The future of charitable donations

The future of charitable donations

Contents 3 Introduction 4 Section one: How are donations being made? 5 Who are donations coming from? 6 Assessing the digital preferences of donors 7 Section two: Breaking down barriers to digital adoption 8 Understanding the slow uptake of text facilities 9 The rise of third party websites 10 Understanding the slow uptake of online facilities 11 Online makes it easy 12 The future of online donations 13 Section three: Strategies for success 14 Key takeaways 15 About the author Critical has taken every reasonable care in the preparation of the content of this research. All information that it contains is provided in good faith. We make no representations or warranties about the information provided through this research. Critical accepts no liability whatsoever for any errors or omissions nor for any direct, indirect, special or other consequential loss or damage of whatever kind, resulting from whatever cause, through the use of any information obtained either directly or indirectly from this research. 2 of 16

Introduction One in five charities in the UK does not have facilities to accept online donations, despite 61% of these thinking that online donations will increase in the next three years. The current donations landscape Today 95% of charities accept donations via cheque and 87% of charities accept cash. However, 20% do not accept donations via their own website. From those we surveyed, it seems that charities have been slow to introduce their own online presence, perhaps because almost 60% of charities receive most of their donations from the over 50s age group. 87% The share of charities who expect website donations to increase There is a common perception that the older generation do not use newer, digital technologies but this is beginning to change as devices become more accessible and user-friendly. Moreover, donations from the younger generation are growing faster than those from the older generation. As younger generations become more affluent, they will expect to be able to use donation facilities that they are familiar with, such as via text, third party websites and directly through a charity s own website. Adapting to change Charities themselves have seen an uplift in their online follower base and have noticed the popularity of digital fundraising. They have also recognised the key advantages of online donations, such as the ease and convenience of payment, although there are still concerns around the security of online transactions. Overall, 87% of all of the charities surveyed think that they will receive a lot or a few more online donations directly via their website. For this reason, we ve put together some tips to help your charity increase its presence in the online world. We look at building a website and embracing social media, as well as setting up a mobile donation facility. One thing is clear: charities have to act now to ensure that they remain relevant in the future. Our research covers a sample of 301 charities in the UK, across a variety of different causes, with varying annual turnovers. By exploring the changing landscape of donations, we hope to examine attitudes towards online and offline payments, and highlight how charities can make the most of opportunities online to save time and money, and to increase support. David McHattie Head of Charities 3 of 16

Section one: How are donations being made? Traditional, offline payments are still the most popular methods of donation today, with 95% of charities receiving cheques and 87% receiving cash donations. Given the popularity of digital devices, such as mobiles, tablets, and PCs, and the proliferation of apps and websites, it is surprising that the main donation channels for charities continue to be cheque and cash, with 79% of donations being made offline, compared with merely 21% made online. Donation channels (%) used by charities Charities are more likely to accept donations via a third party website (83%), than they are to have their own online method of accepting donations (80%). In line with these findings, it comes as no surprise that one in five charities does not currently have a direct online donation facility such as a website, and fewer than two thirds of charities accept donations via text. This perhaps correlates with the underwhelming 1% of donations made via Gift Aid. Whilst it is easy to add Gift Aid to donations made online and via text, it is much more complicated for supporters to add Gift Aid to donations made via cheque and cash. 95% 87% 85% 83% 80% 62% 62% 8% 6% 4% 2% 2% 1% 1% 0% 2% MESSAGE VOUCHER LOTTERY OTHER Direct cheque donations Direct cash donations Regular direct debits/ standing orders Via a third party website Own website Telephone Text message Sponsorships/ grants/ contacts Vouchers e.g. Charities Aid Foundation Legacies/ wills Events/ fundraisers Own retail shops Via Gift Aid - tax relief Via lotteries Donations in kind 4 of 16

