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Direct charity payments declining

11 March 09 02:05 GMT

The number of charity donors cancelling the direct debit payments they make to worthy causes has increased during the recession, research shows.

Average monthly cancellations rose from 3.32% in 2007/08 to 4.64% in 2008/09, said Rapidata, which handles four million payments for charities a year.

The average monthly cancellation rate in 2008/09 exceeded 5% four times.

Scott Gray, Rapidata managing director, said it showed charities needed to focus on new ways of retaining donors.

The research looked at the company's total business from more than 160 charities from April 2003/04 to March 2008/09.

Mr Gray said: "Our analysis shows that from April 2003 until the summer of 2007, there had been an overall fall in average monthly cancellation rates, which was a very positive trend.

"But that trend was abruptly halted and violently reversed after Northern Rock.

"Cancellation rates skyrocketed last summer so that, for example, in July, 54% more people cancelled their direct debits than in the average July for the pre-recession period, while in December, there were 67% more cancellations than for the average pre-recession December.

"There are a number of things charities can do to keep donors on board, including giving them the option to reduce the amount they pay, or allowing them to take a payment or gift holiday.

"If they clearly want to cancel, the charity should acknowledge that cancellation as soon as possible and work on attracting them back."

Last month the government announced it would put £40m towards helping charities to assist people through the recession.

The plan, for England and Wales, will include awarding grants to deprived areas, establishing a volunteering scheme and creating funds to help non-profit organisations merge.

Some charities have already been forced to cut staff and reduce services as they try to cope with the economic downturn.

A survey of 500 charities by the Charity Commission suggested one in four had seen donations drop, while one in five said they had experienced a surge in demand for their services.

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