Fundraising Without Checks
In a comment on The Agitator, Jim Toscano of the Minneapolis Heart Foundation says that checks will no longer be used in Britain in nine years.
And he asks: "What effect would it have on our fund-raising process if donors didn’t have a check to use to convey funds?" Fascinating question.
But first of all, can any of our UK readers confirm Jim’s report?
Assuming he’s got the scoop, let’s think about his question.
A key objective of direct mail fundraising has always been to simplify the response process, right up to and including a stamped reply envelope. And to support the close — "Send your check NOW!" — the best mail packages include an "order card" that drives home the "ask" by underscoring the most motivating sales points … and that makes it easy for the donor to provide necessary contact information.
When Jim’s check-less scenario comes to pass (at least in the UK), fundraisers using letters will need to motivate prospects to undertake a more complicated and time-consuming process … go to a computer, (perhaps) wait for it to boot up, navigate manually to the correct landing page, and once there, finally begin the actual transaction process (of course, mid-way through that process, the donor realizes that she doesn’t have her credit card handy!).
Will this extended process have an adverse impact on response? I’d say, definitely.
Some possible implications of a check-less fundraising environment …
1. The letter (if fundraisers are still using a letter!) must carry the "sale" on its own.
2. Alternatively, the "order card" becomes some sort of "reminder" card to be set aside to furnish the needed landing page URL when it’s convenient for the donor to go online and consider giving.
3. The landing page becomes the order card, and as such carries no less (and perhaps more) importance than the original pitch letter itself. But this is the way online fundraisers should be thinking about dedicated "donate" pages anyway.
Or,
4. The check-less environment simply accelerates the transition to strictly online fundraising … where, done correctly, there is the least transactional "friction" to deter a committed donor from actually making a gift, right then and there. This is not a certainty … most fundraisers report they have plenty of "cross-over" donors currently who respond to direct mail appeals via the online channel.
But whichever scenario emerges as far as how the pitch is first communicated to the prospect, what is certain is that credit/debit cards and EFTs will become the only transactional mode. Hopefully, in nine years the percentage of consumers/donors who remain resistant to electronic bill paying will be negligible. In the UK, what alternative will they have?
Any other thoughts on check-less fundraising?
Tom
10 responses to “Fundraising Without Checks”
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http://www.printweek.com/business/news/970471/Payments-Council-decide-future-cheques/
“The Payments Council, a 15-strong board of representatives from the banking industry, will meet on the 16 December to debate the issue and are widely expected to decide to phase out cheque payments by 2018, despite strong opposition from businesses and charities.”
I have to think long and hard to remember the last time I wrote a cheque. As best as I can recall, I’ve written 3 cheques in the past 5 years. With the ability to make purchases using mobile phones, my bank ATM/Debit card, credit cards etc., and cheques just aren’t terribly handy or useful. (for me)
While this may be inconvenient to certain groups of people, for a growing portion of the population, it’s preferable. As the “cheque generation” diminishes, banks are eventually going to revisit the cost of providing them as a personal service.
However, as the article above states, there are still a substantial number of cheques exchanged annually in the UK. It’s probably not something charities need to worry about today, but it’s certainly wise to be prepared for their elimination.
FYI – According to the following website, Finland stopped issuing personal cheques in 1993 and Sweden has now “totally abandoned” them. http://www.businesspme.com/uk/articles/finance/15/The-future-of-cheques-by-country.html
In the UK, checks (or cheques) will be phased out in 2018 as Jim says.
This was announced on Wednesday 16th Decemeber:
“Cheques will be phased out by October 2018, but only if adequate alternatives are developed, the body that oversees payments strategy has said.
The board of the UK Payments Council has set the date in a bid to encourage the advance of other forms of payment”
http://news.bbc.co.uk/1/hi/business/8414341.stm
Will we still be printing and mailing letters to donors and potential donors in 9 years time?
In technology terms, that is aeons but for an aging population (in the UK), that’s not a very long time to get everybody online and using PayPal or whatever the system du jour is…
The UK Payments Council has decided that cheques will be phased out by October 2018 but only if adequate alternatives are developed.
http://news.bbc.co.uk/1/hi/business/8414341.stm
Here is the news article that supports what Jim says:
http://news.yahoo.com/s/nm/20091216/lf_nm_life/us_britain_cheques
In my opinion, direct mail will have a place in the mix for a long time. However what will change is the way donors respond. Look at the catalog industry. In 10 years, the purchase model has totally flipped. In 1999, 95% of orders were placed by the mail order form. In 2009 95% of the orders are placed over the phone or online. Catalogs are still mailed out but we order through different channels. The same thing will happen with our fundraising approaches.
The future is very bright for fundraisers!
I agree with Chip Grizzard. The future is bright for fundraisers. Order forms for some groups now include 3 or 4 ways of giving a donation — check, debit or credit card, direction to a url if one wants to donate on-line, and sometimes an 800 number to call. If we add to that mix directions on how to text a donation — just another method of giving.
For as long as it is cost-effective, and productive of new members or donations, to mail charitable direct mail. “packages” will continue to exist and be used, with components tailored to existing banking processes and ways of giving that give consumers choice and a sense of control over their money and charitable choices.
Laurie Pringle’s comment reflects the situation of most people (and not necessariy excluding the “older” age groups):cheques aren’t the preferred donation -or payment, for that matter- method in most European coutries. Although the cheque option is of course offered, all direct mail pieces include a a credit card form. Another option in many countries is a giro.
