Direct debit cancellations 'skyrocketing'

By Hannah Jordan, Third Sector, 10 March 2009

Regular donations cut as consumers rein in spending

Cancellations of direct debits to charities rose sharply in 2008, according to a report by the payment processing firm Rapidata.

The Charity Direct Debit Tracking Report 2009, published today, shows an increase in cancellations of direct debits to charities in December 2008 of 67 per cent on the average December figure since 2003.

In July last year there was a 54 per cent increase on the average July level for the same five-year period.

The figures contrast with a steady decline in cancellations of charity direct debits between April 2003 and July 2007. Scott Gray, managing director of Rapidata, said the decline stopped abruptly after the collapse of Northern Rock. "Cancellations skyrocketed last summer," he said.

He said charities might have to shift their focus from donor acquisition to donor retention. "Charities need to take steps to reactivate the donors they have lost and, more importantly, prevent donors from cancelling in the first place," he said.

He said it was difficult to predict what would happen in the coming year, or when cancellations might return to pre-recession levels.

The report also suggests ways for fundraisers to discourage cancellations, such as offering donors lower giving levels or 'payment holidays'.

The NSPCC, which gets a third of its income from regular giving, reported an increase in cancellation rates for payments through direct debits of about 14 per cent last year.

A spokeswoman said: "We are naturally anxious to retain all those generous people who donate, and we do our best to persuade them to stay with us, even if it means reducing the monthly amount they give."

Lindsay Boswell, chief executive of the Institute of Fundraising, said the Rapidata report provided useful and practical tips and was a benchmark for fundraisers to compare their own figures against.

But the main percentage increases looked more dramatic than they probably were, he said.

Rapidata processes an average of four million charitable direct debit payments a year.

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