Direct debit cancellations increase ‘mirrors the depths of recession’ 4

Fundraising | Celina Ribeiro | 26 Aug 2011

Direct debit cancellations rose sharply between April and May and remain significantly above last year’s rates, prompting questions about whether a new trend is emerging with regular giving.

Charity direct debit cancellations rose from a low 2.44 per cent in April to 4.1 per cent in May, with no apparent explanation for the soar, according to figures compiled by Rapidata.

Although cancellation rates did fall slightly in June (to 3.87 per cent), rising only marginally in July (3.91 per cent), these rates remain significantly above that of June and July 2011, when they sat at 3.21 per cent and 3.22 per cent respectively.

Somewhat ironically, May was when the government released its Giving White Paper designed to boost philanthropy and coincided with the release of Rapidata’s Charity Direct Debit Tracking Report, which found that 2010 cancellation rates had fallen to pre-recession levels, ending the year at 2.87 per cent. May also followed a series of bank holidays caused by Easter and the Royal Wedding.

Scott Gray, managing director of Rapidata, said the May rates “mirrored those seen in 2008 and 2009 in the depths of the recession”, but that at the time the company had written it off as “an anomaly”.

However, the recent months figures he said, “suggest an economic shift has occurred since Q1 2011, maybe reflecting the nation’s mood of economic uncertainty that has flared up again recently.

“I don’t think this is overly alarming just yet, but charities should be looking at their current activities and asking whether they are doing everything they can to minimise cancellations and attrition.”

Rapidata monthly monitoring figures

	April	May	June	July
2010	2.89%	2.80%	3.21%	3.22%
2011	2.44%	4.10%	3.87%	3.91%

Directory: Rapidata Services PLC
Who's Who: Scott Gray

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PS Siu
Fundraiser
RNS
26 Aug 2011

Interesting stats - BTW, is Mr Gray Rapidata's MD And chief analyst? We need to know...

[Reply]

Wendy Ramshaw
26 Aug 2011

Speaking from personal experience I have been targetted on the street many times to sign up for direct debits to national charities that do not have any resonance with me. Its not that I don't want to support charitable giving but the bully tactics can be counter productive and I suspect that many cancellations are due to that. I would prefer to still donate money to charity but I am more selective as to who I want to divert my cash too. The notion of philanthropy and the discussions around Big Society may mean that people are looking closer to home to donate their money and time too.

[Reply]

Richard Radcliffe
Legacy consultant
Smee and Ford
26 Aug 2011

The rise in direct debit cancellations is hardly surprising. A majority of older people are suffering from a huge lack of cash. In virtually every focus group I meet donors who are struggling to make ends meet and they cannot support the many charities they want to support. 5 years ago typical committed donors I met supported around 5-8 charities. Now they support 2-4. It is not that they do not want to give, they just do not have the cash. Any new giving initiative will just not attract more direct debits until the recession is over and their cash position improves.

[Reply]

Andy Perry
Director
Change4Pence
27 Aug 2011
Response to [Richard Radcliffe]

I have no doubt that charities recognise the reality that in difficult economic times people will look to reduce their outgoings, and 'non-essential' debits like monthly payments to charities are an obvious first choice to cut. Perhaps charities should be looking at a strategy to give individuals the option of reducing their regular payments rather than losing their regular donors altogether. A letter to a regular donor who has cancelled their direct debit acknowledging difficult economic times and asking a donor to consider giving even a pound a month could mean the difference between retaining an individual's loyalty through these times or losing them altogether. As a member of the Round Pound Working Group my company is currently exploring a form of regular micro-giving where individuals would have their debits from a nominated bank account rounded up to the nearest 5p with the total amount rounded donated to nominated charity on a monthly or quarterly basis. With an average donation of between 45p and 90p per month (based on 15 to 30 debit transactions), this type of option could be one solution to either attract new potential new givers or retain those who can no longer afford to give larger sums of money, at least in the short-term.

[Reply]

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