Increase in direct debit cancellations since coronavirus crisis began

08 Apr 2020 News

More donors than usual have been cancelling their direct debits to charities since the coronavirus crisis started, data from a charity payment company suggests.

Rapidata, part of the Access Group, gathers data on more than 600 charities and about 21 million transactions. It says that in March the direct debit cancellation rate stood at 3.09%, which is 41% higher than during the same month last year (2.19%).

The tracker also recorded a significant decrease in the number of new regular donors, which was down 24.1% from March 2019.

Both the increase in direct debit cancellations and the slow down of new sign-ups were especially evident in the last two weeks of the months, suggesting that the coronavirus crisis is the most likely cause. Social distancing measures were first introduced in the UK on 16 March and the country went into lockdown one week later.

Rapidata said that the decrease in new donors could be linked both to the fact that charities have been focusing on taking care of existing supporters rather than acquiring new ones, and to the suspension of face-to-face fundraising activities, which are a major source of donor acquisition.

While direct debit cancellation rates were generally higher in the first months of 2020 compared to the same period last year, in March the gap was much more pronounced than in January and February.

Conservative figures estimate that the charity sector could lose around £4.3bn in 12 weeks due to coronavirus. While event and public fundraising were the first income channels to be hit, others, including legacies and individual giving, are also likely to register losses.

Pandemic having ‘major impact on regular giving’

Scott Gray, Rapidata lead and head of payments for The Access Group, said: “We have recorded a shift away from the annual cancellation cycle that we would only expect in the wake of an extenuating event. Clearly the coronavirus pandemic has had a major impact on regular giving to charities. Social distancing and lockdown in the UK have resulted in job losses and furlough arrangements with many individuals concerned about the security of their future income. Naturally people will be considering financial priorities and their ability to continue supporting their chosen charities.”

He also said that it is yet unclear whether the trend will continue in April.

“The rate for March is lower than levels experienced at the height of the recession in 2008-09. It remains to be seen whether the lockdown measures brought in during March resulted in an incidental spike as the majority of supporters immediately affected chose to cancel their donations during those few weeks, or whether cancellations will continue to build as so does the pandemic.”    

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