The total number of UK charitable donations made by Direct Debit rose to a record breaking 60 million in 2014, according to data from Bacs Payment Schemes, with values exceeding £1.21 billion, a rise of 4.1%.

The study found that a number of charitable sectors benefited from Direct Debit in the last year, with the greatest beneficiaries being the environmental sector, where the number of donations grew by 7.1%, which equated to a value increase of 5%.

Housing charities enjoyed the biggest growth in the total value of donations by Direct Debit, at 9.6%, followed closely by older people’s charities, at 9.4 %.

Bacs’ charity sector specialist, Graham Callaghan, commented recently: “We know that automated payments are cost-effective for charities, as they are cheaper to process than the likes of cash and cheques, while they are also easy and convenient for those donating. Converting supporters to Direct Debit also increases retention rates, impacting on long term collection levels.”

Yet according to research published by Charities Aid Foundation (CAF) last year, a staggering 91% of charities in the UK still do not offer Direct Debit as a way of giving.

For charities, Direct Debit processing is a perfect business opportunity to streamline costs and guarantee receipt of regular voluntary income from one-off donations. The problem is however, registering for and complying with Bacs scheme rules can become a financial and administrative burden for many smaller charities.

Other contributing factors include charities approach to donor giving. Charities should consider how donors give; allowing donors the opportunity to choose from a variety of monthly donation plans and making it clear where their money is being spent, can all minimise a charity’s risk. According to the BACs Family Finance Tracker 2013, the average value of each charitable Direct Debit is £181 per year (just over £15 per month), more than any other donation method.

If charities can succeed in driving more of their fundraising toward Direct Debit, hopefully smaller charitable organisations can start to benefit from the revenue stability that many larger charities have been enjoying for years.

References

http://www.bacs.co.uk/Bacs/DocumentLibrary/PR_number_of_charitable_donations_made_by_Direct_Debit_reaches_60_million_in_2014.pdf

http://www.theguardian.com/voluntary-sector-network-caf-partner-zone/2014/nov/05/caf-donate-breaking-down-the-barriers-to-direct-debit-fundraising