“Regular giving trends return to pre-recession levels”

Rapidata today released the first full tracking report for charity direct debit donations, and the news looks good (well better), with a return to pre-recession donation cancellation levels and increases to both the volume and value of regular giving (see executive summary below).  

Its great to have this information available to the sector and Rapidata should be applauded for this research.  Some of the key findings are:

  • Direct debit donation cancellations fall to pre-recession levels
  • First ever sector analysis of direct debit average gift shows an increased gift for 54% of charities in 2009
  • Volume of direct debit donations increase by 14% (2008-09)
  • Income by direct debit donations increase by 18% (2008-09)
  • Average gift breakdown by cause shows children’s charities top the chart, while international charities made biggest growth during 2009

According to the Press Release

For the first time, Rapidata’s Charity Direct Debit Tracking Report 2010: The Full Picture provides not only the latest benchmark figures for direct debit cancellations (up to the end of March 2010) but a comprehensive analysis of direct debit regular giving.  The new elements include: charity direct debit volume, income and average gift levels and explores the changes from 2008 to 2009.  The 2010 report also provides details about how donors cancel their direct debit donations and what charities can do when armed with this information.  Benchmark statistics in these areas have not previously been available to the charity sector and provide significant new insights for the current state of regular charitable giving.

Scott Gray, Managing Director of Rapidata Services Plc says of the new information,

“Cancellations of donations will inevitably rise in a global recession, but donors have shown that they are also willing to increase their support and commitment, understanding that this is as much a difficult time for charities and, ultimately, their beneficiaries, as it is for themselves.”

 Professor Adrian Sargeant, Professor of Nonprofit Marketing and Fundraising of Bristol Business School and Professor of Fundraising of Indiana University previewed the analysis and responded,

“This report provides some fascinating insights into donor behaviour and some of the very first evidence to suggest that the worst of the donation losses due to the recession may finally have come to an end.

You can download the full report here 

Executive Summary

Rapidata’s Charity Direct Debit Tracking Report 2010: The Full Picture

 

Overall fall in cancellation rates

2009 saw direct debit cancellation rates fall substantially throughout the year, returning to pre-recession levels for the first time since June 2007. Cancellation rates began at a high of 5.63% in January and rates dropped steadily for the first half of the year, falling at a more accelerated pace in the second half before plummeting to 2.63% in December (versus 3.89% in December 2008). December 2009 was also the first month rates dropped below 3% since June 2007. The good news continues into 2010, with cancellation rates in January to March considerably lower than in the same months last year and in 2008.

The Cancellation Cycle for 2009/10 returns to pre-recession pattern

During the height of the recession, there was little evidence of the cyclical pattern for cancellation rates that we have seen over former years.  And yet, during the last half of 2009/10, the clear cyclical pattern for direct debit cancellation rates appears to have returned.  Rates even dipped below the pre-recession average in August and October, and again in January 2010.

Increase in value and volume of direct debit

Overall, the actual amount generated through direct debit donations rose significantly in 2009. The 117 charities within this data sample received just over £26m by direct debit donations, up from £22m in 2008 – an increase of approximately 18%.  The increased value was largely prompted by a substantial rise in the number of donations over the past year – an increase of 14%.

 Average gift direct debit amount revealed

This is the first time that it has been possible to reveal the average amount that charities receive per direct debit donation, amounting to almost £12. In 2008, the average monthly direct debit was £12.26. Last year, this fell slightly to £11.95 – a drop of 31p (2.6%). Meanwhile, 54% of charities saw an increase in their own average gift level in 2009.

 Some causes fared better than others in 2009

Overall income levels as well as the volume of direct debit payments increased across the board in 2009 and, while a slight majority of charities saw their own average gift amount increase, results varied depending on the cause. Detailed analysis was reserved for the top five causes (each represented by over 10 charities within this dataset); children, young people & families, healthcare & medical research, international, general social welfare and community.

 Out of these, children, young people and families now top the chart in terms of the highest average gift by cause at £13.11, while international causes yield the lowest level (£10.65). However, it looks as though this hierarchy may be shifting. 68% of international charities succeeded in increasing their average gift amount over the past year and this segment reported the highest annual rise in average gift, yielding a 38% rise in the overall value of donations.  General social welfare and community charities achieved substantial growth in the volume of donations, but reported a decrease in average gift from 2008 figures.

 Majority of donors cancel directly with their bank

Less than 10% of donors cancel directly with the charity. Instead, the vast majority – 68% of cancellations in 2009 – were from donors cancelling directly with their bank. 20% of cancellations last year came from direct debits being returned unpaid, and just 4% were a result of incorrect bank details meaning that payments could not be collected.

 Twice as many direct debits are failing because of insufficient funds

The percentage of failed direct debit payments due to a lack of funds in the bank account more than doubled between 2006 and 2009 (from 11.97% to 26.89%).  More and more charities are re-presenting direct debit donations in an attempt to secure payment the following month, constituting 6 in 10 of all unpaid direct debits in 2009.

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