12 February 2016

Dumping cheques could "spell disaster" for UK charities

09 May 2011  |  7826 views  |  6 cheque

Plans by Britain's banks to abolish cheques by 2018 could "spell disaster" for many of the country's charities, according to the Institute of Fundraising.

In late 2009 members of the Payments Council voted to set a provisional target of 2018 for the abolition of cheques - which have seen declining popularity in recent years - with a review scheduled for 2016.

However, the decision provoked widespread concern, with consumer groups, small businesses and charitable organisations all raising objections.

Last month parliament's Treasury select committee reopened its probe into the plans, claiming it had been "inundated with letters".

In its response to the select committee's call for evidence (the deadline for which passed on Friday), the Institute of Fundraising has warned that the plans could be disastrous for charities, some of which receive up to 80% of their income through cheques.

Louise Richards, director of policy and campaigns at the institute, claims that despite claims to the contrary, the Payments Council, views the phasing out of cheques as inevitable, citing the imminent abolition of the cheque guarantee card, which is set to go in June.

"Banks may use the abolition of the cheque guarantee system to say that fewer people are using cheques, as no retailer will take them. But this doesn't mean that there's less demand for cheques, rather that a decision has been taken away from consumers and charity donors," says Richards.

Speaking to the BBC, the Payments Council's Sandra Quinn stressed that the 2018 deadline is only a target and viable alternatives - such as mobile payments - must be in place by 2016 if the plans are to go ahead,  vowing that "we won't get rid of cheques unless alternatives work".

Comments: (6)

Vishwanath Thanalapatti - Risk Management Professional - Toronto, Canada | 09 May, 2011, 17:34

In a changing world of payments in banking industry checques will fast loose out in importance and will be an expensive option to retain the service.  I fail to understand  why the UK charities are raising a hue and cry.  The simpler and the only available option will be electronic based. Mobile payment is one of these, the other will be online with a charity organisation as a registered biller with a bank. A   seamless, fast, transparent,at no-cost transaction. 

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A Finextra member | 09 May, 2011, 23:52

From my experience I think charities give account of themselves when promoting giving my electronic means.  In regards to cheque donations, these will mainly come through with large amounts on them - take a amount left in a will for example.  The volumes on these amounts will probably be small but significant in value.

The main issue here is the habitual way in which authorisation is given for these payments.  Consideration needs to be given to tempt cheque payers to adopt a more controlled way of sending payment that retains the control that cheques give to them.

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Bo Harald - ZEF and Real Time Economy Program - Helsinki region | 10 May, 2011, 09:30

Cheques will disappear and it would be a good idea to promote easier and better alternatives for donators and receivers alike. Who btw want to donate if the receiving organization does not rationalize its own administrative processes?

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Nick Collin - Collin Consulting Ltd - London | 10 May, 2011, 10:38

Not much sympathy for the charities, then - and rightly so.  Let's face it, cheques are obsolete and much more efficient and convenient alternatives already exist, in particular direct credits via online banking.  If the charities took the trouble to encourage payment by direct credit and adopted the Payment Council's excellent guidelines in this respect I think they'd be pleasantly surprised - see http://www.paymentscouncil.org.uk/files/payments_council/best_practice_guidelines_for_billers.pdf

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Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 10 May, 2011, 17:10

As receivers of funds, charities have a lot to worry if checks are cut off and a little to do to change donor behavior, which at least currently appears overwhelmingly in favor of donating by checks. Personally, I've tried donating by many forms. While things could change from now to 2018, I find checks to be easily the most convenient instrument at this time. Unlike a utility bill where the consumer will suffer loss of service if they fail to pay on time - even if the online bill payment website has a lot friction - let's not forget that donors to charities are under no compulsion to put up with the inconvenience currently involved with non-check alternatives.  

So, the real issue here is with donors, and, by extension, the general public. Instead of asking charities to do this or that, why not poll donors for their preference? And, if this is a matter for legislation, maybe even hold a referendum among the general public?

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Terry Day - International Financial Systems - London | 19 May, 2011, 13:29

I agree with everything that has been said by previous commentators. There is no shortage of methods to pay money to charity take, for example, Just Giving or the BBC's Red Nose Day. Significant sums of money is given or pledged without cheques being mentioned. As for large donations these can be paid by CHAPS. I agree with Bo Havald above that charities could do much more, and have greater disposable funds, if they were to look at ways of maximising their assets and become more efficient in their distribution.

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