Cutting off the charity card line

27th February 2012  

With charitable donations at an all time low, some major charities have received a further blow with the news that several credit card houses have decided to cease to issue and underwrite charity affiliated credit cards.

Halifax and the Bank of Scotland’s charity credit cards will be withdrawn at the end of February, effectively ending more than two decades of continuous support for organisations such as Cancer Research UK, the NSPCC and the Scottish SPCA. The charities are disappointed at the decision, but remain hopeful that they can continue to work with the banks in other ways.

Europe’s biggest affiliate card issuer MBNA will continue to offer some charity cards, but MBNA itself is for sale and it remains to be seen how long any new owner would support these charity schemes if the take up and usage is poor.

The first donation credit cards go back further than you might expect. The Cancer Research UK card was first launched in 1988, while the first NSPCC cards appeared 17 years ago, the Scottish SPCA 15 years ago. Since that time the donation cards have raised a massive £14.5million for Cancer Research UK and half a million pounds for the Scottish SPCA.

Cutting back on the giving

What has angered some commentators is the timing of the announcement. While the UK has an enviable reputation for charitable giving, the news that two of the biggest players in charity credit cards were pulling the plug came at the same time as banker’s bonuses were hitting the headlines.

Baroness Finlay, vice-chair of the parliamentary all-party committee on cancer, voiced her concern, saying

“I think a bank which can produce that amount of additional money to give large bonuses has to look very hard at whether it should be giving back to the society on which it depends for its business.”

How charity cards work

Traditionally, charities earned a one-off donation when their associated card was first used, usually around £20. After that the card worked in a similar way to cashback cards – every time a credit card holder made a purchase, a small donation was made directly to the chosen charity, usually between 0.25-0.5% of the total amount spent.

So why have they stopped? The reason stated by both card providers is that the cards are not cost-effective. While they stressed that they were still committed to charitable giving, it seems that bottom-line numbers have played an important role in their decision to terminate charity credit cards.

They also claim that demand for the cards is limited, but perhaps that’s because they haven’t been as actively promoted as some of the market leading card deals. Charity credit cards have received some mixed press over the years with some analysts stating that if you want to give money to charity, there’s much more efficient ways.

Members of the public have retorted that as it doesn’t cost them anything extra, the charitable giving is coming from the credit card issuer’s fees and not out of their pockets, so on balance it must be a good thing.

PR ‘faux pas’

This decision certainly hasn’t gone down well with customers. Those who have specifically chosen charity credit cards don’t do it for the kudos – there is often a deeply personal reason for wanting to support a particular charity.

In today’s busy world, charity credit cards were an easy way to donate to a particular organisation without having to find someone rattling a tin on the street, or sending a cheque direct to the charity.

Credit card donations played a major part in enabling Cancer Research to fund important work, and while the banks have re-iterated their commitment to supporting their chosen charities, it seems this decision has been a bit of a PR faux pas. As bankers wait eagerly for their bonuses, it seems the charities have been left out in the cold – and the buying public isn’t happy about it.

Those banks who have made this unpopular decision could see some of their customers demonstrating their displeasure by transferring their accounts to other providers whose charitable status isn’t tarnished.

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