Rapidata’s Charity Direct Debit

Tracking Report 2017

connect collect

communicate

ContentsWhat we do pg 4

Introduction pg 5

Executive summary pg 6

Setting the scene pg 8

Direct Debit cancellations 2016 pg 10

Cancellations Average Benchmark (CAB) pg 14

Direct Debit Cancellation Cycle pg 16

‘No-show’ payments pg 17

Online Direct Debits pg 19

Making the most of online giving pg 24

Conclusion - Changing times pg 26

Methodology pg 31

Rapidata is an award-winning payment provider, supporting charities and the wider not-for-profit sector with the collection, administration, and processing of Direct Debit payments. Founded in 1997, our experience and reputation means we are a recognised voice for regular giving within the sector, and our partnership approach and innovative solutions have seen us grow into the leading Direct Debit specialist for charities in the UK.

But managing Direct Debits is not all we do. We provide reliable and intelligent collection services that use our expertise to meet our clients’ requirements while helping them optimise their regular income streams. We also support our clients online with Rapidata’s eDirectDebit service for Direct Debit sign-up, as well as our online fundraising services for one-off donations, events and in-tribute fundraising. By combining our years of experience and clever use of technology, we work with our charity clients to maximise the value of their fundraising and supporter stewardship.

We are proud of our best practice and compliance and are always seeking to expand our sector credentials. We currently hold ISO9001 and ISO27001 certifications, which demonstrate our commitment to the highest standards in data and service quality. Currently we’re working towards our ISO22301 Business Continuity accreditation to continue to give our clients peace of mind and trust in our ability to always submit their Direct Debits without delay. We are also a Bacs approved bureau, a proud member of the Institute of Fundraising and an associate member of Rogare, the fundraising think tank.

Our dedicated and experienced team works across the UK, with our headquarters based in Crawley, West Sussex. If you have any questions about the services we offer, or would like to discuss any other issues around payments, we would love to hear from you.

Tel: +44 (0) 1293 601111 Fax: +44 (0) 1293 601112 Email: info@rapidata.co.uk @Rapidata_UK

rapidataservices.com

What we do

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IntroductionWelcome to Rapidata’s Charity Direct Debit Tracking Report 2017. This year marks an important milestone for Rapidata as we celebrate our 20th anniversary. For two decades, we’ve been processing Direct Debits for our clients and we’ve grown both in size and reputation to become the leader in our field.

We first began tracking the status of charitable Direct Debit payment activity and cancellation rates in 2003, and now publish regular updates that show longer term trends in regular giving. This year’s report compiles data from over 9.46 million charity Direct Debit transactions across 2016.

The popularity of giving by Direct DebitDirect Debits have become second nature for millions of UK consumers, who make regular payments for everything from household bills to charitable donations. Over four billion Direct Debits1 were processed in 2016, with almost nine out of 10 British adults having at least one Direct Debit in place.

Research from Charities Aid Foundation shows that Direct Debit has become increasingly important to UK charities in recent years, becoming the most used method of making donations (31%) after cash (58%), raffle/lottery (40%) and purchasing goods (40%). Direct Debit far outweighs other payment methods like debit cards (10%) and cheques (8%). 2

Importance of Direct Debit cancellationsCancelled Direct Debits can significantly impact a charity’s income. The loss of this regular income source affects not only central programmes of work, but resources, costs, campaigns and the ability to budget for the future.

This report tracks cancellation rates across Rapidata’s client base, featuring hundreds of charities, large and small. Identifying peaks and troughs in Direct Debit cancellations, the report enables organisations to understand trends, benchmark their own activity and anticipate future changes. By putting this knowledge into action and communicating effectively with supporters, charities can nurture supporters and manage their long-term advocates effectively.

New to Rapidata’s Tracking ReportRapidata is always looking for insight from different Direct Debit trends and for the first time, we have started to explore online regular giving via charities’ own websites. We look at a new segment of data from online sign ups to charities using Rapidata’s eDirectDebit service and this new analysis includes trends for online giving via both desktop and mobile devices. It provides an exciting new perspective, one that we hope to build upon in future reports.

We hope this report is useful and offers you new insights. Please do get in touch if you would like to discuss or feedback on any of the issues raised.

Scott Gray, CEO of Rapidata Servicessgray@rapidata.co.uk

1 Bacs Corporate Overview 2016 2 CAF UK Giving 2017

Tim Hunter, Director of Fundraising, Oxfam“This is a really useful and high quality piece of work that each year adds to our understanding of this vital area of fundraising. Long may Rapidata continue to support the sector in this way.”

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Cancellation rates show a return to the norm after 2016 anomaly

First quarter results from 2017 show a return to normality following what we believe to be anomalous fi gures for 2016 resulting from the fundraising crisis in 2015.

2016 was a year of adjustment with many charities carrying out less fundraising activity while they sought clarity around changes and new regulation. The average annual cancellation rate for 2016 was 2.61%, the lowest since our records began in 2003 with further record monthly lows in April (the lowest fi gure of any month, ever, at 2%) and July (2.48%).

January 2017 shows a cancellation rate of 2.86%, close to 2015 and 2014 rates at 2.95% and 2.82% respectively. The quarter indicates a positive return to the more usual Cancellation Cycle patterns, combined with low rates that continue the positive long-term downward trend.

The 3% CAB - a new industry standard for charities

We’re pleased to introduce a suggested ‘industry standard’ fi gure for regular giving cancellations, a Direct Debit Cancellation Average Benchmark (CAB) of 3%, which charities should aim to stay below.