Who are donations coming from? The younger generation is the fastest growing demographic, increasingly donating more to charity than the older generation. In general, our results show that charities perceive most of their donations to come from the over 50s, with 58% citing this age group as the biggest donors. Just 1% of charities think that most of their donations come from the under 30s age group. This goes some way to explaining the relatively small uptake of digital donation methods amongst charities. The feeling that the older generation is more comfortable donating by traditional methods of payment, such as cheque and cash, may have caused the slower adoption of new, digital donation methods. An increase in younger supporters 4% of the charities surveyed have seen a decrease in the level of donations from the older generation, compared with only a 2% decrease from the younger generation. Additionally, charities have started to see a greater increase in the level of donations coming from the younger generation a 30% increase, compared with a 24% increase from the older generation. The biggest donors (%) by age group The level of donation increase (%) by generation Under 30 Between 30-50 Over 50 Younger generation Older generation 1% 34% 58% 30% 24% 5 of 16

Assessing the digital preferences of donors 85% of charities agree that young people prefer donating online, yet only 63% of charities see online fundraising as the way forward. Charities appear to agree with the stereotype that young people prefer donating online, with 85% of respondents agreeing with this sentiment. It is unsurprising that almost two thirds of charities also agree that the elderly do not like donating online. How charities responded to statements made about online and offline donations (%) Younger people prefer to donate to a charity online 2% 10% 23% 62% 3% However, this is changing. Our recent Ageing Population report demonstrates that nearly 70% of the over 65s already use the internet to book hotels, showing they are more comfortable online than perhaps currently thought. Value vs volume Over half of the charities surveyed think that donations made online by individuals are smaller in value than those made offline, with only 22% of charities disagreeing with this statement. Perhaps this is why 97% of charities agreed that there will always be a place for traditional fundraising. However, it is important to note that the notion of traditional fundraising will change as the younger generations grow older and become more affluent. Currently only 56% of charities recognise that their supporters are now more likely to donate online. Donations made online from individuals are greater in value Online fundraising is the way forward Our supporters are more likely to donate online The elderly do not like donating online There will always be a place for traditional fundraising 28% 23% 20% 17% 5% 7% 9% 12% 14% 38% 25% 2% 12% 21% 8% 30% 26% 3% 6% 22% 7% 28% 35% 2% 3% 16% 81% Strongly disagree Slightly disagree Neither/Nor Slightly agree Strongly agree Don t know 6 of 16

Section two: Breaking down barriers to digital adoption 61% of charities think that posts and advertisements on social media such as Facebook and Twitter are important in driving donations. It is surprising to see that over a third of charities consider social media to be not very important or not at all important in driving donations. Social media is a cost-effective channel for driving awareness and donations because of the sheer number of people who use such websites. As the general public continues to move towards the online world, so too should charities look to be present here. The value of going viral 72% of charities think that the number of donations directly triggered by social media will increase in the next three years. No charities think that these donations will decrease. 72% expect an increase in donations via social media This is hardly surprising, given the success of online charity campaigns such as the ice bucket challenge and the no make-up selfie, which used social media as a broadcast mechanism to ensure that people engaged with them. Importance of posts and advertisements on social media in driving donations (%) Extremely important 9% Not very important Very important 23% Social Media Quite important 29% Don t know 2% Not at all important 24% 14% 7 of 16

Understanding the slow uptake of text facilities Of the charities without a text message donation facility, 25% thought it was not relevant for them. Lack of technology and time were raised as barriers to introduction. Only 11% of charities are in the process of introducing a text message donation facility, with the remaining 89% of respondents identifying numerous barriers to implementation. 16% of charities stated that they do not have the facilities, technology or time to implement such a facility. A further 12% said that there would be too few potential donors to make such a facility worthwhile, while 9% of charities consider the facility to be too expensive. Keeping up with supporter expectations Barriers to introducing a text message donation facility (%) 25% Not relevant for our charity 12% Too few potential donors 15% of charities had not considered introducing a text message donation facility, perhaps because they perceive this channel to be of little interest to the majority of their supporters. However, as donations from the older generation decrease and donations from the younger generation increase, charities should look to introduce donation facilities that their supporters are familiar with and can use with ease. Of the charities with a text message donation facility, 71% think that social media will play an important role in driving donations, showing that these charities are integrating new platforms to increase their fundraising efforts. We do not have the facilities/ 16% technology/time to implement this 15% We have not considered this We are not funded through 13% public donations We are in the process of 11% introducing this 9% Too expensive Not been successful for us 6% in the past 5% Don t know 8 of 16

