By Vicki Butler, Senior Public Affairs and Policy Manager at the Charities Aid Foundation (CAF)

The ‘new normal’ is a term presently being used to describe many situations and phenomena – yet when it comes to contactless payments, ‘new normal’ is an accurate summary. The coronavirus pandemic has accelerated the adoption of contactless payments and this has had ripple effects across various sectors. One sector that has been significantly impacted by this shift is the charity sector.

With fundraising and other forms of charitable giving being so integral to charities’ work, seemingly small changes to how individuals donate money can have major impacts on the charity landscape.

What are the trends that we are seeing and how can the charity sector mitigate the challenges thrown up by the move to contactless, and make the most of opportunities?

1. Less spare change circulating

In 2018, research carried out for CAF found that people gave an estimated £320 million in loose change to charity over the course of the year. The study concluded that donating cash was a perennially popular option, with charities generating significant revenue through collection tins and charity stalls.

By contrast, UK Finance data from 2021 indicates that UK residents are hoarding an estimated £50m in loose change, with little sign of it being spent as Covid-19 restrictions ease. A complementary survey by the banking trade body found that nearly six in 10 people are holding coins at home. This is partly because retailers and entertainment venues closed during lockdown and many shops encouraged the use of contactless payments, as opposed to cash. Contactless payments have become either mandatory or preferred in many contexts.

Cash has traditionally been the most popular way for people to give to charity. According to findings from CAF’s UK Giving Report 2021, however, against the backdrop of lockdowns, only 38% of donors gave with cash in 2020, compared to 51% the previous year. This trend has continued into 2021 despite the gradual removal of restrictions – as little as 7% of donors used cash in January 2021, compared to 30-40% in a typical January.

However, digital payments have the potential to entrench behaviours through donations being offered as part of online transactions, in line with how people might previously have put their pennies in a charity box at a checkout. The Pledjar app, for example, uses Open Banking to enable users to pass on their ‘spare change’ to charities; CAF is in fact managing the administration of this donated money. Such innovations are driving real change in the charity sector. Given the exponential growth in online shopping, the increased take-up of opt-out donation options at digital checkouts could make a big difference – however small the individual donation amount.

2. Contactless payments can change who donates

CAF’s UK Giving Report found that during the pandemic, there has been a large and sustained increase in cashless giving since March 2020 as opportunities to fundraise through face-to-face interactions have declined. This growth in cashless giving is a positive effect to come from the Covid-19 pandemic and has helped to ensure the proportion of people donating money to charity remained broadly in line with previous years, despite the crisis.

Nevertheless, the digitisation of donation channels means that who donates – and how – has changed. More novel forms of contactless payment tend to attract digital natives and younger demographics, such as making donations via QR code, for example, or responding to a fundraising campaign driven by social media. However, older age groups have also embraced cashless giving in the form of debit card donations in particular. The UK Giving Report 2021 found that younger donors are much more likely to have donated via a website or app in the past 12 months than older donors (38% of 25-34s vs 18% of over 65s). However, the proportion of donors aged 65+ who gave via a website or app in the past 12 months still increased from 14% to 18% in 2020. Older donors may be moving online more slowly than younger donors, but these ways of giving are becoming increasingly popular across demographics.

Older citizens remain a key demographic in terms of charitable giving. CAF research found that younger people were more likely to cancel a regular donation to charity than older people (6% of 16-24 year olds vs 3% of those aged 65+) because younger people typically worried more about the impact of the pandemic on their finances. Therefore, staying connected with older donors remains a priority for charities, and they should ensure online donation methods do not alienate this charitable demographic.

3. Creative adaptation

The changing giving landscape can be a cause for trepidation for charities. Many have been questioning how and if they will be able to maintain and grow their fundraising activities and donation programmes in a time of great uncertainty.

Although contactless payments can exclude groups of donors, such as those who lack access to technology, they also offer new opportunities for creativity and success in the context of cashless fundraising. For example, contactless payment and donation devices, such as paying by scanning QR codes in shop windows or on t-shirts, branded drink bottles, or the sides of vehicles, are innovative ways of enabling donations without cash passing between hands. If charities embrace these new donation methods, they can diversify their fundraising streams.

Voice payments are also an emerging force at the frontier of contactless donations. For example, smart speakers like Amazon Echo (commonly known as ‘Alexa’) are beginning to offer online donation services and there is speculation that they will expand to offer voice-controlled payment and donation functions. Such devices hold significant promise in terms of charitable giving, for issuing a voice command to donate money is a simple, accessible, and time-effective of way of engaging with charity. It also allows people to donate in a highly spontaneous manner from the comfort of their own home. This could see donations increase especially in direct response to reading a news report or seeing a charitable appeal.

Many charities have already shifted components of their operations online, in order to continue supporting clients remotely. With this in mind, charities with the budgets available could benefit from funding digital literacy classes for longstanding donors and sponsors. Alternatively, charities could incorporate information about contactless – including its safety and ease into their existing online communications. Prioritising financial education and literacy among donors – particularly older donors – is pivotal to maintain engagement and the relationship between donors and charities, as well as fostering the confidence that enables people to donate.

It’s encouraging that CAF research from August 2021 shows that many charities across the UK report they are increasing their digital functions. Half (51%) plan to do more digital campaign activity via apps, websites or social media. More than two in five (45%) have already increased their card, contactless and digital payment capability, and a third have increased email engagement. While incorporating a financial literacy component into digital campaigning could be a way to amplify the impact of these charities’ digital scale-up work, it is encouraging to see how many charities are already embracing change and adapting creatively and agilely.

Consequently, while contactless payment has undeniably altered how people engage with charities and how charities connect with audiences, there are strong indications that the challenges brought about by Covid-19’s impact on the sector could also result in new opportunities for fundraising. The charity landscape may have changed, but the outlook over this new terrain holds its own valuable, distinctive promise.