We believe that this is an achievable level for charities that are actively monitoring their cancellation rates and carrying out communications with regular supporters that reinforce the fl exibility that the Direct Debit payment method offers.

We recognise that there are factors that mean some charities’ rates will always be above this level and there will never be a one size fi ts all standard, but a CAB of 3% is a viable target for many.

Executive summary

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First ever stats for regular giving via charity websites

Online regular giving is growing in popularity, with eDirectDebit sign-ups averaging at a 7% year-on-year increase.

While most people sign up to give from a desktop device, there has been a 14% increase in mobile sign -ups for the fi rst quarter of 2015, 2016 and 2017. The gap between desktop and mobile sign-ups is closing.

Despite this closing gap, the average donation value given on desktop devices remains 24% higher at £13.75, compared to £10.49 on mobile devices.

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Declining no-shows

There has been a 17% annual fall in the number of ‘no-shows’ – new donors who fail to ever fulfi l a payment after signing up to give by Direct Debit – over the past year. Having peaked at 13.26% in 2013, no-shows dropped to a record low of 10.09% in 2016.

Gift Aid

Statistics for Gift Aid usage can be hard to come by but we have analysed our online data for a rare glimpse at Gift Aid trends. Of online regular giving donors, 94% boost their donation by 25% by declaring Gift Aid.

Setting the sceneOur sector has experienced considerable changes since the challenges we faced in 2015, and we’ve evolved into a stronger, more transparent and more robust industry over the course of 2016 as a result.

Government intervention heralded significant changes, including amendments to the Code of Fundraising Practice, the closure of the Fundraising Standards Board (FRSB), the establishment of a new Fundraising Regulator and the forthcoming introduction of the Fundraising Preference Service (FPS). Those charities registered in Scotland saw the creation of the Independent Fundraising Standards and Adjudication Panel, taking responsibility for overseeing fundraising standards and complaints. The Information Commissioner’s Office (ICO) also issued new guidance on the handling of donors’ information following several investigations into the fundraising practices of charities, and the fining of 13 organisations for the misuse of personal data.

Changes also came from within the sector, with senior experts establishing the Commission on the Donor Experience with the aim of driving improvement in how charities engage with their donors, through establishing best practice in areas such as language, donor satisfaction, working with suppliers and media relations.

Looking at the wider picture, it’s fair to describe 2016 as a year of mixed fortunes for the UK economy – continuing the trend of highs and lows experienced over the past few years.

We can’t begin to talk about 2016 without mentioning Brexit. The repercussions of the public’s decision to end 43 years of European Union membership hit the markets hard and, fearing another recession, the Bank of England cut interest rates in August 2016 to a record low of 0.25% - its first reduction since 2009. On a more positive note, January 2016 saw unemployment fall to 5.1%, the lowest rate in almost a decade, and April’s introduction of a new national living wage of £7.20 per hour added an additional boost to our nation’s workforce. Further good news at the end of 2016 saw the FTSE 100 end a turbulent year at an all-time high, marking its best annual performance since 2013.

2016 was also a good year for the nation’s feel good factor. We were glued to our screens in January to watch Tim Peake make the first spacewalk undertaken by a British astronaut and April saw us marking the Queen’s 90th Birthday with a host of local, regional and national celebrations. In August, Team GB achieved the best-ever Olympic result in over a decade, finishing second on the medals table in Rio and bringing home an impressive host of medals.

We also saw several standout charity campaigns, including the viral #FirstFiver, as well as the continuing success of the well-established campaigns like Movember and the annual Children in Need and Poppy Appeal events.

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It will be interesting to see how both Brexit and the recent election affects our economy over the next 12 months although it’s worth noting that the impact of 2016’s challenges on the British public purse was not as signifi cant in terms of charitable giving as we may have expected.

Figures show that a total amount of £9.7 billion was donated in 2016 – an amount which is on a par with 20151. This further reinforces the UK’s sense of pride in its achievements and history of pulling together in tough times, giving our sector enduring hope for the future.

1 CAF UK Giving 2017

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During 2016, we see some surprising monthly figures that fail to follow what we know as the annual Cancellation Cycle. The average annual cancellation rate for Direct Debit donations was at an all-time low of 2.61% - the lowest figure since our records began in 2003. This was a 10% decrease on the 2.89% 2015 average, sitting comfortably below the combined annual average for 2003-2016.

Direct Debit cancellations 2016– an ‘anomalous’ year

In fact, 2016 saw a total of three all-time lows for Direct Debit cancellations – January at 2.46%, April at 2% and July at 2.48%. These figures are unusually low when compared to the 2003-2016 averages, at 3.68%, 3.03% and 3.49%, respectively.

Even more unusual is the fact that the month of January records such a low cancellation figure. January is historically a month of high cancellations, with rates peaking in 2009 at 5.63% (more than twice the January 2016 figure). Yet, January 2016 saw rates dip below the monthly average.

While the cancellation average rate of 2.61% in 2016 is closest to the 2.67% average seen in 2014, the monthly data for both years is very different. As an example, the cancellation figure for April 2016 was 2%, an all-time low, whereas in April 2014, it was 2.57%.

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Chart 1: Direct Debit Cancellation Rates (%)

Why so unusual?With such a deviation from the expected Cancellation Cycle, we need to look back at the year and the wider fundraising environment across that time in order to suggest any reasoning for the fi gures we are seeing. Scott Gray, CEO of Rapidata suggests that “2015 and the fundraising crisis was a massive challenge for the fundraising sector and the impact of this extended into 2016, producing some extraordinary monthly averages in our tracking.

