Posted on 24th November 2011
The Treasury Select Committee says that without the cheque guarantee card which are under threat from a review by the Payments Council, cheques as a payment method will “wither on the vine”.
With cheque donations accounting a for a sizeable proportion of gifts to charity there is concern they could be badly affected by its withdrawal. The Treasury Select Committee has welcomed the fact that the Payments Council is now undertaking research, which will be available at the end of 2011, on the impact of the closure of the cheque guarantee card scheme. The committee says in its report: “There is a case for reintroducing either the cheque guarantee card scheme or an alternative mechanism to ensure cheque acceptors have confidence when accepting cheques.”
Charity Finance Directors' Group (CFDG) head of policy and public affairs Jane Tully said: “If the cheque guarantee card scheme is no longer viable then it is important that there is an alternative mechanism to ensure cheques are accepted with confidence, and we therefore welcome the Payments Council’s decision to revisit this issue.”
Payments Council chief executive Adrian Kamellard says: “The Treasury Select Committee report asks for further details about the cheque guarantee card scheme closure. As already confirmed to them, we are on track and awaiting the results of the independent consumer and business research that we have commissioned to measure the impact of the closure. We will be publishing this research before the end of the year as well as sharing it with the Treasury Select Committee and, depending on what the research shows, setting out our next steps.”
In 2010, CFDG the Small Charities Coalition and the Charities Aid Foundation (CAF) conducted a banking survey, which provided data on the use of cheques in the UK charity sector. The survey found that:
· 45% of respondents received over 100 cheque donations per year with 10% receiving over 5,000.
· Cheque income was greater than £10,000 per year for 45% of respondents, for 10% it was greater than £1m.
· 42% of grant-making charities used cheques to disburse grants.
Some charities receive substantial sums by cheque, for example, Great Ormond Street Hospital Children’s Charity received £11,645,402 via cheque in 2010/11.
CFDG says that if the cheque guarantee card is abolished, cheques will decline and this will have a negative impact on a charity’s long-term ability to retain donors, build relationships and attract potential legacy income.
CFDG is calling for banking software, which enables charities to take website donations to be made more affordable. It also wants the rental of mobile terminals which allow charities to accept payments at events to be cheaper.
There has already been a battle with the Payment Council over the proposed abolition of cheques altogether. The government threatened to legislate to preserve cheques before the Payment Council changed its mind. When the Payment Council’s research is concluded, the Treasury Committee says the government may wish to consider whether intervention on the guarantee card is also warranted.
