Amount donated by direct debit 'up by 10 per cent'

Rapidata report also shows a rise in the value of the average donation in 2010

Donations via direct debit have increased
Donations via direct debit have increased

The amount of money given to charity through direct debit rose by almost 10 per cent in 2010, according to the latest report from the direct debit processing company Rapidata.

Rapidata's Charity Direct Debit Tracking Report 2011 is based on the direct debit payments processed by the company for a sample of 117 charities, which accounted for 3.5m transactions in 2010, worth £28.5m.

Seventy per cent of the charities in the sample saw a rise in the total amount of income generated through direct debit during the year. The total income for the whole sample rose by 9.8 per cent, or £2.5m.

This was a smaller increase than in 2008 to 2009, when the total amount rose by about 18 per cent, or £4m.

The number of direct debit transactions also increased by 7.8 per cent in 2010, from 3.2m transactions to 3.5m.

There was an increase in the number of direct debits set up online rather than on paper: the average number of online sign-ups among the charities sampled rose by 36 per cent year-on-year, from 112 to 153 per charity sampled.

The report says the average gift level also increased, from £11.95 in 2009 to £12.86 in 2010.

The children, young people and families sector saw the most significant increase in average gifts, rising from £13.11 in 2009 to £15.01 in 2010.

Cancellation rates were down in 2010, with an average monthly rate of 3.32 per cent, compared with 4.05 per cent in 2009. According to the report, this was the lowest rate since 2007.

Adrian Sargeant, professor of fundraising at the Bristol Business School and at the Centre on Philanthropy, Indiana University-Purdue University Indianapolis, said that while the data painted quite an optimistic picture, charities were still losing an unacceptably high proportion of their regular giving file each year.

"There is therefore no place for complacency," he said. "As a sector we need to continue to focus on donor loyalty, identifying ways in which we might add value for donors."

During 2010, Rapidata also measured how many direct debit payments that failed one month because there were not enough funds in the account, but were successful the next month when asked for again.

Doing this involved a process called re-presenting, and, according to Scott Gray, managing director of Rapidata, many charities do not have this policy in place, meaning that instead of asking for the donation again the next month, they treat the failed payment as a cancellation.

"It only takes some minor tweaks to the administration process to gain a significant amount of income, reduce attrition figures and the costs of reactivation programmes," he said.

"Our research shows a staggering 62.5 per cent of 'refer to payer' unpaids go on to pay in the following month. This demonstrates how we should not write off the donation, or the supporter, because of one failed payment, but should pursue the relationship."

He said that, for a large charity, this could mean thousands of pounds of extra income a month.

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