From anecdotal evidence, we believe that charities responded to the negative media onslaught and to the uncertainties resulting from a Government review and signifi cant

regulatory change by stopping or postponing their fundraising campaigns, especially those involving telephone or direct mail communications.

Dramatically less communication with supporters seems largely to account for these unusual results. There simply wasn’t the usual volume of activity – such as upgrade campaigns – taking place across the year, which in turn, has resulted in less cancellations being recorded. This may go some way to explaining why the data for 2016 presents such an anomalous year in our records.”

Chart 2: Cancellation Rates by Year (%)

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Chart 3: Quarter 1 - Cancellation Rates 2015-2017 (%)

Chart 4: Average Annual Cancellation Rates 2003-2016 (%)

(CAB)

Rapidata has now collated Direct Debit cancellation data for a fourteen-year period, helping to establish a clear picture of both longer-term trends, as well as the impact of shorter-term events. The chart below shows the average annual cancellation percentages for each calendar year. We can clearly see the high peaks of the recessionary years of 2008 and 2009, but also the longer-term downward trend since tracking began.

Further highlighting the anomaly of 2016’s results, the first quarter months of January, February and March 2017 are all showing an increase in cancellations on the previous year, with figures of 2.86%, 2.78% and 3.25% respectively, equating to a total average increase of 0.31% for the period. However, the data for 2017 shows a remarkable correlation to those seen for the same months of 2015, which suggests a possible return to the normal Cancellation Cycle.

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Direct Debit cancellations - first quarter 2017

The long-term picture

Peter Lewis, Chief Executive, Institute of Fundraising“Direct Debits are an essential part of the fundraising mix, both because of the volume of donations that they support, but also because those giving by Direct Debit do so in a long-term and predictable way. This is so important for charities and all of us who benefit from their work, because it gives the ability for charities to plan for the longer-term. For this reason, the health of Direct Debits and knowing what is happening in this part of our sector is vital.”

The impact of the industry challenges experienced during the fundraising crisis of 2015 are also clear to see, with a small spike in cancellations. We weren’t surprised at the time to see this resulting from a year of intense negative media coverage, and the possible impact on public trust in charitable giving. In our last report, we suggested this may have been lower than might have been expected of such turbulent times and indicated no detrimental long-term impact on regular giving.

When we look at the new figures for 2016, it appears that we see a return to the ongoing decreasing trend that we’ve seen since 2011. When highlighted against the previous years’ averages, the new low annual average for Direct Debit cancellations in 2016 is clear, but it is important we remember that the monthly breakdown for 2016 does not conform to the known Cancellation Cycle. As such, we suggest this year to be on trend but anomalous, as described in the previous section of this report.

More comforting insight from our most recent analysis, can be seen in the first quarter’s data for 2017 mirroring that seen in 2015 and the usual Cancellation Cycle. This suggests that regular giving patterns are returning to the norm. We will be watching the rest of 2017’s data with interest to see if this correlation between the two years’ continues over the rest of the year.

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Despite 2016’s results being somewhat unusual, we have still seen three years of consistently low figures, below 3% in both annual and monthly averages. This is extremely exciting and it presents the perfect opportunity for charities to set themselves a clear benchmark target.

Drawing on our 20 years of experience within the charity sector, we are now recommending a new industry standard, a charity Cancellation Average Benchmark, or CAB, for Direct Debit cancellation rates.

We believe that any charity whose cancellation rate rises above 3% for any given month, aside from exceptional reasons from within the charity sector or outside events that may impact the rate, should review their supporter care programmes and strategic operations, with the aim of reducing and improving this rate. By identifying reasons for a rise and by carefully planning activities, charities can help prevent a repeat occurrence during similar months, campaigns or occasions in the future.

If we look back at the past three full years of activity, we see that the average monthly rates have only risen above 3% in seven out of 36 months, or 19% of the three-year period.

We should point out that these averages are gathered from the data of hundreds of charities every year, so there will be many charities that often exceed this monthly 3% figure and a proportion that experience less every month. The purpose of having a benchmark is to encourage those organisations to recognise their own high cancellation periods and to pre-empt them from happening again, particularly when it comes to known cancellation hotspots, such as the January/February post-Christmas peak period.

The 3% Cancellation Average Benchmark (CAB) – a new standard for charities

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There are many methods that charities can use to try to prevent cancellations from escalating. This might include issuing well timed fundraising communications or thank-you messages, offering payment holidays, flexibility around payment dates or reduced donation amounts.

The focus here is on working flexibly with and around supporters’ needs, always aiming to improve the donor experience and build engagement with the charity. Scott Gray of Rapidata firmly believes that “championing and promoting the idea of giving donors a choice will be key to reducing Direct Debit cancellation rates and boosting loyalty in regular giving. If we communicate to donors that they can be flexible with their Direct Debit donations, then we stand more chance of retaining these donors for the long-term, and avoiding total cancellations.”

Morag Fleming, Account Director at Karat Marketing

“We now have a CAB to add to our toolkit for managing performance. Charities should be tracking their cancellation rate but until now there has been no specific figure to track against and nothing to say whether the individual charity rates compare favourably with others, now there is no excuse!”

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The Direct Debit Cancellation Cycle is the pattern that cancellations tend to follow during the course of each calendar year, reflecting seasonal events such as the common peaks of Christmas and summer holidays. It is often seen as a useful benchmark by the charity sector, enabling organisations to plan their campaigns around the cycle’s peaks and troughs.

