The end of Cheques? - Treasury Contents

Written evidence submitted by the Institute of Fundraising

  Many people, particularly the elderly, disabled and housebound—still rely on cheques as a means of payment. Almost four million cheques are written in the UK every day.

  Many believe that this is merely a way in which banks can engage in a further cost-cutting exercise and a way of cutting their services to the public. Whilst 2016, when the Payments Council is due to review its decision, seems a long way off, it is important to ensure that the issue doesn't get sidelined as a result of the seemingly long time line—it will be on us before we know it.

  One of our fears has been that some banks will use the Payment Council announcement as an excuse to jump the gun and begin phasing out cheques now. This is what happened in Belgium, and our fears are somewhat justified by the following example, submitted to us by a small hospice:

    "I had a call from one of my lottery members who is having difficulty setting up her standing order. When she contacted her bank (Santander) to find out if they had received the form, she also asked for a new cheque book as hers was running out, only to be told that they were already phasing out cheque books, and she needs to do her transactions on line. When she mentioned that she was 88 and didn't have a computer, she was asked to find a relative or friend that had one to do it for her/with her! She eventually managed to get a cheque book out of them, but couldn't believe the lengths they were going to so that, as they said to her, they didn't have to process so many things".


  In general terms, large national charities with the facilities and infrastructure to operate other methods may cope better (although even they have concerns in terms of discouraging payment by cheque), but small/local organisations are likely to suffer.

  The Institute has received a large number of responses from both large national charities who are among the Top 20, down to smaller organisations (for example local hospices, many of whom are extremely worried by the proposals).

  The following are examples we have received:

    Abbeyfield—charity with a relatively small donor database, a majority of their donors are in their 70s and 80s. Their October warm mailing raised around £31,000, with £14,300 being received from 408 cheques. They say they will certainly be hit by the phasing out of cheques. Whilst change is inevitable and younger generations will embrace it, particularly through online giving, for older people in particular, changing their giving patterns will be a challenge. Most of Abbeyfield's supporters don't have computers, so would not donate online and it's also unlikely that they would switch to credit card.

    Martin House Hospice for Children and Young People—almost 50% (£2 million) of their entire income comes through donations made by cheque payments, so it would have a huge negative impact on the charity if this method of making donations were to be abolished without thorough consultation and ensuring that alternative methods were in place and working well for everyone.

    National Deaf Childrens Society—91% of their cash payments come in by cheque and about 5% from Debit/Credit cards. They have an elderly cash donor profile, which skews this in favour of cheques. It is likely that older people would either struggle to or opt not to use a card for this kind of payment.

    Radio 4 Appeals—70% of the donations are made by cheque.

    NSPCC—cheques make up only 1 or 2% of donations and they prefer to receive donations by other methods, eg direct debit or standing order. However, they don't want do see cheques phased out, because it would be wrong to discourage any particular method of giving—if some people cannot give in a particular way, they won't give at all.

    Fight for Sight—which funds research into the prevention and treatment of blindness and eye disease.—over 50% of their voluntary income last year was donated by cheque. One in six people over 65 is affected by sight loss and not surprisingly, the majority of their supporters are elderly people. These supporters rely on cheques as their main form of payment. Many are unable to make donations by other means or indeed do not trust the security of other means. The charity fears the cost implications, given the current higher charges associated with credit card and on-line donations.

    Cancer Research UK—around 90% of the one-off donations given to CRUK offline by their supporters are made by cheque. The vast majority of their legacy income is also paid in the form of cheques.

    Katharine House Hospice, Stafford—last year received £600k by cheque. They offer other forms of payment for most of their initiatives, but those supporters who currently pay by cheque opt not to use methods such as online and credit card, and it is highly unlikely that the charity would be able to convert them to other methods of payment in the future.

    Delta Disability Social Group—receive 90% of their money by cheque. Members who have a disability and cannot always get to a bank (rural members) always pay by cheque.

    Aid to the Church in Need—is a long established charity; its supporter file has an older profile—supporters tend to join them form the age of 50+, with longer-standing supporters now in their 70s and 80s. 80% of their donations are sent in by cheque, and their supporters have already said that they are unwilling to use other methods and to reveal their bank card details, and if they cannot pay by cheque, they will stop giving. Many of this organisation's supporters do not use or have access to the website.

  The Institute has also been advised that cheques are vital for small parish councils who pay small amounts out to suppliers on a monthly basis.

The Donor

  What about the donor? Quite apart from those without access to the internet and/or older supporters who won't opt to pay by other methods, it would seem that some donors have a greater "feel good" factor when paying by cheque rather than pressing a button, also that they have more control over their money and don't have to give financial details online, which is of concern to many people who do not like putting their bank details on the internet.

  It's interesting to note that 6.4 million people over the age of 65 have never used the internet.

The Alternatives

  The voluntary sector needs to be fully engaged with the Payments Council in terms of looking at possible alternatives and evaluating their viability. What alternatives are being proposed? Will they work? How much will they cost? At present there are few alternative ways to give for those who are not used to managing their money online, and it is important to seek solutions which work for everyone and which do not exclude vital giving groups and which do not discriminate against the elderly and disabled donors. This seems to be somewhat of a generational issue, so 2018 may just be too soon—maybe a later end date could be envisaged?

  Direct Debit has been put forward as an alternative; however, it is only available to a small handful of major (mainly national) charities, as you need to have an income of over £5 million a year going through. This rules out a vast swathe of charities, as only 1% of registered charities have more total income than this (and that ignores unregistered charities, churches etc). Even if the banks could be persuaded to lower this limit to say £1 million per annum, it would make very little difference to the vast majority of charities. It should be remembered that most donations (by volume, not value) are processed by small charities, mainly using volunteers.

March 2010

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