The annual benchmarking report for charity Direct Debit donations, released today by Rapidata, presents positive growth in regular giving for the third consecutive year.

Although the UK has avoided ‘double dip’ recession the latest economic reports have shown smaller growth than hoped.

Despite this, charitable regular giving is proving robust with a positive growth trend that demonstrates the resilience of the charity sector.

Rapidata’s Charity Direct Debit Tracking Report 2011 reveals volume, total income and average gift figures increased significantly on last year and the continued fall in Direct Debit donation cancellations, the lowest rate recorded since 2007, sees the Direct Debit Cancellation Cycle back in line with pre-recession levels and appearing to be stable.

Rapidata’s research is also supported by sector analysis provided by Bacs – the not-for-profit organisation responsible for the UK’s Direct Debit payment clearing scheme.

In a new section, the report shows how online regular giving is popular with consumers and growing fast, up 36% year on year, with 83% of donations taking up Gift Aid making an average gift of £11.39.

In addition, Rapidata’s research reveals how charities could be losing income unnecessarily by failing to efficiently record and manage unpaid Direct Debits.

This year’s report provides undeniable proof that charities can save potentially thousands of pounds every month by re-presenting unpaid Direct Debits that are returned as ‘Refer to Payer’.

Key Findings:

• Volume of Direct Debit donations increase +7.8%

• Income of Direct Debit donations increase +9.8%

• Average Gift sees significant increase by almost £1 to £12.86

• Average Gift By Cause shows children’s charities shoot up to £15.01 from £13.11, while healthcare & medical research shows second biggest increase.

• Direct Debit donation cancellations lowest recorded since 2007 at 3.32%

• Online regular giving is popular among consumers: year on year growth: 36%

• Online average gift revealed at £8.09, with 83% taking up Gift Aid (AG: £11.39)

• Charities are losing income unnecessarily by treating all unpaids as cancellations. The majority of unpaid Direct Debits are due to ‘insufficient funds’ and 62.5% of Direct Debits returned as Refer to Payer were paid when re-presented the following month. Charities could save £1000s every month.

Scott Gray, managing director of Rapidata, said: “The new statistics are truly encouraging but should not be taken lightly; it’s no time to rest on our laurels. I hope charities will be able to use the insight we are providing for planning future strategies.

“The most exciting news is that for the first time we have undeniable proof that representing certain failed Direct Debits prevents unnecessary loss of income, and charities need to be made aware of this.

"This issue is not widely understood; charities just don’t know about it and are losing money and regular donors.

“Commonly charities treat all unpaid Direct Debits as donation cancellations whereas our analysis shows that more than half of all ‘unpaids’ are due to insufficient funds in the donor’s bank account and returned as Refer to Payer, rather than being active cancellations by the donors.

“Our research shows a staggering 62.5% of Refer to Payer unpaids go on pay in the following month. This demonstrates how we should not write off the donation, or the supporter, because of one failed payment but should pursue the relationship."

He noted that very few charities analyse their unpaid donations past counting them all as just cancellations, nor do they have a re-present policy in place.

"It only takes some minor tweaks to the administration process to gain a significant amount of income, reduce attrition figures and the costs of reactivation programmes. For a large charity this could mean thousands of pounds a month."

Commenting on the report’s top line findings, Gray added: “Average gift value has increased quite considerably, which I would say proves the case for quality upgrade campaigns.

"The heightened focus on existing donors through the tough economic climate has really paid off. And this also backs up the long-term argument for Direct Debit versus Standing Order."

Rapidata’s Charity Direct Debit Tracking Report 2011 will be published on Monday, May 9th at midday and available as a free download from here

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