Direct debit cancellations fall, but charities miss opportunities

This article is kindly borrowed from www.civilsociety.co.uk

Direct debit cancellations fall, but charities miss opportunities

The level of direct debit donation cancellations is falling, approaching pre-recession levels, but charities are often dismissing otherwise loyal donors after just one failed payment. 

After spending the entirety of 2009 suffering direct debit cancellation rates of above 4 per cent, charities saw a slow down in cancellations last year; cancellation rates never peaked above 4 per cent, ended the year at 2.87 per cent and had a year average of 3.3 per cent – the lowest since before the recession, in 2007.

The Charity Direct Debit Tracking Report, released today by Rapidata with Bacs, found that while the trend with cancellations was positive, charities were missing out by counting missed payments as cancellations. Just a third of missed payments were the result of an actual cancellation by a donor; the report found that the majority of missed payments were the result of insufficient funds. Of those who failed a payment due to lack of cash in the account, the report found that 62.5 per cent paid the pledged donation when re-presented for payment by the charity. 

Combined, the 117 charities studied as part of the survey saw a 7.8 per cent rise in total volume of regular direct debits and 9.8 per cent rise in total value, which reached £28.5m. 

Donors are also giving more on average each month. The average monthly gift rose by just under £1 to £12.86 in 2010, with the area of children, young people and family enjoying the highest average gift, at £15.01. 

Online direct debits have seen a good year, with the report finding a 36 per cent increase in the number of donors signing up to a regular gift online. The average such gift, however, is lower at £8.09. Gift aid take up on these online gifts is high.

Scott Gray, managing director of Rapidita, said the issue of how charities treat non-payments is critical. “For the first time we have undeniable proof that re-presenting failed direct debits prevents unnecessary loss of income, and charities need to be made aware of the issue,” he said.

“Even if you’re a small charity and you’re losing just one donation of £10 a month, month after month it adds up.”