Donors are starting to feel more optimistic and are less likely to cancel their charitable contributions, with new figures showing direct debit cancellations in 2013 fell to the lowest annual average rate since before the recession.
The figures, released today by Rapidata, show direct debit cancellations fell from 4.05 per cent in January last year to 2.4 per cent in December. The average cancellation rate for the year, 3.1 per cent, was the lowest seen since 2006. Average annual rates of cancellations peaked at 4.33 per cent in 2008, falling to 3.32 per cent in 2010, before rising to 3.79 per cent in 2011.
Radidata, which processes direct debit payments for charities, other not-for-profit organisations and companies, compiled data from more than 500,000 direct debit transactions each month from more than 100 UK charities for the Charity Tracking Report 2014.
The previous tracking report, published in 2011, revealed the full scale and dramatic rise of cancellations during the recession, but noted signs of an early recovery in 2010. The latest report includes newly published data from 2011, 2012 and 2013.
Data from 2013 shows that cancellations in August, October and November were the lowest recorded in those months since the company began tracking in 2003, indicating donor retention is on the rise. Writing in the report, Adrian Sargeant, professor of fundraising at the University of Plymouth and director of the Centre for Sustainable Philanthropy, says: “What we are seeing is the ‘feel good factor’ associated with coming out of recession. People are starting to feel more optimistic and thus less likely to cancel charitable contributions.”
The report says hotspots for cancellations have historically been during the summer months and after Christmas as people cut back due to the additional expense of the holiday seasons. But the cycle for 2013 was less typical with a fairly continual decline in cancellations throughout the year, including August, which is normally a peak month. Sargeant says: “One might ask why retention patterns aren’t exactly the same as pre-recession levels, but the rationale for this is that people’s anchors have changed in the intervening years. The recession was long enough for the memory of their previous behaviours to fade, allowing the current wave of optimism to create a new baseline level of normal.” He is hopeful that bar any challenges in the economy, this pattern will continue this year.
During the recession, cancellations hit a peak of 5.63 per cent in January 2009. Scott Gray, managing director of Rapidata, says: “Looking at cancellations from the last few years, we can see the catastrophic impact of the recession on charities’ regular giving income streams.
"With continued investment in donor stewardship, charities fought through the recession, driving down cancellations to create the most positive environment for regular giving ever seen.”
During the recession, many charities invested more resources into retaining donors. He says the cancellations for 2013 are the clearest sign that charities’ investment in stewardship, against the backdrop of a more robust economy, has succeeded.
Mark Astarita, director of fundraising at the British Red Cross and chair of the Institute of Fundraising, says: “History will show that UK fundraising weathered the storm of this last recession rather well and that this will have been done best by those who concentrated on regular giving.
"In January 2009, with the full roar of the recession ringing in our ears, 5.63 per cent of direct debits were cancelled. By December 2013, cancellation rates were down to a remarkable 2.40 per cent. The difference may only be a few percentage points but for charities as a whole those few points mean millions of pounds.”
