Boosting charities with Direct Debit, technology – and more millennial donors

With age comes wisdom, or so they say. People also become more generous as they get older - pensioners are almost twice as likely to give to charity as are young adults.

Some might argue that elderly baby-boomers have more spare cash for good causes. Yet, charities are also failing to accept payment in ways that appeal to younger would-be donors. Many fundraising methods are old-fashioned, ignoring digital technology’s innovative methods of raising awareness and collecting cash. Greater use of tech-enhanced payment systems, including Direct Debit, could allow smaller sums to be paid more easily and cost-effectively, putting charity donation within the reach of the young, and boosting philanthropic giving across the board.

Update to donate

Direct Debit is already a popular way to donate to charity – just over 30 per cent of people made donations this way in 2015, according to the Charities Aid Foundation’s (CAF) UK Giving report. Despite the popularity of Direct Debit among donors, this figure falls well short of the 55 per cent who still make donations in hard cash. Digital forms of payment, such as those made online and via text message, are woefully under-exploited, being used by just 16 per cent and 12 per cent of donors respectively. This may reflect how slow many charities have been to embrace recent advances in payment technology.

Yet, research indicates that British millennials are digitally driven, preferring to purchase goods and services by contactless, cashless, and mobile payments. This push by young people for new and convenient forms of payment extends to how they give to charity, which means charities could be missing out on many millennial pounds. But numerous charities still use telephone or paper-based donation systems that involve a lot of administration, and make setting up payments time-consuming.

Young people are typically fiercely loyal to their chosen causes, but they have busy lives. If they want to give regular support to an organisation, they want it to involve minimal hassle. Direct Debit could be the answer. About 68 per cent of millennials already pay their utility bills, rent, or mortgages this way, so setting up recurring payments to make donations is a natural extension for this generation. Make payments easy, and millennials are likely to donate on a recurring basis.

Social success

There have already been some innovative examples of technology used successfully to raise money for charity. The Ice Bucket Challenge was a high volume, small donation campaign that went viral in 2014, raising almost £95 million for the ALS Association, a body researching motor neurone disease. Social media helped huge numbers of young people to take part globally, and to give modest, one-off sums easily.

But much of the younger generation also wants to donate on a regular basis. In fact, more than half of millennials are interested in giving monthly donations to a non-profit organisation, according to the Millennial Impact Report 2015. They are particularly supportive of educational causes, as well as those focusing on children and young people, the CAF research shows. Enabling donors to give regular amounts to their chosen charities in a quick, convenient manner encourages people to commit to long-term charitable support while they’re in the benevolent mood. Using a method that minimises costs for the charity itself also maximises revenue for the cause being supported.

New ways to give

PayPal is just one company enabling quick charitable payments, having recently developed a system to allow micro donations. Facebook also introduced a fundraiser’s tool last year, allowing charities to add a ‘donate’ button to their pages and posts, rather than making donors give via a third-party fundraising site. JustGiving is one such intermediary, which has created a text donation platform to make it easier for people to give with just a few taps on their smartphone.

All this innovation is designed to make it simple for so-called ‘slacktivists’ to do more than just read about and ‘like’ charitable causes on social media. Online giving has made it quick, simple and inexpensive to taking the next step to financially support those causes. But charities really want to translate these one-time-only gifts into regular donations - and this is where Direct Debit comes into its own.

Direct Debit donors

It’s great to raise a large one-off sum of money via a successful charity campaign, but regular donors are what keep charities going in the long-term, funding their core projects, and enabling them to do their day-to-day work. Direct Debit enables this by offering great convenience for the individual donor. Donors don’t need to remember to make a payment, or juggle which causes to support - funds just regularly come out of their account and go directly to the worthy organisation. From the charity’s point of view, it can be confident of having an ongoing finance stream dripping into its coffers, which enables better forward planning.

Direct Debit is good from both sides of the equation, and fintech innovators such as GoCardless are now allowing charities to accept one-off or regular automated payments at minimal expense. Cutting the cost of processing donations is a sure-fire way to boost the amount going to a charitable cause, and Direct Debit typically costs less than credit and debit card payments. GoCardless charges just one per cent per transaction, capped at £2, and offers scaled pricing per transaction for larger businesses. In contrast, credit and debit card payments incur costs of between two and three per cent per transaction, plus a flat fee of between 20 and 30 pence. Cheques are even worse. Processing cheques is such an expensive business that accepting small donations this way is prohibitive for many charities.

Regular Direct Debit donations have another merit – they can secure an individual’s ongoing support for a charity in an age when many young donors jump between causes based on what is currently firing up their social media feed. Research also indicates that younger people think of charitable giving as investing in a cause rather than simply donating to it. They want to develop a long-lasting relationship with the organisation they donate to, building emotional ties while keeping an eye on how their money is being used. Setting up a regular Direct Debit link can help forge this bond. But, while about 58 million donations were made to British charities via Direct Debit last year, totalling £1.1 billion, this figure still has room to grow.

Giving via GoCardless

Current methods of wooing donors need updating. This could include greater use of social media (instead of traditional direct mail and ‘chugging’ in the street), or using new, tech-savvy methods of payment to collect donations. GoCardless is now working with over 1,800 charities to help them sign up new donors, using traditional methods, such as paper or telephone registration, as well as online via desktop or mobile. The simple, easy-to-use GoCardless online dashboard offers maximum flexibility, allowing users to alter contribution dates, or increase or decrease donations with a single click.

Charities must innovate to keep up with the habits of the donating public, and to attract younger supporters as well as the older generations. Technology should be part of this - and Direct Debit, too. Then, what every charity wants - regular contributions, greater numbers of young donors, and, of course, more money - will soon follow.