The future of charitable donations

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 adoption8 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 success14 Key takeaways

15 About the author

Contents

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 providedthrough this research. Critical accepts no liability whatsoever for any errorsor omissions nor for any direct, indirect, special or other consequential loss or damage of whatever kind, resulting from whatever cause, throughthe use of any information obtained either directly or indirectly from this research.

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Introduction

The current donations landscape

Today 95% of charities accept donations via cheque and 87% of charities accept cash. However, 20% do notaccept 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.

There is a common perception that the older generationdo not use newer, digital technologies but this isbeginning to change as devices become more accessibleand user-friendly.

Moreover, donations from the younger generation aregrowing faster than those from the older generation. As younger generations become more affluent, they willexpect to be able to use donation facilities that they arefamiliar with, such as via text, third party websites anddirectly through a charity’s own website.

Adapting to change

Charities themselves have seen an uplift in their onlinefollower base and have noticed the popularity of digitalfundraising.

They have also recognised the key advantages of onlinedonations, such as the ease and convenience of payment,although there are still concerns around the security ofonline transactions.

Overall, 87% of all of the charities surveyed think that theywill receive ‘a lot’ or ‘a few more’ online donations directlyvia their website.

For this reason, we’ve put together some tips to help yourcharity increase its presence in the online world. We lookat building a website and embracing social media, as wellas 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 annualturnovers.

By exploring the changing landscape of donations, wehope to examine attitudes towards online and offlinepayments, and highlight how charities can make the most of opportunities online to save time and money, and toincrease support.

One in five charities in the UK does not have facilities to accept onlinedonations, despite 61% of these thinking that online donations will increase in the next three years.

87%The share of charities who expectwebsite donations to increase

David McHattie Head of Charities

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Section one: How are donations being made?

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 charitiescontinue to be cheque and cash, with 79% of donationsbeing made offline, compared with merely 21% made online.

Charities are more likely to accept donations via a thirdparty website (83%), than they are to have their own onlinemethod of accepting donations (80%). In line with thesefindings, it comes as no surprise that one in five charitiesdoes not currently have a direct online donation facilitysuch as a website, and fewer than two thirds of charitiesaccept donations via text.

Traditional, offline payments are still the most popular methods of donation today,with 95% of charities receiving cheques and 87% receiving cash donations.

£MESSAGE VOUCHER LOTTERY OTHER

Direct chequedonations

Direct cashdonations

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 retailshops

Via Gift Aid -tax relief

Via lotteries Donations in kind

95%87% 85% 83% 80%

62% 62%

8% 6% 4% 2% 2% 1% 1% 0% 2%

This perhaps correlates with the underwhelming 1% ofdonations made via Gift Aid. Whilst it is easy to add Gift Aidto donations made online and via text, it is much morecomplicated for supporters to add Gift Aid to donationsmade via cheque and cash.

Donation channels (%) used by charities

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In general, our results show that charities perceive most oftheir donations to come from the over 50s, with 58% citingthis age group as the biggest donors. Just 7% of charitiesthink that most of their donations come from the under 30s age group.

This goes some way to explaining the relatively small uptake ofdigital donation methods amongst charities. The feeling that theolder generation is more comfortable donating by traditionalmethods of payment, such as cheque and cash, may havecaused the slower adoption of new, digital donation methods.

An increase in younger supporters

4% of the charities surveyed have seen a decrease in thelevel of donations from the older generation, comparedwith 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 younger generation is the fastest growing demographic, increasinglydonating more to charity than the older generation.

Who are donations coming from?

The level of donation increase (%) by generation

Under 30

7% 34% 58%

Between 30-50 Over 50 Younger generation

30% 24%

Older generation

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Charities appear to agree with the stereotype that youngpeople prefer donating online, with 85% of respondentsagreeing with this sentiment. It is unsurprising that almosttwo thirds of charities also agree that the elderly do not like donating online.

However, this is changing. Our recent Ageing Populationreport demonstrates that nearly 70% of the over 65s alreadyuse the internet to book hotels, showing they are morecomfortable online than perhaps currently thought.

Value vs volume

Over half of the charities surveyed think that donationsmade online by individuals are smaller in value than thosemade offline, with only 22% of charities disagreeing withthis statement. Perhaps this is why 97% of charities agreedthat 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 youngergenerations grow older and become more affluent. Currently only 56% of charities recognise that theirsupporters are now more likely to donate online.

85% of charities agree that young people prefer donating online, yet only 63%of charities see online fundraising as the way forward.