Of course, when we talk about the Cancellation Cycle, we are usually looking at data for years that roughly follow the same seasonal trends. Even for years where we’ve seen an increase or decrease in a specific month’s rate, its position within the cycle, i.e. a ‘good’ or ‘bad’ month for cancellations, is usually the same.

We’ve already established that 2016’s Direct Debit cancellation rate figures are unusual and, in addition to its overall low rate, this sentiment also extends to the Cancellation Cycle.

As an example, the month of January has historically been a cancellation hotspot due to many donors feeling the post-Christmas squeeze on their finances. If we look at the figures for January 2016 however, we see that its 2.46% rate makes it the lowest January on record, and the month with the third-lowest rate for the whole of 2016. The same can be seen for the month of July. Again, usually a high-cancellation month due to people cutting back in line with the holiday season, 2016 sees the lowest July cancellation rate of 2.48% since our records began in 2003.

Things change though once we move into 2017 with January showing a cancellation rate of 2.86%, very similar to the 2015 and 2014 rates of 2.95% and 2.82% respectively.

The fact that our figures for Q1 of 2017 fall in line with previous years again suggest a return to the Cancellation Cycle as we know it is likely.

The Direct Debit Cancellation Cycle

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Chart 5: Average Cancellation Rates (%) 2003 - 2016

What a difference a year makes. In last year’s report, we saw the beginning of an increase in no-show rates but figures for the rest of 2016 tell us a different story. The number of ‘no-shows’ (newly acquired donors who do not progress to making their first gift payment by Direct Debit) has seen a dramatic decrease with the overall no-show rate for 2016 at 10.09%, the lowest since 2010’s figure of 10.23%.

Chart 6: Proportions of No-shows

‘No-show’payments

2016 shows a fall in no-shows from 12.16% in 2015 to 10.09%, a two point reduction that equates to a huge decrease of 17%. This is the greatest fall we’ve seen since analysis of no-shows began.

Average no-show rate for 2010-2016 = 11.35%

It is important for charities to be able to identify the reasons why a Direct Debit has not been paid, so that they can understand why this may have happened. There are several reasons why a donor may sign up but then fail to make their first gift.

The supporter could have had a change of heart and cancelled, but it could be down to an error in the payment details, the length of time before acknowledgement or the first collection date could be too soon or too late. The initial fundraising approach could be responsible, or the donor may simply have had insufficient funds in their account at the time the payment was due.

No-show donations generally receive little attention and therefore the implications for lost revenue can be widely overlooked, but these donations add up to a considerable sum for some charities. Engagement with your donors

with quick and responsive communications is key to achieving further reductions.

“We’re only 0.1% away from seeing the no-show figure decrease into single digits, so we’re fast heading in the right direction,” says Scott Gray, of Rapidata. “Strong engagement and communication from point of sign up will help drive no-show rates down even further as will the sector continuing to recognise the importance of the issue. We hope that we may have played a part in this falling rate by highlighting the need for action in our previous reports.”

Strong engagement from the start is a key point also for Morag Fleming, Karat Marketing “I am pleased to see a drop in the no-show rate over the year and would hope that it is a mixture of more attention to donors whose first payment fails and a more considered approach to Direct Debit recruitment. The first will rescue payments where there are errors and the second will see only donors who are really committed to the cause taking the step of signing up for a regular donation.”

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Alex Hyde-Smith, Head of Individual Giving, Marie Curie

“The sector continues to focus on recruiting the right type of donor – those people who have a genuine interest in supporting the charity over time – whilst also continuing to try to improve the supporter experience, through better journeys, supporter care and donor choice; it is great to see this refl ected with a signifi cant reduction in no-show rates and the average annual cancellation rate falling below 3% for the third year in a row.”

Online Direct DebitsNew for this year, Rapidata is pleased to release data for online giving through our eDirectDebit service. Paperless Direct Debit and regular giving sign up via a charity’s own website donation page is not a new concept – and Rapidata’s eDirectDebit service has been offered for more than 12 years. It’s an increasingly important and valuable income stream for charities.

Our data analysis captures eDirectDebit sign-ups across a new dataset for the full 2015 and 2016 period, and the first quarter data for 2017. Moving forward, we hope to be able to analyse and compare eDirectDebit activity with our main cancellations data in future tracking reports.

The rise of online sign-ups The average year-on-year increase for signing up online to a regular donation is 7%, with 2016 seeing 23,164 new donors via eDirectDebit, compared to 21,572 in 2015. This will probably not come as any shock to see the total number of sign-ups increasing as charities start to promote and maximise the regular giving donation option on their website. We will continue to track the same data set across 2017 to enable us to see if the trend continues.

Chart 7: Sign-ups by Year

No. of Donors

Tim Hunter, Director of Fundraising, Oxfam

“One of the key findings in this year’s report is the growth in digital, especially mobile, Direct Debit giving. We all know from our own daily life that this is the way the world is going and charities need to make sure they are responding to the changing expectations of digital supporters.”

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The impact of Christmas campaignsThe chart below shows the seasonal cycle of new eDirectDebit donors setting up regular gifts and the impact Christmas campaigns have on the number of new sign ups made online. Compared to Q3, Q4 sees an increase of 18% of new sign-ups and demonstrates the need for charities to ensure that their online Direct Debit giving page is established and easily accessible before these key months.

Rapidata has also seen the increase in sign ups when using other methods of fundraising, highlighting the importance of a joined-up approach when recruiting new donors. Our advice to charities would be to consider setting up an online regular giving page that complements other fundraising mechanisms and channels that may be in place during campaigns. As an example, a charity carrying out a fundraising telephone campaign can provide an alternative channel for donations for those people who don’t wish to give banking details over the phone simply by setting up an online regular giving page.

