U.K. Charity Direct Debit Cancellations Highest Ever in August
Press release (Sept. 8, 2011) London — The Charity Direct Debit Cancellation Rate for August 2011 has been recorded at an all time high at 4.58% in the U.K. This is the highest cancellation rate seen in the month of August since Rapidata Services Plc, the charity transactions processing agency, began tracking regular giving trends eight years ago in 2003. The figure exceeds the August 2008 mid-recession figure of 4.4%.
Scott Gray, managing director, Rapidata Services Plc, says, “The recent increases in cancellations have spiked yet again in August to a shocking 4.58%. I am deeply concerned to see charity Direct Debit cancellations increasing again to recession levels and higher. I wouldn’t be surprised to see the rate exceed 5% in September with the trend continuing. Charities need to know about this shift and they need to act.
“This is this fourth consecutive month that cancellations have increased and although I was hoping we were seeing a temporary blip it is becoming clear that the trend has shifted once more with our figures reflecting the recent sharp economic downturn and threat of double-dip recession. Consumers are tightening their personal finances still further under uncertain economic conditions that are unlikely to improve very quickly.”
The economy grew just 0.2% in the second quarter and we saw unsettled market volatility once again through August. A Gfk NOP survey conducted on behalf of the European Commission showed British consumer confidence fell in August to its lowest level since April. And a CBI survey showed last week that retail sales fell at their fastest pace in over a year in August with spending on food even – not normally affected – falling.
“However, we should remember that Britain is one of the most generous nations and we should not be disheartened,” Gray continues. “We’ve been here before and seen recovery, but it means being proactive. Charities should be looking at their current activities and asking whether they are doing everything they can to minimise cancellations and attrition. The increases we’re seeing represent many thousands of pounds of lost donations each month, but also the loss regular donors. Now is the time to be as proactive with donors as possible. If you are stalling a stewardship programme or have communications, appeals or campaigns on hold, it’s time to act.
Rapidata will be tracking and monitoring cancellation figures as the year progresses. We would also call on charities that may have experienced marked changes in donation cancellations over the past few months to contact us with their experiences.”
Rapidata Charity Direct Debit Tracking, April – August 2011
April May June July August
2010 2.89% 2.80% 3.21% 3.22% 3.49%
2011 2.44% 4.10% 3.87% 3.91% 4.58%
Q1 2011 saw reasonably low cancellation rates with April at 2.44% (down from 2010 2.89%). In May we saw a significant increase in cancellation figures compared to last year and a rate that mirrored those seen in 2008 and 2009 during the depths of recession. The giving landscape offered no obvious explanation for this increase, either from current, political or economic affairs, nor from any one specific charity’s activity or campaign; cancellations increased across the board. With no single indicator Rapidata suspected the jump in cancellations to be an anomaly, just a blip for May.
June (3.87%) and July’s (3.91%) cancellation rates were lower, not exceeding 4%, but both were still much higher rates than expected for this time of year and through consecutive months. For the last four months rates have followed the shape of the annual Cancellation Cycle but at a full percentage point higher than this time last year, reflecting an economic shift since Q1 2011.
The cancellation cycle for 2010/11 (up to and including March ’11) closely followed the pre-recession pattern of cancellations and was far removed from the sky-high pattern seen at the height of the recession in 2008/09. During the second half of 2009, cancellation rates had already dropped dramatically from their recessionary high, and the figures for 2010/11 showed that cancellation rates continued on this downward trend throughout the rest of 2010 and into 2011. The first quarter of 2011, started on trend, showed a slightly higher than expected peak for February but fell again in March to a positive low rate heading into quarter two.
Cancellation rates across the calendar year of 2010 were significantly lower than those seen in 2009, reaching pre-recession levels. Rates were up and down for the first quarter, before rising for four months in succession, and then dropping significantly each month between September and December, with a year-end finish of 2.87%. Where cancellation rates in 2009 only fell below 4% four times, in 2010, they didn’t reach up to 4% once, leading to an average for the year of 3.32%. This was a significant drop from 2009’s average of 4.05%, and the lowest seen since 2007 and the pre-recessionary period.
The full Rapidata Charity Direct Debit Tracking Report 2011 is available as a free download from Rapidata’s website.