Assessing the digital preferences of donors

How charities responded to statements made about online and offline donations (%)

There will always be a placefor traditional fundraising

The elderly do notlike donating online

Online fundraisingis the way forward

Younger people prefer todonate to a charity online

Our supporters aremore likely to donate online

Donations made online fromindividuals are greater in value

Strongly disagree

10% 23% 62% 3%2%

28% 23% 20% 7%5%17%

9% 12% 14% 2%25%38%

12% 21% 8% 3%26%30%

6% 22% 7% 2%35%28%

3% 16% 81%

Slightly disagree Neither/Nor

Slightly agree Strongly agree Don’t know

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Section two: Breaking down barriers to digital adoption

It is surprising to see that over a third of charities considersocial media to be ‘not very important’ or ‘not at allimportant’ in driving donations.

Social media is a cost-effective channel for drivingawareness and donations because of the sheer number of people who use such websites. As the general publiccontinues 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.

This is hardly surprising, given the success of online charitycampaigns such as the ‘ice bucket challenge’ and the ‘nomake-up selfie’, which used social media as a broadcastmechanism to ensure that people engaged with them.

61% of charities think that posts and advertisements on social media such asFacebook and Twitter are important in driving donations.

Importance of posts and advertisements on socialmedia in driving donations (%)

Quite important

Very important

Extremelyimportant

Don’t know

2%Social Media9%

29%23%

Not very important

Not at all important

24% 14%

72%expect an increase in donationsvia social media

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We do not have the facilities/technology/time to implement this16%

Not relevant for our charity25%Too few potential donors12%

We are in the process ofintroducing this11%

Too expensive9%

Not been successful for us in the past6%

We have not considered this15%

We are not funded through public donations13%

Don’t know5%

Barriers to introducing a text message donation facility (%)

Understanding the slow uptake of text facilities

Only 11% of charities are in the process of introducing a text message donation facility, with the remaining 89% of respondents identifying numerous barriers toimplementation. 16% of charities stated that they do nothave the facilities, technology or time to implement such a facility. A further 12% said that there would be too fewpotential donors to make such a facility worthwhile, while9% of charities consider the facility to be too expensive.

Keeping up with supporter expectations

15% of charities had not considered introducing a textmessage donation facility, perhaps because they perceivethis channel to be of little interest to the majority of theirsupporters. However, as donations from the oldergeneration decrease and donations from the youngergeneration increase, charities should look to introducedonation facilities that their supporters are familiar withand 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 areintegrating new platforms to increase their fundraisingefforts.

Of the charities without a text message donation facility, 25% thought it was notrelevant for them. Lack of technology and time were raised as barriers to introduction.

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One charity attributed this rise in donations to themarketing and advertising that these sites haveundertaken. They suggested that there is “a lot of brandrecognition with JustGiving type brands. People use thattype of well known site when doing their fundraising orlooking to donate. They can also find charities to give toby looking at that site.”

However, just over a quarter of charities thought that there would be no change in donations made via thesewebsites. “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 asbeneficial to the charities themselves. “Our own websitewill become more proficient. So we will become lessreliant on third party websites.”

Another commented: “It is not our preferred method. Youhave less control and you can’t always track the donors.”

The rise of third party websites65% of charities think that online donations made via third party websites will rise over the next three years.

“Our own website will become moreproficient. So we will become lessreliant on third party websites.”

“They have been going for a while and there has been no great surge.People are getting bored of them if anything.”

“It is not our preferred method.You have less control and youcan’t always track the donors.”

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Understanding the slow uptake of online facilities

It is a positive sign that 23% of charities without onlinedonation facilities were in the process of introducing thisat the time they were surveyed. However, given theincreases in the level of donation amongst the younger,tech savvy generation, it would seem that more charitiesshould be implementing these facilities in order to meetthe expectations of this age group.

Nearly a fifth of these charities state that it is simpler forthem to use third party websites instead of introducing an online donation facility.

Of the charities that already have an online donationfacility, 71% say that online donations have increased from three years ago. It is worth remembering that notonly does an online platform offer a simplified, morestreamlined process for donations, but it also enablescharities to increase their profiles and raises awareness of their cause.

One in five charities still has no online donation facility. Of the charities withoutan online donation facility, only 23% were in the process of introducing this.Complexity, cost and irrelevance were raised as challenges.