“By considering the setting up of an online regular giving page to run alongside other donor recruitment methods, charities can achieve a vital second ‘bite of the cherry’ for very little time, effort and cost.”Scott Gray, CEO of Rapidata

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Chart 8: Seasonal Cycle of New eDirectDebit Donors

In chart 8, we can observe the increasing and decreasing volumes of sign-ups by quarter. It is interesting that April – June (Q2) shows an increase, possibly attributable to new fundraising activities for the financial year. We then see a comparable trend with the offline Direct Debit Cancellation Cycle, reflecting Q3 slowing as we enter the summer season before sign-ups spike in October to December for the Christmas campaign period.

As we continue to monitor this pattern over 2017, we may start to see a new cycle emerging for online Direct Debit sign-ups as the data set matures.

New sign-ups: A first glance at 2017The chart below shows how similar sign-up rates were for 2015 and 2016, with very few donor numbers separating them. In comparison, we see a rise in January and February rates for 2017, before March returns to almost identical volumes seen in the last two years. This reflects our hypothesis that charities are beginning to engage in more campaign activity and communications. As a result, sign-up activity has increased post-Christmas as donors choose to follow up on the campaigns at a time and date of their choosing into the months of January and February.

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Chart 9: Quarter 1 Review - New Online Sign-ups

Chart 10: Percentage of Sign-ups from Mobile Devices

Mobile vs DesktopTo give a further insight into online giving, we have compared the method by which donors are signing up to eDirectDebits – whether this is via mobile devices, such as smartphones or tablets, or desktop devices, such as laptops and computers.

It will come as no surprise, given the popularity of smartphones and tablets, that we are seeing greater numbers of donors choosing to give to charities via their mobile devices. While this is good news, and shows that donors are responding ‘on demand’ to the flexible and fast donation methods that charities are offering, this method is showing a lower donation amount. Our figures for 2016 show that the donation value given on desktop devices is 24% higher at an average of £13.75, compared to £10.49 on mobile devices.

Could the average gift difference between desktop and mobile donation reflect the age of supporters? Michelle Chambers, Managing Director at THINK Consulting Solutions, suggests that it is likely to be “age related, with younger donors taking the mobile sign up option. Smartphone penetration amongst the over 65 age group is still very low. For these supporters, the trick will be getting to know when they are ready for an upgrade or cross sell ask.”

Quarter 1 in reviewWhile desktop devices still account for most new online sign-ups, when we look at the Q1 figures for the past three years, we can clearly see how the sign-up rates using desktop are reducing. For this period, we see a 4% decrease in the number signing up through this method each year, which represents a 14% increase in donors signing up from mobile devices.

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Chart 11: Percentage of Sign-ups from Desktop Devices

Gift AidGift Aid is a vital source of additional revenue for charities, boosting any donor’s pledged amount by 25%. Our research into Gift Aid usage via online giving shows that the clear majority (nearly 94%) of donors Gift Aid their donations.

We suspect that this very high declaration rate is possibly the highest for all fundraising methods, and would welcome a greater focus within the sector on establishing Gift Aid rates for different fundraising streams. By establishing an inclusive view of the success of Gift Aid declarations, charities would be able to focus their campaign activity on fundraising mechanisms where the likelihood of achieving a vital additional 25% on their donation stream would be higher.

Michelle Chambers, of THINK adds, “Perhaps some lessons for other channels could be learnt from how the Gift Aid ask is put directlyin the path of an online donor – its arguably easier to miss on a DM response form, or made separately in a follow up, standalone communication. Online, the immediacy of the connection of how this can amplify your gift seems to be a winner.”

Average Gift Aid Take Up

93.99%

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Given the increasing popularity of online giving via mobile devices, the importance of having mobile-optimised donation pages, along with being able to make the sign-up a quick and easy process, is clear. The data shows just how crucial is the last quarter in the year, so charities need to ensure that they have their online Direct Debit forms up and running before the start of their Christmas campaign to maximise donations. Importantly, charities which are new to online Direct Debit need to make sure that they allow enough time for their banks to approve the form.

As well as a standard one-off donation form on a website, we suggest that charities set up an additional online Direct Debit page which mirrors campaign images, messages and gift amounts to achieve greater sign-ups during this period. For some, this may also help track sign ups linked to campaigns and the online impact of these.

Speed of sign up on mobile devices is a major factor for conversion. Consider whether all the questions are needed for your mobile version to make sign up faster and easier when on the move. Charities should always look to improve the journey and the donor’s experience; continual activity should include trialling changes to the look and feel and tone, to the speed of first collection and subsequent collection date options, and how your automated ‘thank you’ is delivered as new supporters are introduced to long term stewardship programmes.

The future of online regular giving is boundless as charities recognise its value and engage with new audiences; the messaging function it provides alone could lead to and support even longer-term fundraising as Alex McDowell Head of Community, Legacy and Challenge Events at RNIB suggests, “The continued growth of customers who are willing to sign up to Direct Debits online, combined with the emergence of online Will providers who are committed to including charitable prompts in Will drafting questionnaires, could create both a relevant, behaviour-led supporter offer and a natural legacy giving (or legacy messaging) opportunity.”

