How charities benefit from direct debits

Direct debit offers significant advantages as a payment method for any sector – commercial, public sector and third sector. In this blog, we look specifically at the third sector, and how charities benefit from using direct debits.

Advantages for Charities

Donor retention

It’s a fact that many households are feeling pressed financially in the current climate. Charitable giving is often one of the first casualty of budgeting as households reign in their expenses. Offering easy ways to donate, such as regular direct debits, is a vital part of retaining donations wherever possible.

Certainty

If you’re receiving donations by direct debit, you will have a greater over view of how much you will be receiving. This gives greater certainty, allowing you to budget and plan more effectively.

Advantages over Standing Orders

We covered the relative advantages of direct debits over standing orders for charities in a previous blog, and our analysis still holds true. For a number of reasons, including the Direct Debit Guarantee which protects donors, direct debit is a better tool for charities to use when compared with standing orders.

Reduced administration costs

It costs as much as 12p to raise £1 in voluntary donations, so reducing that 12p to as little as possible is very important for charities, ensuring that as much money as possible goes to the cause itself. Direct debit payments typically cost less than debit or credit card transactions, and avoids the costs associated with processing cash and cheque donations, because direct debit can be automated.

Reporting

As accountability becomes more and more important, particularly financial accountability, the BACS reports that direct debit offers is a huge advantage to charities and also helps with keeping administration costs down.

Of course, it’s all very well looking at the advantages for charities, but what about donors? Fortunately, direct debit offers donors – and potential donors – a number of advantages too.

Advantages for Donors

Familiar territory

9 out of 10 adults makes at least one regular payment by direct debit – and 73% of household bills are paid this way. As we move more and more to an online society where donors and potential donors want life to be as easy as possible, direct debit is a tool that is already familiar to many people. Using it to make their charitable donations makes sense.

Popularity

It’s already a popular way of making charitable donations – second only to cash donations, direct debit already accounts for over 30% of charitable donations.

Convenience for donors

The statistics we’ve quoted above highlight the underlying benefit for direct debit in today’s society – direct debit is a convenient and hassle free way to make a regular payment. For the donor, it means they can fulfil an intention to donate – be that monthly or annually – without having to remember to do so.

Investing in a new system may seem daunting, and perhaps an expense you might feel is unjustified. However, the benefits of using direct debits are clear for charities, and if your charity hasn’t already done so, it’s well worth taking the time to explore the possibilities so that your organization can take advantage too.