.63% in January 2009 and dropped steadily for the first half of the year, falling at a faster pace in the second half before dropping steeply to 2.63% in December (compared to 3.89% in December 2008).
December 2009 was also the first month rates dropped below 3% since June 2007. This trend has continued into 2010, with cancellation rates in January to March considerably lower than in the same months last year and in 2008.
The 2010 report also provides details about how donors cancel their direct debit donations and what charities can do when armed with this information. For example, Radidata found that fewer than 10% of donors cancel directly with the charity. Instead, the majority (68% of cancellations in 2009), were from donors cancelling directly with their bank. Twenty per cent of cancellations last year came from direct debits being returned unpaid, and just 4% were a result of incorrect bank details meaning that payments could not be collected.
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Comment
Scott Gray, Managing Director of Rapidata Services Plc, said: “Cancellations of donations will inevitably rise in a global recession, but donors have shown that they are also willing to increase their support and commitment, understanding that this is as much a difficult time for charities and, ultimately, their beneficiaries, as it is for themselves.”
Indeed, Rapidata point out that the research shows that “the majority of charities have managed to increase the volume and overall value of direct debit income during this period, underlining the message that direct debit giving can not only help sustain charities through tough times, but can even be increased during a recession”.
Professor Adrian Sargeant, Professor of Nonprofit Marketing and Fundraising of Bristol Business School and Professor of Fundraising of Indiana University added that this report was “some of the very first evidence to suggest that the worst of the donation losses due to the recession may finally have come to an end”.
He welcomed this annual analysis, saying: “What is genuinely exciting about this work is that with every passing year we will understand even more about donor behaviour. It will be possible to track the impact of various events and economic circumstances on giving by direct debit in the UK and provide fundraisers with a tool they can use to make realistic predictions about how the fundraising environment will impact on their work, while affording them valuable benchmarking data to assess their own performance.”
For example, Rapidata’s analysis has shown that direct debit cancellations were decreasing in the lead up to the recession, that this trend rapidly reversed once the economic downturn took hold, but also that this has been followed by an equally quick recovery and a significant increase in the volume and value of direct debit giving.
Although the statistics are very encouraging, Rapidata urged charities to be “proactively manage any cancellations or failed payments”.
A free downloadable copy of Rapidata’s Charity Direct Debit Tracking Report 2010: The Full Picture is available from Rapidata from from midday on 20 April 2010. The company will publish a mid-year update in the Summer.
www.rapidataservices.com
About Howard Lake
Howard Lake is consultant editor of UK Fundraising. He founded the site in 1994 and successfully sold it in 2022. As director of Giving X Ltd he is exploring growing giving on a massive scale.
He is the founder of Fundraising Camp and co-founder of GoodJobs.