Small change, big difference: Will getting rid of 1p and 2p coins hurt charities?

Posted on March 14, 2018 by Karl Wilding
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2p, or not 2p: that is the question

The chancellor of the exchequer yesterday announced a consultation on whether or not we should scrap 1p and 2p coins. You can read more about the announcements in the Spring Statement in Paul Winyard’s blog. As part of a review of digital payments (PDF, 227KB), the chancellor reported that one in twelve 1p and 2p coins are literally thrown in the bin. Six in ten 1p and 2p pieces end up in a glass jar – of which more in a minute.

The thought of people no longer carrying around all that loose change in their pockets is not just a cause of imminent concern to the clothing and tailoring trades or the operators of amusement arcades. Charities too might be affected, with some already asking if this is the death knell for charitable donations. In short, no. I’ll explain why, but there are some interesting issues worth discussion.

A pyramid of pounds, shillings and pence

Charities have long depended on lots of people giving small amounts. Crowdfunding has been around since at least victorian times to my knowledge, when fundraisiers for the voluntary hospitals referred to appeals based upon ‘a pyramid of pounds, shillings and pence’. Pennies from donors were an important mechanism for getting wealthier employers involved. Cash remains the single most popular way people give to charity – according to CAF’s excellent UK Giving 2017, 58% of donors give to charity using cash. Giving loose change is a habit ingrained in the British culture and psyche.

 

 

But loose change doesn’t generate much money. 10 years ago, when we last collected the data, we reckoned 48% of donors used cash, and that all of the cash given (not just loose change) generated 16p of every £1 the public donated. Modern fundraising has more emphasised a shift to regular giving, with direct debits doing much of the heavy lifting in terms of the total amount given to charity. Also, as charities we increasingly depend upon a small number of very generous donors who give large amounts of money – what academics call ‘the civic core‘ – and cash clearly isn’t the way they work.

The loss of loose change in the form of 1p and 2p coins is unlikely to make a major dent in the total amount given to charity. It might even increase what people give, if we instead give 5ps and 10ps. Either way, we’d be hasty in dismissing out of hand the importance of loose change. Looking again at @cafonline‘s excellent UK Giving, counter intuitively, the people most likely to give to charity using cash are 16–24 yr olds. Whilst we are probably all obsessing about ‘channel shift’ and digital natives, giving loose change remains a way in for those who want to support the causes that they believe in, but might not have the means to give in other ways. Giving small amounts is also one of the ways that we teach the giving habit to our children. And that matters: people giving pennies today might be the people who give pounds tomorrow.

 

 

Giving is about more than money

Giving to charity isn’t just about the cash, both for the charity and the donor. For charities, I reckon it’s an important indicator that a majority of the population (61% of adults) give to charity. It’s an important barometer of our legitimacy. I’d be reluctant to see that fall. It’s also important to maintain a broad-based democracy of giving – many already argue that charities have become too dependent upon the whim of major philanthropists.

Giving loose change also makes the practice of participation, of getting involved, easy. And human. Whilst that sounds like a political science lecture, these habits are the foundation of democratic engagement. And at a time when we seem as a society to be obsessed with designing-out the human touch – a point eloquently made recently both by David Robinson and Julia Unwin – there’s a face to face element of much cash giving that seems to me important. Not least of which is for charities, as it’s an opportunity for a conversation about the cause.

The fate of six out of ten coppers, apparently

 

As I kid, I had a huge whisky bottle that I used to fill with copper coins. It’s a fundraiser behind the bar of many a pub I’ve visited. Contributing via such methods is a small act of kindness that, I would argue, matters.

The death of cash?

The death of cash has been predicted for numerous years. Such an outcome may well be premature. But the gradual shift to digital mechanisms for buying your newspaper or giving to charity is starting to happen. Some larger charities are already preparing for that future, and are starting to encourage people to donate by tapping their bank card or the digital wallet on their phone.

Likewise, you can digitally give pennies to a charity by rounding up your shopping bill at some of our bigger supermarket chains. The Pennies Foundation is a fantastic idea, and it’s raised over £12 million for charities. Digital offers us some real opportunities (and a few false starts, as one initiative I was involved with found).

But in any transition from giving cash to digital payments, it’s going to be especially important that we help small charities make the transition. It seems hard for me to believe, but I was writing about how innovation in giving would change charities in 2012 – and technology has come on so much since then. It’s gotten much easier since then – some traders at my local Saturday market don’t take cash any more. But some of the technology involved in digital payments may be beyond the capability of our smallest charities; and even if it isn’t, platforms that encourage rounding up or supplementing a purchase might more likely emphasise large household name charities. If we shift from loose change, let’s use it as an opportunity to level the playing field for donations between large and small charities.

Don’t throw it away!

And finally – what most surprised me about the consultation was that people are literally throwing their 1p and 2p coins in the bin. There are so many charities out there that would put them to good use, just as we did with our ‘first fivers’ and ‘last tenners’. Give them to a charity that you love!

Image credits: Digital Trends, bmdoyle2014, Pennies Foundation, The Flashing Blade.

Thanks to Nick Booth, Helen Johnston, Jake Eliot, Johnny Five for comments

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Karl Wilding Karl Wilding served as NCVO's chief executive from September 2019 to February 2021.
All blog posts by Karl Wilding

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