25/07/11

By Alison Hutchinson

Last year in the UK we spent £26 billion more using debit cards than with cash. Using payment cards is a way of life. Combine this with rising inflation, and the traditional charity box into which we are used to dropping a few pennies is long over-due for a revamp. By bringing it up to date, new avenues are opened for retail businesses to harness the power of those card payments and allow their customers to donate “micro” amounts to charity. These pennies have enormous potential to make a difference to charities and the people they help across the UK and to generate a consumer feel-good factor too.

Internet transactions are growing rapidly too, both through multi and single channel retailers. For example UK spending online for the first half of 2011 was up 19% from the same period last year, according to the IMRG Cap-Gemini ‘e-Retail Sales Index’. Total sales via the internet reached £31.5 billion in the first six months of this year, creating an increasingly important space for charitable giving and an area as yet largely untapped by retailers interested in participating in their communities, whether virtual or real.

Research shows that giving a little with minimal effort and no need for commitment appeals to the public, 62% of the population say that they would like to give this way. Electronic micro-donations harness the twin trends of rising debit and credit card usage circa one million transactions an hour and the increased use of the internet as a shopping channel.

This new approach comes at a time of declining individual giving. There were for example 750,000 fewer charity donors last year, and research which indicates that one in twenty Britons has stopped giving altogether. Coupled with this, an uncertain economic outlook, reduced investment returns, and uncertainty over state funding; charity income has been badly hit. At this time, electronic micro-donations offer one way of increasing funding for the charity sector.

Against this backdrop, retailers have a unique opportunity to boost their charitable and corporate responsibility (CR) initiatives in a very cost-effective way. It can be difficult for smaller businesses in particular, to invest in CR at all, even though there is rising evidence that consumers expect the companies they do business with to participate in the communities they serve. Working with new retailer-focused charities, like The Pennies Foundation, which has created “Pennies, the electronic charity box”, it is now simple to give customers the option to round up their donations to charity, or top-up their purchases by a few pence. It’s cost-effective, flexible enough to meet changing business needs and designed to kick-start or complement existing CR activities. There’s no direct staff interaction as the donation request is made on the Chip & PIN machine or on the payment page of the website, and no forms or personal information is needed.

The key to growth of this micro-donation movement is to remove barriers, making it easy for retailers and compelling for consumers. Working with payment technology providers has resulted in a number building the capability into their payment systems, meaning merchants can just ‘switch it on’.

For consumers a one click process that’s quick and private with no staff interaction, has been key as has the fact that a micro-donation is affordable and via Pennies, a choice not a commitment. All the money goes to charity with retailers choosing the charities they want to support for the majority. The remaining charities cover a broad range of causes designed to appeal to a mass audience and increase the ‘YES’ rate.

Whilst historically some donors have felt uncomfortable donating small sums of money to charity, being asked for an amount between 1p and 99p as a round-up is psychologically different. This approach particularly appeals to the under 34’s, a hard to reach segment for charities and a core target market for many retailers. , 74% of this group which according to the Office of National Statistics represents 28.5% of the adult population say that this form of giving appeals to them.

And is it worth doing? We believe so. If the 43 million card users in the UK gave just 1p a day in this way, over £150 million would be raised for UK charities every year. In addition this new fundraising channel has the potential to encourage a new generation of "philanthropists" and help retailers develop CR approaches to differentiate themselves from competitors.

As an example Pennies, the electronic charity box, is now working with four retailers (Domino’s, The Entertainer, Zizzi and Travelodge), 577,000 consumer donations, most of 10p or less, have been made since launch in November 2010 raising £136,000 for charities and that’s just a start Pennies is a new and affordable way of giving for the masses.

About Pennies

Pennies is the electronic charity box, created by UK registered charity, The Pennies Foundation.

Pennies offers consumers an easy, affordable and secure way to donate small change to charity. Donations are a choice every time and are made in private, at the touch of a button when paying for goods and services with any type of card, in-store or online with participating retailers. Donations are always pennies, never pounds and the retailer chooses to opt either for a round-up to the nearest pound or a top-up of a specific number of pennies in their ask. Consumers will always know how many pence they are being asked for and the main recipient charity.

The retailer chooses the charity or charities to benefit from the majority of the amount raised through their outlets, a cost-effective way for a retailer to magnify their charity impact.

Further information and details of the charities being supported can be found at www.pennies.org.uk