A regular stream of donations is the goal for many charities as having a consistent, predictable income allows them to plan ahead, budget better and to run the organisation more efficiently. So why is it then, that many charities do not focus on offering a Direct Debit payment option for regular donors?
“Direct Debit accounts for 31% of all donations to UK charities, making it the largest share of donations of all the payment methods.”
“Approximately 58 million donations totalling £1.1 billion were made to UK charities using Direct Debit.”
Direct Debit payments obviously benefit the donor, as this is the easiest way that they can give money, but what benefits does it bring to charities?
Here are 4 reasons why charities need to encourage giving in this way.
1) Direct Debit reduces the transaction costs of processing donations
Transaction fees are a huge cost to a charity – using credit or debit cards typically cost around 2-3% per transaction plus a flat fee of 20-30p – so the smaller you can make this cost, the more finances you have available to go towards your cause.
By encouraging donations via Direct Debit, charities can reduce the costs of processing donations to about 1-2% per transaction which is capped at a certain amount (e.g. £5) and they can get a lot more from each donation.
2) Direct Debit reduces the administrative burden and costs
Another big cost for charities is administration as taking payments by cheque, cash and standing order is a very manual process. With Direct Debit payments, however, this is completely automated.
Not only do you know exactly what has been paid and when, but you will also be notified when a donor has cancelled their Direct Debit so that you can contact them and attempt to change their mind. Less wasted time and money – sounds like a win-win to us!
3) Direct Debit can result in people giving more
Would you rather give £300 upfront or does £20 a month seem much more reasonable? Think about what is better for your supporters when it comes to donating and help them give however much they can to you regularly.
The average cash donation stands at £5 while the average Direct Debit donation is around £15 a month. That’s a big difference. It goes to show that while most of us might want to give a one-off contribution, if we are given the option to give little and often and are told how much more of an impact this will make, we would be willing to give in this way for the foreseeable future.
4) Direct Debit allows charities to receive donations quicker
Another area where charities can benefit from when encouraging Direct Debit giving, is maintaining a healthy and consistent cashflow. How? Because Direct Debit is regular income and they can start accepting payments right away!
People are more than willing to help, charities just need to make it as easy for them as possible. Encouraging Direct Debit giving is one of the best ways to do this as it’s quick, it’s effortless and it results in a win for both parties involved.