How charities benefit from accepting Direct Debit donations
Having a constant stream of donations is an essential part of operating a charity, generating budget for the day-to-day operations whilst also driving fundraising for the charitable cause.
Offering donors multiple options for the way they can donate is always a good idea, allowing for different payment behaviours and flexibility in order to maximise fundraising success. One of the options should be Direct Debits and within this blog we highlight the reasons why.
Convenience for Donors
Direct Debit is the easiest way for consumers to regularly donate to a charity each month. Once they’ve completed a Direct Debit Instruction , the money will automatically be collected from them each month, thereby taking away the need for them to remember to action the payment each time.
From an organisational standpoint, it’s important to be able to look at each month’s accounts and have some certainty of knowing what’s coming so that you can budget effectively. With Direct Debit payments, unless an instruction is cancelled by the payer, donations remain consistent so you know exactly what’s coming in when, and can forecast accordingly.
Reduced Admin Costs
Taking payments via cheque, cash or standing order can be a very manual process which takes up a lot of staff time. Any manual process can also add cost and effectively reduce the time which could be spent doing far more important things such as organising new fundraising activities, lobbying or arranging promotional campaigns. With the more automated and reliable Direct Debit collection process, charities can reduce the amount of time spent on admin so they can focus on more essential fundraising.
Capturing Gift Aid information is essential for any charity when it essentially leads to boosting donations by 25%. The option to include permission to give Gift Aid from a donor can be included on the Direct Debit Instruction which reduces the need for separate paperwork and permissions. In addition, features in Direct Debit management portals such as SmartDebit Pulse can help by allowing you to see in one place if a donor has opted in to Gift Aid.
Reduced Transaction Costs
When running a charity, the last thing you want is a percentage of each donation being taken away due to transaction fees. Although this is somewhat unavoidable, some methods are cheaper than others. Credit and debit card costs can be as high as 3.4% + 20p per transaction through a full service provider. Direct Debit fees are generally lower, but especially when considering the cost of failed payments and churn. SmartDebit customers overall enjoyed payment churn of 0.39% in 2018, while up to 13% of credit card transactions fail. Ensuring your churn rate is low means that your donors will continue to donate for longer.
SmartDebit have over 20 years’ experience in creating payment solutions for charities and not-for-profits of all sizes. We offer a fee discount to all registered charities, and all charities registered in England and Wales benefit from VAT exemption by choosing to partner with SmartDebit. Contact us today to find out more.