Making the most of online giving

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“Online Direct Debit is one of the most cost effective ways to gain more regular donors, so it’s important that charities don’t just tick the box to say they offer it. It’s a relatively simple process to set up, and for those that do have it in place, testing is key - small changes can see big results.”Scott Gray, CEO of Rapidata

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There’s no doubt that our sector has experienced tremendous changes over the past two years. In last year’s report, we were largely optimistic about the impact of the after-effects of the 2015 fundraising crisis, with this confidence further boosted by the 2016 first quarter results we saw at the time.

We now believe that the fundraising crisis impacted upon the Direct Debit cancellation rate for 2016, but not in the manner we first suspected. Instead of this impact stemming from the public’s reaction, and more specifically donors’ reactions, to the volume of negative media coverage at the time, we now suppose that charities’ fundraising activity levels have been the determining factor. Our rationale behind this statement is that the highly sensitive crisis environment caused many charities to reassess or put on hold their campaign activities, leading to fewer donor engagements in 2016.

Pointing to these changes in charities’ activities, Matthew Sherrington from Inspiring Action Consultancy, says, “The last two years have seen a lot of change in key fundraising activities, particularly a reduction in the use of telephone, which has been a key part of encouraging supporters to start regular support through Direct Debit, after perhaps making a first gift by text on the street, or in response to a TV or poster ad. Donors giving by Direct Debit have always been a mix of those demonstrating their long-term commitment, and those for whom it’s just simple and convenient and who don’t engage with the charity too much more than that. That overall cancellations have remained low over the last couple of years suggests both these groups of supporters are unaware of, or unperturbed by, the maelstrom of regulation and public trust concerns charities have felt so acutely.”

In addition to the negative media barrage, the sector has been tasked with making multiple changes across best practice guidelines and legislation that have taken a toll on fundraising activity. Amy Oberholzer, Senior Direct Marketing Manager, Prostate Cancer UK, says, “The past year has indeed been a year of adjustments for charities, including the changes to telemarketing legislation and loss of charity lists from the market. This has resulted in many having to revise their acquisition and retention programmes, no doubt impacting on the number of new regular givers and income.”

Throughout the fundraising crisis, amid dramatically reduced direct mail and dwindling telephone activity as charities held back, face-to-face remained a strong recruitment channel for regular giving. But even face-to-face experienced a fall in the number of donor sign-ups, according to the latest figures from the Institute of Fundraising (IoF), decreasing from 770,000 in 2015/16, to 598,000 in 2016/17. Although, this channel too will have felt the general reduction in charity fundraising activity, we should remember that 2015/16 saw the closure of a number of face-to-face fundraising agencies, which could in some way explain a decrease for that period.

Despite the combination of causes behind the reduction in fundraising activity, we also speculate that these lower levels of communication with donors may have played a contributory role in the low Direct Debit cancellation rates. While we strongly believe that regular donor communications are good practice and essential for great relationship building and stewardship, this can also – whether personally through direct mailings or more general messaging via mass advertising methods – remind donors about their regular donation commitment and thus cause them to re-evaluate. It could, therefore, be a balancing act between prompting cancellations and building deeper engagement and loyalty – an issue that is surely greatly dependent on the quality of those communications and perhaps worth exploring further within the sector.

Changing times with a flavour of optimismBy Scott Gray, CEO of Rapidata

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A new industry standard – CAB 3%Based on our 14 years’ experience of studying cancellation rate trends, Rapidata has now launched a Cancellation Average Benchmark (CAB) figure to help charities respond to their Direct Debit cancellations, an initiative that has been welcomed by the Institute of Fundraising (IoF).

Peter Lewis, Chief Executive of the IoF, says, “In broad terms, I welcome the idea of the sector-wide cancellation benchmark proposed in this report that charities should aim to stay below. I look forward to the discussions around this and encourage others to join these on how this might be taken forward.”

Our recommendation for the CAB is that any charity whose cancellation rate rises above 3% for any given month should review their supporter care programmes and strategic operations. By evaluating how they can improve the donor experience for their supporters, charities can hope to lower their level of cancellations.

Of course, this figure will not be applicable or achievable for every single charity. Indeed, Alex Hyde-Smith, Head of Individual Giving at Marie Curie, shares his concerns around how achievable the CAB is, given individual charities’ differing campaign activities. “It could be difficult to compete or compare against, for example, a charity offering a ‘sponsorship’ regular giving product at a lower monthly ask,” he says. “It may be more useful for charities to benchmark against themselves and their own historic performance, or perhaps break this down into normal Direct Debit and special Direct Debit products (such as sponsorship) or industry sectors to avoid the CAB average being skewed.”

We take these comments fully on board but, as Ian MacQuillin, Director of Plymouth University’s fundraising think tank Rogare, points out, we’ve launched what we feel is a good starting point, “Better fundraising theory and policy start by someone asking a

question that no-one has yet posed. Rapidata has asked: what is an appropriate – and achievable – cancellation rate for charities to strive to get below and not rise above? Based on sound evidence, they answered their own question. It’s now up to the rest of the fundraising profession to join the debate that Rapidata has started, and I look forward to seeing how Rapidata leads and stewards the discussion.”

We look forward to engaging further with the sector on the CAB, but are pleased with the initial positive feedback we’ve received, such as that from Stephen George at Good Leaders, who says, “The idea of a benchmark of a 3% cancellation rate is a great opportunity for the sector to work together to improve performance and the donor experience. By creating a data driven benchmark, trustees and charity leadership can find a common language and understanding to focus attention.”

