News

Direct debit cancellations on the rise

Fundraising | 25 Mar 2009

The number of charity direct debits being cancelled each month has risen ‘substantially’ since 2008 according to a new report, PF can reveal.

Figures collated by Bacs-approved direct debit bureau Rapidata, show cancellations began to rise following the collapse of the Northern Rock bank in September 2007, and have continued to increase significantly.

Rapidata processes between four and five million monthly, quarterly and annual direct debit transactions each year, for a range of charities of all sizes.

The average rate of cancellations has risen from 3.54 per cent in 2003 to 4.64 per cent in 2008, and for the first time since Rapidata’s records began, monthly cancellation rates exceeded 5 per cent in July, September and October last year, and in January this year.

The report acknowledges seasonal rises and falls, with peak cancellation rates in the summer, but says the overall reduction is notable and likely to be because of the recession. Scott Gray, managing director of Rapidata, said: “In December 2008, 67 per cent more people cancelled their direct debits than for an average December in the pre-credit crunch period.”

Rapidata, which has plans to produce its Charity Direct Debit Tracking Report annually, recommends several ways for charities to win back donors. Suggestions include thanking them for their support and offering alternatives to cancellation such as giving at a lower level or taking a payment holiday. They also advocate making sure donors can reactivate easily online, that charities attempt reactivation within a year, and they test for reactivations by telephoning a sample of 100 donors.

Gray added: “We can’t predict what will happen over the coming year. What we can say with absolute certainty is that if economic factors continue to drive cancellation rates, then charities need to take steps to reactivate the donors they have lost.”

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