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The penny won’t be dropped: copper coins to remain in circulation

penny - one pence piece - 1p
The penny won’t be dropped: copper coins to remain in circulation

Someone in government rapidly spared more than a penny for the nation’s thoughts, as the possibility of scrapping 1p and 2p pieces, mooted this week by the Treasury, was scrapped within 24 hours.

The Prime Minister’s Official Spokesman confirmed that lower value copper coins would not be removed from circulation. The idea had been floated by the Treasury as part of a consultation on the role of cash (including the £50 note) in an increasingly digital economy.

The threat to the penny and 2p piece made headlines. Much coverage mentioned the value to charities of small coins donated in .

SEE ALSO: ‘Every penny helps’ outperforms ‘please give generously’ on collecting tins (1 May 2007)

Former Chancellor of the Exchequer George Osborne “came within weeks of announcing plans to take 1p and 2p pieces out of circulation” according to The Guardian. He “was stopped by David Cameron who feared the symbolism of the Conservative party scrapping the penny”.

Former Charities Minister Rob Wilson welcomed the initial indications that the copper coins would be scrapped, suggesting that the charity sector would actually benefit.

 

Penny falls

The Treasury’s consultation notes that “Cash has fallen from being 62% of all payments by volume in 2006, to 40% in 2016, and is predicted by industry to fall to 21% by 2026. It represented only 15% of the total value of consumer spending in 2015.”

Remarkably, many low denomination coins are used only once!

The consultation explains: “Surveys suggest that six in ten 1p and 2p coins are used in a transaction once before they leave the cash cycle. They are either saved, or in 8% of cases are thrown away. To meet demand created by such losses from circulation, in previous years the government and the Royal Mint have needed to produce and issue over 500 million 1p and 2p coins each year to replace those falling out of circulation.”

The Treasury said of the £50 note: “At the other end of the denominational scale the £50 note is believed to be rarely used for routine purchases and is instead held as a store of value.”

 

Charities and small coins

Charities are often in for a penny, in for a pound. They receive small coins in various ways:

  • public street collections
  • home collecting boxes
  • counter-top collecting boxes in shops
  • collecting boxes at venues e.g. theatres, art galleries and museums

 

 

 

IoF to respond

The Institute of Fundraising will respond to the Treasury’s consultation to reflect charities’ views on the value to them of copper coins.

 

Commenting before the Government confirmed that the coins were safe, Daniel Fluskey, Head of Policy and External Affairs at the IoF, said: “Charities and donors benefit from being able to use a diverse range of payment methods. While many charities are implementing contactless in order to suit donor preferences and respond to consumer habits, there is likely to be an important and ongoing role for cash payments for a range of fundraising activities.

“The Institute of Fundraising has heard some concerns from our members around the potential scrappage of 1p and 2p coins. While the proposed change might not have a huge impact on the overall value of donations, there is potentially a wider impact that we should be aware of.

“Our members have shared examples of how collecting small change on a regular basis provides much needed funds for local and smaller charities, and noted the importance of spare change for many young children’s first experience of donating. This is symbolic of wider and more long-term change in how people give, and how people use cash more generally.

“There needs to be a strategic approach to looking at the issues as the consultation proposed big structural changes across society in how we carry and use . The IoF will engage with our members on the potential impact of this proposed change.”

 

All change

The rapid confirmation that small coins are safe might even hinder charities. 

  • cash is still being used less, so there are likely to be fewer pennies being donated to charities
  • suggesting that many charities ‘rely’ on 1p and 2p donations might reaffirm public misunderstandings of how charities operate and fundraise
  • not having a contactless donation option in public street collections might make it harder for contactless-card-using people to donate
  • due to inflation a 1p now is not worth as much to charities as it was 10, 20 or 30 years ago
  • if 5p and 10p pieces were the lowest value coins, that might actually increase the value of coin donations to charities

 

A last hurrah for small coins?

When (it is unlikely to be ‘if’) small coins are phased out, fundraising consultant John Thompson has an idea ready to go. He came up with the #FirstFiver and #FinalFiver campaigns which raised over £12.5 million according to CAF.

He suggests that the Bank of England (or Royal Mint) “should create a charitable fund from which to distribute nominal and melt-down values” of the coins.

 

 

 

 

Howard Lake is a digital fundraising entrepreneur. Publisher of UK Fundraising, the world's first web resource for professional fundraisers, since 1994. Trainer and consultant in digital fundraising. Founder of Fundraising Camp.

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