We are inthe process of

introducing this

23%18% 17%17%

11%6%

4%

9%Simpler to use

third partywebsites Not relevant

for our charity

We are notfunded throughpublic donations Too few potential

donors/notright target market Too

expensive

10%

Inadequatewebsite/

online facilitiesHave not

consideredthis Other

71%Barriers to introducing an online donation facility (%)

17% of charities state that an online donation facility suchas a website is not relevant for their charity. A further 11%of charities believe that there would be too few potentialdonors on an online donation platform or that they wouldnot be able to access the right target market.

have seen an increasein online donations

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Online makes it easy

48% of charities worry that “not everyone is internet savvyor has computer access.” This suggests that charities areconcerned about some of their supporters being leftbehind in the digital age.

Whilst the internet remains easy and convenient for thosewho know how to use it, it is clear that many charitysupporters have not benefited from this yet.

There is a conflict of opinion relating to the security ofonline donations. 19% consider this to be an advantage ofonline donation facilities, whereas 46% consider securityfears to be a disadvantage.

It is important to note that a further 14% see anadvantage in the guarantee that money has gone to the right place.

Online donation facilities provide an objectivity to thedonations process, by using the payments infrastructurelinked directly between the individual’s and the charity’sbank accounts.

92% of charities see the ease of payments as the key advantage ofonline donations but legacy fears over security linger, with 46% citingthis as a disadvantage.

Ease andconvenience

92%

19% 14% 12%4%

Security oftransaction

Guarantees money has gone

to right place

Not everyonecarries cash

More information

available online

48% 46%

15% 13% 11%

Securityfears

ImpersonalNot everyone isinternet savvy/has computerinternet access

Some preferusing cash

Inadequateonline donation

facilities

Perceived disadvantages of online donations (%)Perceived advantages of online donations (%)

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The future of online donations

Some common themes ran through respondents’ answersexplaining why most charities think that online donationswill increase over the next three years.

One charity reported, “We tend to have a lot more peoplefollowing us online now.” Another emphasised, “Becauseof the nature of people we talk to, they live in that onlinespace. So we’re concentrating on digital fundraising.”

Other charities argued that they are “moving with thetimes… giving supporters platforms to give money thatthey prefer to use. It will probably maximise one-offdonations.”

Online on the rise

Of the charities without an online donation facility, 61%think that online donations will increase over the next threeyears. These charities are in danger of being left behind as their online profile decreases, and the affinity withtraditional payments, such as cheque and cash, declines.

Overall, 87% of all of the charities surveyed think that theywill receive ‘a lot’ or ‘a few more’ online donations directlyvia their website. Only 10% thought that there would beno change.

87% of all charities surveyed think that they will receive ‘a lot’ or ‘a few more’ onlinedonations directly via their website. Only 10% thought there would be no change.

Charities with/without an online donation facility

20%

80% WITHOUT

WITH“We tend to have a lot more peoplefollowing us online now.”

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Section three: Strategies for successCharities engaging with online donation facilities and social media have adopted anumber of strategies and techniques to ensure they are appealing to their targetaudience. 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 yoursite 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 onyour website, which will enable you to upload custom

templates, layouts, and images for free, or at a small cost.

Consider mobile donation facilitiesEnsure you have a mobile payment platform whichallows 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 BarclaysPingit and enable your supporters to donate to you

via a mobile app, which adds Gift Aid to the process at no extra cost.

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 willincreasingly use these platforms and, for your charity

to remain relevant, so should you.

Use images and videoIt is important that your website contains useful and

informative content. This will allow your supporters tofind out more about particular aspects of the charitythat interest them, and also improve your ranking inthe list of results on search engine websites. Images

and video do particularly well in attracting andengaging audiences.

Act now and act fastGet involved now and grow your follower base,

so that you can take advantage of online donations in the years to come.

Optimise it for online donationContent management systems offer you the

opportunity to add a variety of different applicationsto your website. You can download and install anonline donation facility, eliminating the need for third party websites. You should also make sure

that your website is optimised for display on mobile devices.

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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 tocharity than the older generation

• 72% of charities think that the number of donations directly triggered by social media willincrease 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 noonline donation facility

• 87% of all charities surveyed think that they will receive ‘a lot’ or ‘a few more’ online donationsdirectly 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.

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About the authorFor further information and to find out how our sector specialist team can support your charity, please contactDavid McHattie, Head of Charities.

*Please note: this is a mobile phone number and calls will be charged in accordance with your mobile tariff.

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 providingbanking 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

David McHattie Head of Charities Barclays

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May 2015.

barclays.com/corporatebanking

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