Charity direct debit cancellations 'seem to be stabilising'

But rates remain higher than before recession, Rapidata report indicates

Donors are continuing to cancel their direct debits to charity in significantly higher numbers than before the recession, according to figures released today by payment processing firm Rapidata.

But the cancellation rate since March is only about 30 per cent higher than the average in the four years
before the recession, compared with about 50 per cent higher in the months from July 2008 to February of this year.

This improvement does not mean cancellation rates are likely to return to pre-recession levels this year, says the report from Rapidata, which processes an average of four million charitable direct debit transactions every year. It says: "2009 will still be a year of higher than average direct debit cancellations.

"The best we can hope for is that they will not rise as much as they did in 2008. This could be the first sign that cancellations might – we stress, might – be beginning to plateau."

The figures in the mid-year update of the firm’s Charity Direct Debit Tracking Report show 4.09 per cent of donors cancelled their charity direct debits in June. This compares with 4.43 per cent in February and a high of 5.63.

Scott Gray, managing director of Rapidata, said that for the past six years, except 2007 and 2008, cancellation rates had followed an annual direct debit cycle, which saw the cancellation rate rise throughout the summer and autumn before falling in winter and spring.

"For cancellation rates to return to pre-recession levels during 2009, we would have to see a reversal of this trend, with cancellations declining over the summer, which I think is extremely unlikely," he said.

However, he said he thought cancellation rates might begin to plateau at about 4 to 4.5 per cent.

"Current economic conditions are keeping cancellation rates higher than before the recession because people cancelling now are doing so because they are suffering financial hardships," he added.

It was important for charities to try to identify and approach donors who were not suffering from the recession because they were benefiting from lower interest rates and lower mortgage payments, he said.

"This could mean there are sections of the donor population that will refrain from cancelling direct debits or indeed will be open to reactivation," Gray said.

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