How to reduce recurring payment cancellations in the charity sector

payment cancellations in the charity sector

Receiving regular recurring payments from donors is a great source of income for any charitable organisation. With recurring payments, donors can benefit from a simple ‘one-step’ sign up and automated payments, while charities can benefit from a steady cash flow and more reliable profit forecasting. 

However, these benefits only apply if you can retain your donors and reduce recurring payment cancellations the charity sector. 

Recurring payments and COVID-19

During the early stages of the COVID-19 pandemic, when social distancing was introduced in the UK, the number of recurring payment cancellations in the charity sector spiked as donors feared for their financial stability. 

Research by Rapidata found that direct debit cancellations rose from 2.16% in February 2020, to 3.09% in March 2020 as COVID-19 restrictions were enforced across the UK. 

While this 1% rise in cancellation rates might not seem like a huge loss to the charity sector on the surface, when you compare this figure with data from 2019, the damaging effects of COVID-19 on recurring payments in the charity sector is clear. 

Rapidata found that the cancellation rate of recurring payments in the charity sector for March 2020 was 41% higher than in March 2019 (2.19%). Alongside this, new donor figures for March 2020 were 24.11% lower than in March 2019, meaning it’s more important than ever for the charity sector to work to retain their regular recurring payment donors. 

As the COVID-19 pandemic continues to dominate headlines and detrimentally affect the economic landscape of the country, charities need to work to retain their recurring payment customers and donors. Read on to find out our tips to help reduce cancellations of recurring payments. 

How to retain recurring payment customers and donors

1. Stay in touch with your donors

As a charity offering recurring payment plans for charitable giving, a lot of your marketing and communication efforts are likely concentrated on securing new donors. After all, the more people that sign up to donate to your charity, the more income you’ll receive and be able to use to impact positive change. 

It’s easy to think that once donors have signed up to issue recurring payments to your charity, the hard work is done and you can back off on your communications strategies. But, retaining these donors requires just as much effort and attention as gaining them.

Staying in regular contact with your donors through direct mail, email and phone conversations can help to show them how important they are to your charity. 

Sending your donors regular emails or direct mail giving updates on how their donations are being spent and the positive impact their money is having on your charity efforts, can help donors to feel appreciated and see the value of their donations. 

However, be wary of sending too much correspondence or focusing your messaging on gaining larger donations from your donors. Spam mail, where communications such as emails, newsletters and text messages are sent to recipients at high frequencies, can turn donors off and make them feel your charity is annoying them. 

And, if your messaging only focuses on gaining increased contributions from donors, they may feel as though they are being used and ‘pumped for money’ by your charity. 

So, to keep donors engaged with your charity, while avoiding spamming them with content, a great way to reduce recurring payment cancellations in the charity sector is to set up a communications strategy that regularly contacts donors with targeted, relevant updates about how their money is being used and developments in the charity. 

2. Reward loyalty from recurring payments

A regular recurring payment donation is a commitment from your donors. It shows a dedication to your cause and a desire to personally contribute to the positive changes your charity makes. 

Try to think of your donors as individuals spending money from their hard-earned paychecks to help your charity’s cause, rather than faceless bank accounts depositing money into your funds each month. 

When you show your donors that you value their continued contributions, they are more likely to keep up their donations month on month. Acknowledging when donors have reached certain milestones in their donations can help to make them feel valued and rewarded for their efforts. 

Systems such as mailing out a personalised thank you card for their contributions at regular intervals, e.g after six or 12 months of continuous donations or around Christmas time, adds a personal touch that helps donors to feel as they are personally making a difference to your charity. 

Personal touches that reward the donor’s loyalty help to humanise your organisation in the donors’ eyes. Meaning, they will likely continue their contributions as they can see the value that it adds to your organisation and the value they receive in return for their loyalty. 

3. Be flexible with subscription changes

People’s financial situation can change in unexpected ways both on an individual level and on a national or global scale. And the COVID-19 crisis has proven that in times of financial uncertainty, charitable giving can be one of the first expenses that people cut. 

Flexible subscriptions and donation scales can be the answer to combatting this cancellation of recurring payments as a result of changes to a donor’s financial circumstances. 

Offering a sliding scale of donation amounts, or allowing donors to adjust their donation frequency can provide a positive solution to changes to their financial circumstances that still allows them to continue donating. 

Many charities employ a recurring payment system that operates on fixed monthly donations of set amounts, usually £3, £5, £10, £15 per month. This allows donors to choose the donation amount that they can afford in relation to their income and other expenses. 

By allowing donors to move between donation amounts as suits their financial position, while continuing their ongoing contract of contributions can help to reduce the amount of recurring payment cancellations your charity receives. 

4. Ask donors to explain their cancellation

Despite your best efforts, it’s inevitable that your charity will still suffer from some recurring payment cancellations from donors. Whether they feel their ideologies no longer align with the charity’s or they are no longer in a strong enough financial position to continue contributing, cancellations are bound to happen. 

While you can’t avoid this, you can use this challenge to work to understand why your donors cancel their recurring payments and then work to address these reasons to avoid future cancellations. 

Whether donors have to speak to your customer services team directly to cancel their contributions or they can end their donations online, deploying a customer survey at the point of cancellation can help you to gather feedback from your cancelling donors.

A few simple questions in an online survey, or a more detailed phone call from a customer services representative can help your charity to gain valuable feedback from your donors. The information you receive from cancelling donors can then inform future strategies and practices to retain recurring payment donors going forwards. 
With these tips, your charity should be able to work to reduce the number of recurring payment cancellations in the charity sector it receives and gain a better understanding of the pain points of donors who do choose to cancel their contributions. This will ultimately help your charity to become more efficient and profitable when handling recurring payments from donors. If you want to find out more about how your charity can benefit from recurring payments, speak to one of our team to see how RSM 2000 can help your charity.

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