In addition, credit card payment is infinitely more practical for monthly giving that, it is my impression, is much more generalised here than in the US.
With extensive experience in Latin America, I can say that cheques are very, very seldom used there too (there’s a considerable risk of theft), credit card being -and by far- the preferred payment method due to the credit card culture that exists in those countries. Also, monthly giving is much more frequent than in the US, made easier, of course, by credit cards.
I think we only need to look at how the ‘younger’ generation is responding to direct mail.
We work with a lot of zoos and target 25 to 45 year old mothers for membership. Our main way of soliciting is direct mail. We use a traditional DM package — letter,reply slip and insert (or two!). On our reply slip we give them four easy ways to join–through the mail, online, onsite or phone. We make a big deal about joining online–not only is this the demographic for that type of request, but it’s also the cheapest way for the zoo to process a membership gift.
The result? On average, 32% of new members joined online–spurred by the DM package (we can track this because they have to enter a code to get the special membership discount).
We still think direct mail is critical to soliciting donations (or, in this case, memberships). In fact, many of our zoo clients are increasing their direct mail campaigns because it’s the most successful way for them to acquire new members.
So, I think direct mail is still an effective way to communicate and solicit. It just may not be the way our member/donors communicate back to us!
P.S. This is one sector that actually nets money on its direct mail acquisition campaigns!
Suddenly the calls for a cashless society do not seem that outlandish of a prospect. Not saying I agree with it, but quite the opposite. Here is a good example of an outside entity telling you how you may (and especially may not) conduct your personal affairs! Wake up UK and protest the policies now.
It was interesting to read your column, Tom, because the number of countries using checks in our world is probably in the minority. Much of Asia, most countries of Europe and most of South America (as Melvyn points out) have never ever use checks, but rather the infamous GIRO system which usually requires donors to go to a bank, convenience store (in Japan) or post office to make donations (as they do to pay their bills and any other non-credit card payments). Money is then wire-transferred into the charit’s Post Office or Ban account.
This has some advantages and some disadvantages: On the plus side, it becomes easier to convert such donors to monthly giving. On the minus side, the donor has to write in the donation amount rather than check a box. However, charities can still show suggested donation amounts in a space above the payment form, and in practice we have found donors tend to write in one of the suggested amounts rather than giving at random.
If anyone would like more advice or help with this form of fundraising I’d be happy, as a retired UNICEF fundraiser and occasional consultant, to give further advice. Bottom line is that the abolition of checks does not damage fundraising, it just changes the way you have to do it.
Today (16th December 2009) the Payments Council Board has agreed to set a target date of 31st October 2018 to close the central cheque clearing. Cheque use is in long-term, terminal decline. The Payments Council was faced with the choice of either managing the decline to ensure that personal and business cheque users have alternatives easily available to them; or to stand back and let the decline take its course. It has decided that its active involvement can help prevent confusion and deliver cheque alternatives that are acceptable to cheque users. The Payments Council wants to ensure that consumers and businesses are not left high and dry when the closure of the clearing occurs.
Over the next nine years the Payments Council will seek to promote and explain existing alternatives; and where innovation and new options are required to ensure that they are put in place. Although cheque use has been in decline since 1990, and has fallen by 40% over the last five years, there are still plenty of situations where cheques are used extensively. These include payments between individuals, and payments to sole traders, small businesses, clubs, charities and schools. The payments industry has to rise to the challenge of finding easy-to-use efficient alternatives for these payments and to ensure that they are easily accessible and well understood by cheque users. The goal is to ensure that by 2018 there is no scenario where customers, individuals or businesses, still need to use a cheque. The Board will be especially concerned that the needs of elderly and vulnerable people are met. The next step is to identify targets which the Council can measure progress against. It will undertake a full review in 2016 before any final decision is taken.
Chief Executive of the Payments Council, Paul Smee says:
“Customers aren’t likely to see any immediate change as the target date is still a long way off. This announcement marks the start of extensive work that we need to do to ensure that everyone has a viable alternative, should the cheque clearing close. We aim to be very transparent and we will continue to consult fully with all interested parties. There will be a critical review in 2016 when the Payments Council will decide whether sufficient change has occurred against agreed published criteria, to press ahead to do away with the cheque in 2018. There are many more efficient ways of making payments than by paper in the 21st century, and the time is ripe for the economy as a whole to reap the benefits of its replacement.”
Today’s decision follows 18 months of extensive consultation and research to understand fully where and when customers still use cheques, and where alternatives need to be developed. This involved consulting with groups representing consumers including the elderly and consumers with disabilities, and those with other special requirements, and small and corporate business users of cheques. Feedback from all these groups showed that the vast majority accept that 2018 is a feasible end date but that many expressed concerns about viable alternatives being in place and being accessible to all those who currently use cheques. This is why we have set the 2016 review date.
Smee added:
“We have already done a significant amount of work, research and consultation which has convinced us that 2018 is achievable. But the real challenge lies ahead if we are going to be comfortable to wave good-bye to the cheque, which undeniably occupies a unique place in British culture. The payments industry will have to react positively and take the lead on delivering solutions which suit all their customers. I know that the Payments Council Board will pay particular attention to check that the needs of disadvantaged consumers are addressed.”