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Covid-19 prompts jump in cancellations of Direct Debit charity donations

Covid-19 prompts jump in cancellations of Direct Debit charity donations

Rapidata, part of The Access Group, releases tracking data for charitable regular giving

Over the past month, UK charities have seen a large increase in cancellations of regular Direct Debit donations, rising from 2.16% in February to 3.09% in March as the coronavirus took hold.

New data, released today by charity payments specialist Rapidata, part of The Access Group, indicates that even charities’ most stable income stream – Direct Debit donations from long-term supporters – has been hit hard by Covid-19. The cancellation rate for March 2020 was 41% higher than March 2019 (2.19%), with new donor numbers also falling sharply.

This comes at a time where UK charities are facing a critical funding crisis, unable to deliver vital frontline services.

Daniel Fluskey, the Institute of Fundraising’s Head of Policy & External Affairs, says:

“The rise in cancellations shows just how challenging the coronavirus crisis is for charities’ incomes. Many of the most committed and generous supporters are having to cancel donations and the limits on social contact mean that charities are unable to deliver much of their fundraising activities. As a result, frontline charitable services are heavily at risk both now and in the future, which is why we urgently need a package of support from the Government.

On average, charities are predicting a 48% fall in voluntary income1, recognising that supporters are fearful for their own financial situations. While it’s an incredibly challenging environment for fundraising, we are seeing some remarkable acts of generosity and responses to emergency appeals – showing that people can and will still give, though perhaps in different ways and levels than in recent years.” 

The charity Direct Debit cancellations rate for March 2020 is the biggest swing from February to March ever recorded. But at 3.09% it remains significantly lower than the highest ever rate for the same month, recorded during the 2008/9 recession at 4.33%.

The majority of Direct Debit donations were cancelled in the last two weeks of the month, correlating with the introduction of social distancing on the 16th and subsequent UK lockdown on March 23rd.

Additionally, the number of new donors for the month of March was 24.11% lower than the same month last year, accelerating during the last two weeks of the month at 58.17% lower than the same period in 2019.

While many charities have reduced their fundraising activity over this period and shifted the focus onto supporter care, it is likely that the closure of face-to-face fundraising operations due to social distancing measures, and which generates high rates of donor acquisition, will be a major contributing factor.

Rapidata first began tracking regular giving trends in 2003, to help charities anticipate trends and budget for the future. The Direct Debit cancellations rate for January and February 2020 was slightly up on last year but continued to hug the Annual Cancellations Rate Cycle2 as expected. However, when the Covid-19 pandemic began to take hold in March the rate jumped dramatically.

 

Scott Gray, Rapidata lead and head of payments for The Access Group, comments,

“We have recorded a shift away from the annual cancellation cycle that we would only expect in the wake of an extenuating event. Clearly the coronavirus pandemic has had a major impact on regular giving to charities. Social distancing and lockdown in the UK have resulted in job losses and furlough arrangements with many individuals concerned about the security of their future income. Naturally people will be considering financial priorities and their ability to continue supporting their chosen charities.”

“The rate for March is lower than levels experienced at the height of the recession in 2008/9. It remains to be seen whether the lockdown measures brought in during March resulted in an incidental spike as the majority of supporters immediately affected chose to cancel their donations during those few weeks, or whether cancellations will continue to build as so does the pandemic.”    

“Almost three quarters of charities fear going bust without financial support; the real worry for the public is of course the end of the vital services and assistance those charities provide. Anecdotally we’re hearing of positive results being reported across digital and telephone fundraising, but with most charities expecting more losses the reality may mean a higher rate still for April.”

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Notes for editors

Charity Direct Debit Cancellations Rate – Q1 2019/2020

2019 2020
JAN 2.89% 3.08%
FEB 2.02% 2.16%
MARCH 2.19% 3.09%

1Source: Coronavirus Impact Survey by IoF, NCVO, Charity Finance Group, March 2020

2Annual Cancellations Rate Cycle

Typically, average cancellations rates from 2003 to present show that cancellations follow an annual cycle pattern. Rates drop during the first half of the year, rising over the Summer and falling again towards the end of the year. Peak months are usually January, July/August and October, while the Spring (April to June) and December tend to bring about the lowest cancellation figures each year.