Unpaid Direct Debits fall, but room for improvement

The number of Direct Debits which are returned unpaid to UK charities is falling, according to the latest figures from Bacs Payment Schemes (Bacs).

The number of unpaid Direct Debits to charities was down by nearly 7% in the second quarter of 2010 compared to the corresponding period last year. This figure now represents just 1% of all donations made by Direct Debit.

Mike Hutchinson, head of marketing at Bacs, welcomes the latest figures but is keen to remind charities that more can potentially be done to reduce the number of unpaid Direct Debits even further.

“When presenting potential payment options, charities need to consider that not everyone is paid at the same time.

"Salaries and wages can be paid weekly, fortnightly, monthly, or even on an adhoc basis so, what for one person is the perfect date to donate, may not be suitable for another,” said Hutchinson.

“Our experience shows that offering customers the option of various payment dates can cut down on unpaid Direct Debits and encourage sign-up.”

Bacs is committed to research into consumer behaviour, including barriers to payment, and has continually highlighted inflexible payment dates as a key issue to preventing Direct Debit sign-up.

The latest Bacs figures paint a positive overall outlook for the charity sector with the number of Direct Debit donations topping 13 million in the second quarter of 2010.

This represents an increase of more than 340,000 donations from the corresponding period last year.

Sarah Tirrell, policy and codes of practice manager at the Institute of Fundraising, commented: “It is encouraging that the public are still responding to and supporting charities by using Direct Debits as a donation method. It is important that charities maximise this fundraising technique through greater interaction with committed donors and high standards of supporter care.

“To this end, the Institute has just launched a ‘Greater Good’ project as a means of determining how best to align the fundraising methods employed by our sector with the values, culture and giving behaviours of UK citizens. This will involve finding out how our sector can motivate people to give more to charity.”