Cash donations fell by £367m last year, prompting fears that small charities will be left behind as giving becomes more sophisticated.
UK Giving 2008, published by the Charities Aid Foundation and umbrella body the NCVO on 10 December, showed donations fell from an estimated £1.7bn to £1.3bn. Total giving increased by 8 per cent to £10.6bn in the same period. The figures are based on a survey of 3,322 UK adults in three waves between June 2007 and February 2008.
Cash remained the most popular method of giving, with 47 per cent of people using it compared with 30 per cent who used direct debit and 4 per cent who used payroll giving. But the rapid decline of cash giving has caused alarm.
"We are concerned about the survey's finding, because it is often smaller local groups that rely on cash donations," said Neil Cleeveley, director of policy and communications at Navca, which represents local groups. "Smaller groups need to be supported to match the bigger charities, which have increasingly sophisticated ways of raising money."
John Low, chief executive of CAF, said £367m was a huge sum, equivalent to half the amount lost each year to unclaimed Gift Aid.
He said the fall was particularly worrying because it occurred before the recession. "If it continues at this rate and accelerates because of the economic situation, this could be big," he added.
But Megan Pacey, director of policy and campaigns at the Institute of Fundraising, said: "I don't think this is something we need to be worried about. It reflects the way society is going."
Karl Wilding, head of research at the NCVO, agreed the decline of cash giving reflected greater use of credit cards and online payments.
"It could be viewed as a really positive development," he said. "Planned giving is more likely to create committed givers."