Optimism for the futureLooking ahead, online giving continues to grow in importance, and we’re pleased to be using this report to launch our inaugural dataset for online regular giving. The results aren’t perhaps surprising, but they do illustrate the importance of considering a multi-channel approach to engaging with supporters, as Morag Fleming, Karat Marketing, advises, “The rise in online Direct Debit sign-ups reflects the way that many donors live their lives today, particularly the increase in mobile sign-ups. However, this should not push us to communicating purely online with them. Our supporter journeys should be as varied and impactful as we can make them over as many channels as we have permission to use to inspire and delight those that are committed to supporting us.”

Overall, our regular giving data for the first quarter of 2017 shows cancellation figures are on the rise. While it may be concerning to see an increase in cancellation rates, the fact that these Q1 figures appear to be mirroring those seen in 2015 can be viewed as a positive, a view shared by Stephen George saying, “The report’s conclusions that we are likely to go back to a new norm, allows us an opportunity to

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view these trends as a way to do things differently and much more from a donor experience point of view rather than a short-term cash issue. If these insights are focused on experience rather than profit we can transform long-term giving.”

Any figures which indicate a return to a sense of normality can only be welcomed as a good thing as it shows that charities’ confidence in their activity with both new and existing donors is returning. But, as Amy Oberholzer of Prostate Cancer, advises, we should expect further fluctuations as we continue to adjust to sector changes, “Whilst cancellation rates appear to be returning to normal this year, I’d expect to see further impact in the coming years – as charities start to prepare themselves for the new legislation that will come into play. In the short-term, we may see cancellation rates increase but we should then see, as a result of the overall changes, our benchmark cancellation rates start to reduce as unresponsive supporters who’ve not engaged fall away, replaced by supporters who’ve opted in to further communications. These supporters will naturally be more engaged with their chosen causes and thus, be more responsive.”

We share Amy’s sense of optimism, and feel it is well-founded. Beyond the charity sector, Bacs also joins us in reporting record-breaking figures for 2016, with an all-time high of 109.3 million transactions processed in a single day. Figures also confirm that there’s no slowdown in the popularity of Direct Debits, and we’re confident that Direct Debit giving will continue to flourish, despite a developing payments market and greater choice in new payments channels. More than four billion Direct Debits were processed in 2016, up 4.9% from 2015, and as a method which enjoys a high level of public trust, the long-term future for Direct Debit giving is strong, especially with charities continuing to improve their regular giving offerings both off and online.

It’s widely accepted that uncertainty within economic markets drives budgets down, both on a business and a consumer level and, at time of publication, we’re yet to see the impact of the UK general election and in what way the continuing political and economic Brexit narrative will impact fundraising in the months ahead. But, as Michelle Chambers, Managing Director at THINK Consulting Solutions observes, we need to be monitoring trends and supporting donors to ensure that any impact is kept to a minimum, “We’re still crystal ball gazing about what the next 12–24 months holds for the sector. GDPR and Brexit loom large which makes it difficult to feel that the sector is settling after the furore of the last 24 months and is rather bracing itself for more turbulence – but we are perhaps better equipped to deal with it. What is clear is that a combination of brilliant basics and increased application of supporter insights will be critical in building and sustaining long lasting relationships with donors.”

As a sector, we have been through tough times, and we’ve survived the turmoil that negative media attention, Government scrutiny, and regulatory changes have thrown our way. But, we hope to have emerged stronger and fitter. Crucially, the public’s appetite for regular giving is still strong, and causes continue to inspire and motivate the public to help, as Tim Hunter, Director of Fundraising, Oxfam says, “I recognise that 2016 was a very different year and for many charities a year of uncertainty and change with some fundraising activity much reduced. But long-term the trend of cancellations is down and that must be worth celebrating. It shows that supporters are more loyal to the charities they give to than headlines might suggest but we can’t be complacent and we all need to work hard to keep inspiring supporters with the stories and evidence of the difference they are making.”

Joe Jenkins, Director of Fundraising and Supporter Engagement at the Children’s Society agrees, highlighting the need for innovation within the sector,

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Changing times with a flavour of optimism continued...

“I strongly caution against any complacency. Rapidata recognises that the significant drop in cancellation rates in 2016 is most likely anomalous and driven more by a decrease in fundraising activity than a rise in donor retention. There has never been a greater need for innovation and change in our sector. I’m sure that giving by Direct Debit will continue to remain a popular means for people to support our causes. But, how we engage our supporters needs to fundamentally transform – and with it, the approach to all forms of fundraising, regular giving included.”

Taking the view that 2016 can be regarded as a year of adjustment for our sector, we are hopeful for a return to some sense of normality for fundraising levels and the subsequent Direct Debit cancellation rates going forward. Uncertainty following the fundraising crisis led to a loss of confidence within the sector but fundraising reforms are now being felt – the introduction of the new Fundraising Regulator and amendments to the Code of Fundraising Practice, combined with new guidance from the ICO and more robust guidance from the IoF, has all helped to provide more clarity for the sector (albeit, despite some early confusion and some wrinkles still being ironed out). With clarity, comes the ability to act, plan and move forward.

Our sense is that the sector is starting to feel more confident and stable, with fundraising activity being reenergised. With 2017’s first quarter figures tentatively setting the scene for a return to more typical and dependable rates in the future, we will be closely monitoring our results for the remainder of the year, and look forward to sharing them with you in our next report.

In the meantime, as our guest contributors have highlighted, perhaps now is the time to appreciate the strength of our donors’ commitment to their chosen charities and causes, and cautiously celebrate our sector’s successes following such a challenging couple of years.

Michelle Chambers, Managing Director, THINK Consulting Solutions “This report suggests the future looks positive for giving via Direct Debit, despite the choppy waters the sector is still sailing in. This is hugely encouraging and I believe those charities who use insight to build appropriate stewardship, activation and cross sell programmes for Direct Debit supporters, will be those who really capitalise on this potential prize.”

