Direct Debit Fundraising Survives Downturn
28 April 2010 at 5:56 pm
While the recession has had a dramatic impact on the level of direct debit cancellations, it has been followed by an equally quick recovery and a significant increase in the volume and value of direct debit giving, according to a UK report.
The inaugural Charity Direct Debit Tracking Report by UK direct debit specialist Rapidata found that December 2009 was the first month direct debit cancellation rates dropped below 3% since June 2007. It says the good news continues into 2010, with cancellation rates in January to March considerably lower than in the same months last year and in 2008.
Scott Gray, Managing Director of Rapidata Services says overall, the actual amount generated through direct debit donations in the UK rose significantly in 2009. The 117 charities within the sample received just over £26m by direct debit donations, up from £22m in 2008 – an increase of approximately 18%.
The increased value was largely prompted by a substantial rise in the number of donations over the past year – an increase of 14%.
Scott Gray says this is the first time that it has been possible to reveal the average amount that charities receive per direct debit donation, amounting to almost £12 per month or £144 per year.
The report found that the majority of donors cancel donations directly with their bank. Less than 10% of donors cancel directly with the charity. The vast majority – 68% of cancellations in 2009 – were from donors cancelling directly with their bank. Almost one in five (19%) 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.
More direct debits are failing because of insufficient funds, the report says. The percentage of transactions that were rejected due to a lack of funds in the bank account increased by 28% between 2007 and 2009, amounting to more than 6 in 10 of failed payments.
The report also offers tips for reactivating direct debit donors:
• Make sure donors can reactivate easily and securely though the charity’s website.
• Attempt reactivation sooner rather than later: certainly within 12 months of a cancellation.
• Regularly test reactivation campaigns, adjusting the timing and communication channel (telephone, letter, email etc) as appropriate
The report can be downloaded at www.rapidataservices.com/news/trackingreport2010