Trading places: cash, online money and charitable donations
Adapting to an increasingly digital world presents the third sector with some head-scratching problems.
People use cash less and less. However, most charitable donations still come via physical money rather than cards or online.
All charities want to make it as easy as possible for anyone to give them money. However, they have to be careful – stingy, even – when it comes to making changes to their business models. Funding is tight and frontline services need to be maintained.
Nevertheless, the third sector needs to adapt with the times just like any kind of organisation. NICVA’s latest Individual Giving Survey was published this week and, while there is nothing to cause panic, local charity bosses have some thinking to do.
The survey covered donations in 2018 and was based on a representative sample of the NI population. It found that 76% of the adult population donated to charity (76%) over the last 12 months – a decrease by two percentage points from the year prior. However, this figure is considerably higher than UK wide levels (60%). On average, over £140 was donated per person to charity over the year.
Despite our increasingly cash-free society, 73% of donors used cash as their main method of giving. Only 29% used any digital means, at all.
The question, then, is why should there be any rush to digital?
This year’s NICVA survey did not cover what prompted donations. The last time they gathered information about that was in 2016, asking donors what had led them to donate in the previous four weeks – and by far the most compelling cause of donations were street coin collectors, responsible for 32% of all donations.
Requests from a friend, family member or colleague was way behind in second place, leading to 15% of all donations.
Fundraising events came third (14%), ahead of direct debit promotions (10%, more on this in a second), and TV advertising (7%).
All other prompts were responsible for 5% or fewer of all donations. Interestingly, direct marketing – by mail, telephone or via digital channels (including social media) – barely made a dent, all only accounting for one or two percent of prompts to donate.
Other than the broad observation that we are an increasingly cashless society, this presents little compelling evidence that digital donations need to be chased.
However, digital donations are growing and, moreover, they are sticky.
The prompt figure for direct debits, above – 10% - is a reasonable figure but the thing to remember about direct debits is that they are not one donations, they are many.
Encouraging people to give a regular amount to your organisation is clearly a huge aim for charities.
According to NICVA’s latest survey, of those who donated digitally:
- 80% of respondents donated to charity using direct debit methods. This was highest in the 65+ years age group (89%)
- Online giving platforms (16%) and PayPal (13%) were the second and third preferred methods of digital donation
Furthermore, amongst respondents who have ever used digital means as a method of donating, 89% had used this method to donate over the last 12 months.
19% of respondents stated that they would be likely to donate more money through one-off contactless payment. In contrast, 59% of respondents said this was unlikely.
That can be read a few ways. One fifth of people is not an insignificant number and presenting them with the option to make one-off contactless payments could be good for charity coffers. However, it might be the case that, when it comes to digital giving, people prefer the idea of direct debits to lump sum payments. More research would be needed to explore that idea (and, bear in mind, our relationship with money is changing and what is true today might not hold up in a few years’ time).
Scope wrote previously about the “dash from cash” and the need for charities to adapt to a slowly but surely declining market for donations.
The impact on charities has not been in proportion to the rate of social change – in 2006 cash payments represented 60% of all UK financial transactions; this is predicted to fall to 26% by 2026 – but that could be indicative of a cliff edge at some unknown point in the future.
Any reluctance shown by the third sector is understandable. Resources are precious and the exact trends are hard to read. Even senior officials who are keen to have a major digital push might find it hard to justify when most donations are still made with cash.
One other concern from the latest NICVA survey that is worth noting is a decline in legacy giving:
The number of respondents who had considered leaving a gift to charity in their will decreased from 16% in 2017 to 11% in 2019; the number intending to leave a legacy gift also decreased, from 7% in 2017 to 4% this year. Only 4% of respondents have currently made a legacy pledge in their will – a large decrease from the figure reported in the 2017 survey (9%).
Geoff Nuttall, NICVA’s Head of Policy and Public Affairs, said: “It is concerning to see an overall decline in charitable giving in Northern Ireland, even though giving remains high compared to the UK average. The drop in legacy giving will be of concern to many charities for whom this is an important source of income. Looking to the future, this survey highlights the need for charities to keep up with new technologies and trends to sustain support for their vital work in a difficult climate.”
What represents best practice in this environment is hard to know. However, the future will not be like the present (which is already unlike the past). Changes will need to be made.
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