Direct Debit for charities and fundraising organisations
It is increasingly important for charities to offer a Direct Debit payment option for regular donors. Direct Debit accounts for 31% of all donations to UK charities, making it the largest share of donations of all the payment methods.
Most charities now offer direct debit as a payment option - offering sign up on the street, in telephone or postal campaigns or, increasingly (although still less often), online. Last year, 58 million donations totalling £1.1 billion were made to UK charities using Direct Debit - more than any other payment method. But what makes Direct Debit such a great option for charities?
GoCardless works with hundreds of charities and fundraising organisations to increase their donations by switching to online Direct Debit. In particular, Direct Debit offers two benefits:
- Cut the costs of fundraising
- Reduce accounting and payment admin
Direct Debit cuts transaction fees and admin costs
Fundraising is a huge cost to a charity, and one that everyone wants to minimise. The average charity spends 12p on fundraising for every £1 of voluntary income. The smaller you can make this cost, the more impact you can have.
One way to do this is to reduce the costs of processing donations. Using credit or debit cards typically costs around 2-3% per transaction + a flat fee of 20-30p. In comparison, Direct Debit typically costs much less. GoCardless charges 1% per transaction, capped at £2, and offers scale pricing.
Direct Debit reduces accounting and payment admin
Taking payments by cheque, cash and standing order is a huge administrative burden for charities and fundraising organisations, particularly as there is no automated reporting system.
In contrast, Direct Debit payments can be completely automated. You’ll always know exactly what has and hasn’t been paid without checking your bank statement. What’s more, you’ll know as soon as a donor has cancelled their Direct Debit so you have the option of contacting them to try to change their mind.
The Foundation of Hearts were able to collect pledges from 8,000 fans by switching to Direct Debit with GoCardless. They chose GoCardless for three reasons: “it's easy for our team to use, easy for our supporters to use, and the fees are brilliantly low.”
Direct Debit makes giving easier
A one-off donation of £300 is daunting for most of us while £20 a month seems much more reasonable. Perhaps as a result of this, last year the average Direct Debit donation totalled £181, or around £15 a month, while the average cash donation was just £5. Direct Debit is also cheaper and easier to process than other payment methods making it more manageable for you too.
What's more, with online Direct Debit potential donors can check out your website and set up payments there and then without the hassle of posting forms or being chased down the street with clipboards! What's more, with Direct Debit payments, will be taken automatically each month with no further hassle for your donors - no more writing and sending cheques or rooting around in pockets looking for change making it more likely that donors will keep giving.
How to get started with Direct Debit
You can access Direct Debit via a bank, a bureau or GoCardless. If you would like to find out more about any of these options you may find our 60 second guide to Direct Debit providers helpful.
GoCardless is the UK’s leading Direct Debit payments provider. It lets you automate the whole payment process and manage everything online. It offers:
- Quick and easy sign up. You can sign up instantly and for free.
- Easy and efficient management. You can collect recurring and one-off payments automatically. We manage everything else for you.
- Simple, low pricing. All it costs is 1% per transaction, capped at £2. Scale pricing is also available.
- Hassle free sign up for customers. Potential donors can sign up there and then and set up their payments online. The easier your sign up the more likely it is that people will sign up.
For more information on the Direct Debit system, read our overview of how Direct Debit works. You can also watch a short video on how GoCardless allows you to save time and money when collecting payments using Direct Debit.‹ View table of contents Next page ›