Alex McDowell, Head of Community, Legacy and Challenge Events at RNIB“Those of us who work in the sector may notice and feel each and every critical word, but some donors will be less aware of both the detail and volume of the critical coverage. The record low Direct Debit cancellation rate experienced in 2016 may be anomalous, but following a prolonged period of public, media and political criticism of fundraising practices and charity governance, the results are no less welcome.”

Ian MacQuillin, Director, Rogare“Rogare encourages fundraisers to base their decisions on theory and evidence. That is why Rapidata’s Direct Debit Tracking report is so important, because it provides the all-important data that fundraisers can feed into their decision-making processes. But it also provides the evidence that counters some of the scaremongering that can happen in the absence of data and evidence.”

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Morag Fleming, Account Directorat Karat Marketing“Once again, Rapidata has provided an excellent review of Direct Debit giving that is a must read for every charity. It provides the evidence that donors are still happy to support the charities that they love on a regular basis and is a key benchmark to measure activity against.”

We are grateful for and would like to extend our thanks to our expert guest contributors from across the fundraising sector, all of whom have shared with us their responses to our research fi ndings in this report, freely and to a horribly tight deadline. It is always a fascinating process drawing the insight from the data we track across the years and this is brought to life by the depth and variety of knowledge and expertise in our guests’ reactions and foresights.

With thanks to:

Michelle Chambers Managing Director, THINK Consulting SolutionsMorag Fleming Account Director, Karat MarketingStephen George Consultant, Good LeadersAlex Hyde-Smith Head of Individual Giving, Marie CurieTim Hunter Director of Fundraising, OxfamJoe Jenkins Director of Fundraising and Supporter Engagement, The Children’s SocietyPeter Lewis Chief Executive, Institute of FundraisingIan MacQuillin Director, Rogare - The Fundraising Think Tank, University of Plymouth Hartsook Centre for Sustainable PhilanthropyAlex McDowell Head of Community, Legacy and Challenge Events, RNIBAmy Oberholzer Senior Direct Marketing Manager, Prostate Cancer UKMatthew Sherrington Consultant, Inspiring Action Consultancy

Also, special thanks to Turner PR and Tutch Media.

Thank you to our contributors

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Rapidata’s findings are based on extensive data gathered from several hundred charities of all sizes and causes to ensure a broad representative range. In 2016, the segment size covered more than 9.46 million Direct Debit transactions totalling over £82.5 million in donations processed.

Cancellation rates are averages based on number of Direct Debits processed per month by cancellations received.

For the online giving analysis, we have evaluated the results of 50,780 new donors recruited via Rapidata’s online regular giving service, eDirectDebit. We have only included charities with at least 12 months’ worth of

data with Gift Aid enabled records, and have excluded supporters giving via lottery, memberships and ‘friends of’ programmes. We have also removed any regular large gift donations of £1000+ and any donation amounts of less than £1.

The information contained in this report is a true and accurate picture of cancellations and regular giving activity for the hundreds of charities for which Rapidata processes and manages Direct Debit submissions. It is not a picture of all UK charities, nor any one specific method of fundraising. The figures quoted are provided as a useful benchmark to be used against an individual Charity’s Direct Debit programme and is for information purposes only.

Appendix Cancellation Rates 2003 – 2017

Methodology

Cancellation Rates 2003 - 2017 (%)Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec

2017 2.86 2.78 3.252016 2.46 2.45 3.05 2.00 2.52 2.79 2.48 2.89 2.79 2.62 2.68 2.552015 2.95 2.80 3.20 2.86 2.72 2.81 3.22 3.15 2.79 3.23 2.34 2.662014 2.82 2.37 2.48 2.57 2.44 2.39 2.95 2.66 3.04 3.03 2.63 2.642013 4.05 3.28 3.06 3.50 3.09 2.69 3.43 2.85 3.29 3.01 2.59 2.402012 4.59 3.93 3.53 3.25 3.64 2.99 3.58 4.20 3.17 3.50 3.60 2.802011 3.26 3.67 3.77 2.44 4.10 3.87 3.91 4.58 4.20 4.56 4.15 3.012010 3.49 3.10 3.93 2.89 2.80 3.21 3.22 3.49 3.84 3.55 3.41 2.872009 5.63 4.43 4.33 4.16 4.25 4.09 4.30 3.57 4.11 3.65 3.49 2.632008 4.01 3.53 3.95 3.60 4.00 4.02 5.16 4.40 5.16 5.52 4.77 3.892007 3.35 2.90 2.75 2.25 2.47 2.30 3.04 3.54 3.61 3.51 3.90 3.712006 3.33 2.92 3.12 2.98 3.64 3.33 3.18 3.39 3.10 3.04 2.78 2.112005 3.78 3.19 3.13 3.06 2.96 3.39 3.15 3.93 3.71 3.39 3.13 2.032004 4.13 3.25 3.56 3.01 3.36 3.42 3.46 3.88 2.92 4.92 4.04 2.342003 3.90 3.50 3.48 3.84 3.31 3.81 3.62 3.42 2.79

(2003 - 2016) average 3.68 3.22 3.37 3.03 3.25 3.20 3.49 3.56 3.54 3.65 3.35 2.75

Average Annual Cancellation Rates (%) 2003 - 2017 Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016Annual % 3.52 3.52 3.24 3.08 3.11 4.33 4.05 3.32 3.79 3.57 3.10 2.67 2.89 2.61

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