The rise of third party websites 65% of charities think that online donations made via third party websites will rise over the next three years. One charity attributed this rise in donations to the marketing and advertising that these sites have undertaken. They suggested that there is a lot of brand recognition with JustGiving type brands. People use that type of well known site when doing their fundraising or looking to donate. They can also find charities to give to by looking at that site. However, just over a quarter of charities thought that there would be no change in donations made via these websites. They have been going for a while and there has been no great surge. People are getting bored of them if anything. Others argued that these sorts of sites are not as beneficial to the charities themselves. Our own website will become more proficient. So we will become less reliant on third party websites. Another commented: It is not our preferred method. You have less control and you can t always track the donors. They have been going for a while and there has been no great surge. People are getting bored of them if anything. Our own website will become more proficient. So we will become less reliant on third party websites. It is not our preferred method. You have less control and you can t always track the donors. 9 of 16

Understanding the slow uptake of online facilities One in five charities still has no online donation facility. Of the charities without an online donation facility, only 23% were in the process of introducing this. Complexity, cost and irrelevance were raised as challenges. It is a positive sign that 23% of charities without online donation facilities were in the process of introducing this at the time they were surveyed. However, given the increases in the level of donation amongst the younger, tech savvy generation, it would seem that more charities should be implementing these facilities in order to meet the expectations of this age group. Nearly a fifth of these charities state that it is simpler for them to use third party websites instead of introducing an online donation facility. Barriers to introducing an online donation facility (%) 17% of charities state that an online donation facility such as a website is not relevant for their charity. A further 11% of charities believe that there would be too few potential donors on an online donation platform or that they would not be able to access the right target market. 71% have seen an increase in online donations Of the charities that already have an online donation facility, 71% say that online donations have increased from three years ago. It is worth remembering that not only does an online platform offer a simplified, more streamlined process for donations, but it also enables charities to increase their profiles and raises awareness of their cause. 23% We are in the process of introducing this 18% Simpler to use third party websites 17% Not relevant for our charity 17% We are not funded through public donations 11% Too few potential donors/not right target market 9% Too expensive 10% Inadequate website/ online facilities 6% Have not considered this 4% Other 10 of 16

Online makes it easy 92% of charities see the ease of payments as the key advantage of online donations but legacy fears over security linger, with 46% citing this as a disadvantage. 48% of charities worry that not everyone is internet savvy or has computer access. This suggests that charities are concerned about some of their supporters being left behind in the digital age. Whilst the internet remains easy and convenient for those who know how to use it, it is clear that many charity supporters have not benefited from this yet. Perceived advantages of online donations (%) 92% There is a conflict of opinion relating to the security of online donations. 19% consider this to be an advantage of online donation facilities, whereas 46% consider security fears to be a disadvantage. It is important to note that a further 14% see an advantage in the guarantee that money has gone to the right place. Perceived disadvantages of online donations (%) Online donation facilities provide an objectivity to the donations process, by using the payments infrastructure linked directly between the individual s and the charity s bank accounts. 48% 46% 19% 14% 12% 4% 15% 13% 11% Ease and convenience Security of transaction Guarantees money has gone to right place Not everyone carries cash More information available online Not everyone is internet savvy/ has computer internet access Security fears Impersonal Some prefer using cash Inadequate online donation facilities 11 of 16

