Rising interest rates, high levels of inflation and a rapidly rising cost of living have forced everyone in the UK to keep a much closer eye on their expenditures. While the struggles felt by individuals, families and SMEs have remained the most discussed and received the most headlines, charitable organisations are also feeling the crunch.
Running a charity is not free. They are privy to much of the same costs as SMEs – including rent, electricity, gas and water bills, as well as other general running costs – and, as the average consumer from the UK drastically reduces their spending, reduced generosity levels are also impacting charities.
In fact, as over 80 per cent of non-profits based in the UK expect to struggle with the increased cost of utilities for their own venues, 35 per cent believe their organisation will struggle to survive altogether.
Another factor significantly impacting charities and fundraising efforts is cash. While cash was traditionally the most popular means of donating, this trend is now dwindling. In 2019, 51 per cent of donors made a cash donation in the last year, but in 2020, this shrunk to just 38 per cent of donors; according to the CAF UK Giving Report in 2021.
Because of this, it is clearer and more important than ever that fundraising efforts evolve with the times, and embrace the digital world. Oliver Shaw-Latimer, senior director of payments and innovation at JustGiving, sat down with The Fintech Times to explain how the leading charity giving and fundraising platform is responding to difficult macroeconomic conditions.
How is the cost of living impacting the donation landscape?
“The cost-of-living crisis is not something to underestimate,” Shaw-Latimer explained: “The third sector has struggled, but it has been supported and kept alive by those generous enough to carry on giving. Essentially, what we’ve seen is that people overall may be donating less on average, but the number of donations that we’ve seen towards charities and good causes has continued to increase.”
To ensure that donations continue to come in, even as economic pressures increase, JustGiving recognised the need to streamline the donation process and make it easier than ever for givers to return to the platform.
After realising that its previous provider was unable to match its innovative payment ideas, JustGiving began working with online payment processor GoCardless.
Oliver Shaw-Latimer, senior director of payments and innovation at JustGiving
Shaw-Latimer explains how the partnership with GoCardless helps to reduce costs, enabling the JustGiving platform to pass on as much of the donations it receives as possible to the intended recipient: “Previously managing direct debits was a fairly manual process with lots of overheads. We’ve been able to optimise our checkout and donor experience meaning that we’ve significantly reduced the number of people who abandon the checkout and so more money is able to go to charities.
“Through GoCardless there are fewer opportunities for payments to fail and on occasion when they do, we are able to retry those payments within the same month – something that we weren’t able to do previously.
“With GoCardless, month-on-month creation of bank payments is up 18 per cent while attrition – our measure of bank payments that fail and can’t be retried – is down 10 per cent.”
The open banking effect
After switching to GoCardless, JustGiving also saw an increase in monthly mandates. Shaw-Latimer also described how increased product flexibility made this possible: “We are now able to offer direct debits on most of our products, including fundraising pages that have a specific end date or a fundraising target.
“We previously did not have the level of flexibility required to offer outside of just direct donations, but with GoCardless, we are now easily able to set up mandates with a specific end date.”
“Open banking in general for us has a number of key advantages. It’s significantly cheaper to process an open banking transaction than it is for any other (circa 70 per cent cheaper), it reduces the risk of fraudulent transactions, and we receive the cash in real time as opposed to having to wait, which is beneficial to charities.
“Furthermore, chargebacks are removed pretty much entirely which, from a merchant perspective, is a huge advantage for us.”
The future of donations
Open banking also presents further possibilities for JustGiving: “Extending beyond payment acceptance per se, in the future, our aim is to move away from onerous and manual verification processes to working directly with banks to verify people’s details,” Shaw-Latimer revealed.
“For example, when someone sets up a crowdfunding page, we ask them to send a bank statement as a means of verifying who they are, their details and where that money is going. That process can take some time and it’s open to human error. Open banking enables that crowdfunder to give consent for us to go directly to their bank in real-time.”
As JustGiving looks to extend its capabilities to maximise the number of donations it receives for the wide range of causes its platform supports, it plans to continue to seek out the providers that lead the landscape for innovation – including GoCardless.
Shaw-Latimer concludes: “We’ve built our payment platform in a way that means we can work with providers who are best in class for their specific fields, as opposed to jumping into any exclusive relationships with payment providers that restrict us, and GoCardless is the number one direct debit provider in the UK.”
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