Friday, 24 May 2024
Friday, 24 May 2024

Move towards a cashless society is causing enormous strain on charities

MULTIPLE factors are coming together to place enormous financial pressure on charities reliant upon public donations.

After the disruption and drop in contributions endured during the pandemic, not only has the cost-of-living crisis significantly reduced individuals’ ability to make donations but the creep towards a cashless society is devastating both the planned and impromptu cash donations that have traditionally provided an essential fundraising stream.

It is now vital for charities to offer potential donors another option – and to find a way to motivate and inspire giving from both regular and occasional donors. Elroy Fernandes, Managing Director, Dona Donations explains how contactless payment terminals are not only providing a convenient alternative to cash donations but also the opportunity to engage emotionally with potential donors.

Financial Pressure

Charities are experiencing a year-on-year decline in donations: people in the UK gave £10.7 billion to charity in 2021, a significant drop from £11.3 billion in 2020. Personal financial pressures are also leading one in eight donors to consider cutting back or reducing donations to charities. The decline in cash usage by around 15% every year since 2017 – and 35% during 2020 – has also affected giving, especially in ad hoc situations such as museum visits or at religious venues, when weddings and funerals have previously generated significant cash collections. 

Overall donations may be down in recent years but the fact that the war in Ukraine prompted the largest donation average ever recorded, with one in three people donating, demonstrates that individuals are still highly motivated to support causes they believe are truly important. So how can charities achieve a strong emotional engagement with potential donors? 

In response to the decline in cash, growing numbers of charities have embraced self-service card donation terminals to provide a simple, convenient way for individuals to donate. But this is not just a straight ‘cash for contactless’ swap – with the right approach, charities can achieve a new level of engagement and motivation to achieve an incremental increase in donations.

Emotional Connection

The motivations of donors typically fall into one of three reasons: Wanting to improve things for others, having a tangible positive impact or ensuring others do not suffer or have a negative experience. Within these motivations, there is a growing focus on two donor personas: the Trust Based Donor and the Impact Donor. Both want to know how the charity is going to use the money, who is being helped and by how much – and the onus is on charities to find the best ways to inform and thus engage these individuals. 

Self-service contactless terminals can be designed to engage potential donors in different ways. In addition to providing a number of suggested donation values, they can also include information about the way each donation will be used. For example, a picture of the stained window that needs to be repaired, with the amount outstanding required. Information about the cost of maintaining a building each day, even the different ways each donation value would be used – such as £5 to feed a child for a day or £20 to provide one night in a homeless shelter. 

Providing a link between a donor and the difference the money will make to an individual, group or even historic location is increasingly recognised to be far more compelling than a generic ‘donate now’ option. It provides people with a sense of emotional engagement and real commitment to a specific cause and, with measurable donation options, a chance to choose exactly how they want to help.

Convenience and Simplicity

The entire contactless model is designed not only to be incredibly simple and easy to use but also to maximise donations. Contactless terminals can display up to six different donation options – including ‘other’ – which helps donors to decide how much to give. On average, individuals donate £12 each time at a terminal, which is a significant amount when the average of all giving, including direct debits and standing orders, is £27 per person

With a simple, one-time Gift Aid opt-in, this approach also significantly boosts the charity’s Gift Aid contributions – with around 40% of contactless donations including the additional 25% Gift Aid.  In addition, while every donation can be made anonymously, the addition of a GDPR-compliant Marketing Opt-In also provides charities with a chance to capture donor information for future communications. 

Positioned conveniently at locations throughout a building, these terminals can even be encased in stands that are sensitive to the building’s history and purpose – something that is especially important in historic locations that can benefit from significant tourist contributions.  In addition, they can also be unlocked and, with the addition of a SIM card and 4G connection, used at different locations to support other fundraising activities, such as fetes, bake sales and festivals.

Conclusion

Offering an alternative to cash donations is a priority in today’s cashless society; but, in many ways, it is the way charities use these terminals to share information with donors, offering a way to boost engagement and inspire additional donations that is the most valuable aspect of the contactless solution. 

There is no doubt that the donation landscape has changed dramatically in recent years, but there is reason for optimism. Younger generations are increasingly committed to good causes, with 16-24-year-olds showing an increased willingness to donate despite their typically weaker financial capability when compared to over-65s. They also show a lot of interest in innovative methods of donating and engaging with charities, such as using apps, contactless donation points in public spaces and virtual reality at fundraising events.

With the right approach that combines convenience with inspiration, charities can continue to engage both individuals and communities and attract the ad hoc donations that will remain a key contribution to overall revenue.

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