The future of online donations 87% of all charities surveyed think that they will receive a lot or a few more online donations directly via their website. Only 10% thought there would be no change. Some common themes ran through respondents answers explaining why most charities think that online donations will increase over the next three years. Charities with/without an online donation facility One charity reported, We tend to have a lot more people following us online now. Another emphasised, Because of the nature of people we talk to, they live in that online space. So we re concentrating on digital fundraising. Other charities argued that they are moving with the times giving supporters platforms to give money that they prefer to use. It will probably maximise one-off donations. We tend to have a lot more people following us online now. Online on the rise 20% 80% WITHOUT WITH Of the charities without an online donation facility, 61% think that online donations will increase over the next three years. These charities are in danger of being left behind as their online profile decreases, and the affinity with traditional payments, such as cheque and cash, declines. Overall, 87% of all of the charities surveyed think that they will receive a lot or a few more online donations directly via their website. Only 10% thought that there would be no change. 12 of 16

Section three: Strategies for success Charities engaging with online donation facilities and social media have adopted a number of strategies and techniques to ensure they are appealing to their target audience. Below are a few considerations for successful digital adoption. If you haven t already, create a website You can buy a domain name (site address) and web hosting for as little as 2 a month. This will ensure your site looks professional, and also means that you can store all of your content easily, so that it will load quickly. You can then install a content management system on your website, which will enable you to upload custom templates, layouts, and images for free, or at a small cost. Optimise it for online donation Content management systems offer you the opportunity to add a variety of different applications to your website. You can download and install an online donation facility, eliminating the need for third party websites. You should also make sure that your website is optimised for display on mobile devices. Use images and video It is important that your website contains useful and informative content. This will allow your supporters to find out more about particular aspects of the charity that interest them, and also improve your ranking in the list of results on search engine websites. Images and video do particularly well in attracting and engaging audiences. Embrace social media It is quick and easy to set up an account on a social media platform. Once you have registered your page, you can begin sharing content and providing information on how to donate. Your supporters will increasingly use these platforms and, for your charity to remain relevant, so should you. Consider mobile donation facilities Ensure you have a mobile payment platform which allows supporters to donate via an app or via text. Many text donation facilities are free and do not take commission. You can also sign up for Barclays Pingit and enable your supporters to donate to you via a mobile app, which adds Gift Aid to the process at no extra cost. Act now and act fast Get involved now and grow your follower base, so that you can take advantage of online donations in the years to come. 13 of 16

Key takeaways Traditional, offline payments are the most popular methods of donation today, with 95% of charities receiving cheques and 87% receiving cash, limiting the opportunity to add Gift Aid The younger generation is the fastest growing demographic, increasingly donating more to charity than the older generation 72% of charities think that the number of donations directly triggered by social media will increase in the next three years. No charity thinks they will decrease 85% of charities agree that young people prefer donating online, yet one in five still has no online donation facility 87% of all charities surveyed think that they will receive a lot or a few more online donations directly via their website. To find out more about how Barclays can support your business, please call 0800 015 4242* or visit barclays.com/corporatebanking Figures based on research conducted by Critical, on behalf of Barclays, between January-February 2015. 301 charities were interviewed. *To maintain a high quality of service, your call may be monitored or recorded for training and security purposes. Calls to 0800 numbers are free of charge, when calling from a UK landline. Charges may apply when using a mobile phone or when calling from abroad. Lines are open from 8am to 6pm Monday to Friday. 14 of 16

About the author For further information and to find out how our sector specialist team can support your charity, please contact David McHattie, Head of Charities. David McHattie Head of Charities Barclays David had over 30 years experience of international and corporate banking with Barclays, before moving into the Public Sector and Healthcare Team as Corporate Director. He now leads a team of Relationship Directors nationwide, responsible for providing banking services to the charities, education and healthcare sectors, delivering a range of solutions, from bank debt and capital markets through to day-to-day banking and deposits. David has previously managed a portfolio of leading Housing Associations (HA) and has experience of structuring new loan deals to the HA sector. Outside work David is chair of a residents association. M: 07775 540 814* david.mchattie@barclays.com *Please note: this is a mobile phone number and calls will be charged in accordance with your mobile tariff. 15 of 16

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