Charities get a helping hand from digital donations

In a time where fundraising seems more important than ever before, many of us don’t hesitate to dig deep when others are in times of need. However, when it comes to regular donations, just 16% of UK adults donated via regular direct debit set up of their own initiative in the year to July 2014.

According to Mintel’s Charitable Giving UK 2014 report , the way Brits engage with charities is evolving, with 17% of UK adults donating money to a fundraising campaign online, including on social networking sites. Charities therefore have been looking for alternative ways to encourage consumers to donate in an increasingly digital world.

Charitable donations get digital

One example of this is global charity Save the Children, who made an announcement in late 2014 that it had started accepting bitcoin (digital currency) donations through a partnership with payment processor BitPay, as well as the BitGive Foundation. The foundation has so far helped support the charitable drive for Philippines Typhoon Haiyan Children’s Relief Fund, as well as the Stop Ebola Campaign, which raised over $900 in less than a minute using a text-to-donate bitcoin feature.

There are many perceived pros to using bitcoins to donate, one is that the process doesn’t have any added fees and there is no minimum amount donors are asked to contribute. Other alternatives, such as debit and credit cards, involve higher fees and entail a risk of donations from fraudulent cards – which could mean bank charges for the charity accepting contributions.

As well as no added fees, the bitcoin mechanism also increases the speed with which contributions can be cleared and therefore can become available to the charity – making this a more appealing payment choice for non-profit organisations. Bitcoin contributions could then be spent online, or even in person in some places. Looking more broadly, the method is especially good for international money transfers, as unlike in normal banking, there is no difference in costs when sending bitcoins across the world.

Bitcoin’s popularity in the charity sector spreads

The rising popularity of bitcoin donations has resulted in a number of initiatives dedicated to this new method of making charitable contributions. It has also led to an increasing number of charities accepting bitcoin contributions.

An example of a charity initiative involving bitcoin is the Bitcoin Giving Tuesday website that was set up with the goal of marking International Giving Day (December 2nd 2014.) The site allowed visitors to donate using digital currency, bypassing the financial middlemen, such as banks and credit card companies, thus allowing charities to receive a higher proportion of contributions. A number of major global charities are also embracing bitcoin donations. For example, American Red Cross, Greenpeace USA and the UK’s Royal National Lifeboat Institution.

Even though the bitcoin payments system has currently been mainly embraced in the US, there are many opportunities for the charitable sector in the UK to benefit from the speed and convenience offered by digital currency.

Generation donate

The tech-savvy younger generation are leading the charge in online charitable activity. Indeed the younger the person the more likely they are to appreciate the convenience of donating over the internet, with 17% of UK 16-24s saying this. They are also more likely to value how social media has changed the charitable landscape and made it easier for donors to support various causes, with 14% of 16-24s thinking this. The attitudes towards the advantages of social media similarly become less positive with age, with only 8% of over-65s saying social media has made it easier for them to support charities.

As the younger generation of donors replaces the older generations, they will be much more comfortable with donating online and via their smartphones, which could pave the way for the expansion of digital ways of donating, such as using bitcoin payments, in the near future. Perhaps there could be more integration between social networking sites and the bitcoin payments system. Similar to Facebook’s ‘Donate’ button, there could be a ‘Bitcoin’ donations button, which could encourage younger users to experiment with a new way of supporting charities of their choice.

Senior Consumer Analyst, Ina Mitskavets, writes Mintel’s UK Lifestyles reports analysing consumer behavior and attitudes. Prior to joining Mintel in 2011, Ina was a Quantitative Manager at Forrester Research. Ina has been quoted in numerous media outlets, including the Times, Sunday Times, Reuters, the Daily Telegraph, the Huffington Post and Marketing Magazine and has also been interviewed on 24 national and regional BBC radio stations, including Radio 5 Live and Wake up to Money.