How to stop the decline of donations

Fewer Australians are donating to charity, according to Roy Morgan Research, but there a few simple ways not-for-profits can effectively manage cash flow and minimise the impact of this decline.

The Roy Morgan study found that the proportion of those aged 14 and over who gave money to charity over the 12 months to the end of June has fallen to 65 per cent this year, down from 71 per cent in 2010.

This troubling decline in charitable giving has been attributed to a similar drop in economic confidence. Four years ago more than half (57 per cent) of Australians thought local conditions were improving. This year, just 35 per cent feel the same.

“The decline in Australians donating to charity appears to be linked to increasing pessimism about our economic future rather than any trend away from charitable values,” Roy Morgan Research Industry Communications Director Norman Morris explained.

“In fact, three quarters of the population still think ‘charity organisations make long-term differences to the world’s poorest people’ and more than half believe that ‘everyday people can help to raise living standards’.”

Australian charities may be facing a decline in their revenue, but fortunately the total donation amount from each donor is picking up. While fewer people are choosing to donate, the number of “heavy donors” – those giving $200 or more each year – has increased. Between 2010 and 2014, the proportion of “heavy donors” rose from 30 to 34 per cent.

So, in these uncertain economic times, how can Australian charities and not-for-profits encourage donors to keep giving?

Make donations easy

While many Australians believe in the importance of charitable giving, making the process as easy as possible can ensure payments continue to roll in.

In particular, not-for-profits in Australia may want to invest in direct debit so that donors can set up regular and recurring payments. This could be incredibly beneficial as it not only makes donating easier for the individual, but also streamlines the payment collection process for charities.

Furthermore, integrating direct debit solutions is a great way to encourage retention as donors are not required to take further action once payments have begun.

Additionally, those running charities can use this time to engage with donors about the work the organisation is achieving. Keeping donors up to date with what the charity is doing with their funds is a great way to ensure individuals understand how much their contributions are worth. When they can see the changes their payments are making, they will be less likely to cancel direct debits because they know they are making a difference.

“Looking at cancellations from the last few years, we can see the catastrophic impact of the recession on charities’ regular giving income streams,” Rapidata Managing Director Scott Gray said.

“With continued investment in donor stewardship, charities fought through the recession, driving down cancellations to create the most positive environment for regular giving ever seen before.”

Promote workplace-giving programs

Further research from Roy Morgan shows that more Australians are interested in compulsory wage deductions landing in the pockets of charities.

“The proportion of Aussies who agree ‘a percentage of everyone’s income should go to charities’ has risen slightly in recent years,” Mr Morris said.

“In view of this, perhaps charities that are feeling the pinch should consider putting more effort into promoting their workplace-giving programs?”

Mr Morris explains that paycheck donations are a “win-win situation”, as employees have a small amount deducted from their pay which they can later claim back on tax, while charities receive steady recurring revenue.

If you operate a not-for-profit in Australia, investing in paperless direct debit solutions could be the simplest way to combat declining donation trends. Online payment software for charities will simplify collections and minimise administration costs.