Case studies

Aid charity CAFOD adopts open banking to help secure a digital fundraising future

25 October 2024

CAFOD (Catholic Agency for Overseas Development) has been a key player in international aid and development since the 1960s. The charity provides relief programmes, in conjunction with local partner organisations, in Africa, Asia, Europe, the Middle East, and Latin America.  

Known for its innovative fundraising approaches, the charity is now exploring the potential of open banking to enhance its digital payments and fundraising efforts. It aims to do this in two ways: improving its donor experience and streamlining operational efficiency.

A digital fundraising strategy

CAFOD’s digital fundraising team focuses on integrating technology to meet supporters’ evolving needs and preferences. The team achieves this through a variety of digital tools and channels to facilitate donations, including online, ‘text giving’ via SMS, and contactless payment options within the Catholic Church and other community spaces.

Therese Wynn-Davies is the Digital Fundraising Manager at CAFOD. As the charity has continued to innovate, she explained that it had identified several pain points related to traditional payment methods.

Costly transaction fees for charities

She highlighted the significant impact of transaction fees on the charity’s funds, pointing out that the costly fees associated with some credit cards and donation platforms reduced the amount of funds available for its international relief programmes. This prompted the charity to seek a more efficient and transparent donation process.

“Our digital fundraising team prides itself on being as innovative as possible and staying ahead of trends,” Therese explained.

“We need to be where our supporters are, or even ahead of them, to ensure we meet their expectations and provide a seamless donation experience.” This includes open banking.

Transaction fees from more traditional digital payment methods can significantly reduce the amount of money that reaches CAFOD’s programmes. For instance, a £100 donation via credit card could incur fees of up to 3%*, meaning that only £97 goes towards CAFOD’s work. Multiplied across thousands of donations, these fees accumulate, diverting crucial funds away from the charity’s mission.

Donor concern about fees

Similarly, feedback on the percentage taken via fundraising platforms has been a source of concern for some donors.

Therese said, “We’ve listened to our supporters’ feedback about transaction fees, which meant looking at options for directly addressing these concerns.

“By offering a fee-free alternative, we can show our donors that we value their contributions and are committed to ensuring their donations have the maximum possible impact.”

Open banking offers a solution by providing a direct bank transfer method that bypasses the need for traditional card networks and their associated fees. This means that nearly 100% of the donated funds can go directly to the intended causes, maximising the impact of every donation.

The open banking journey

CAFOD’s journey into open banking began with a website refresh incorporating a new donation process. During this update, the team discovered a payments platform that offers an open banking-enabled payment solution to charities, social enterprises and small businesses.

Wonderful’s account-to-account platform allows donors to make direct donations to CAFOD, eliminating the fees associated with banking, or charity platform, transactions. Importantly for CAFOD, Wonderful is fee-free for charities.

The charity is currently in the process of implementing open banking through Wonderful, due towards the end of 2024. Its initial phase focuses on offering online donors open banking as a payment option.

Part of this process involves educating CAFOD’s support teams to ensure a smooth transition and readiness for donor enquiries. Its follow-up work will expand the option to parish fundraising teams and the broader supporter base.

By implementing open banking, CAFOD aims to provide donors with a secure (open banking is built on the same systems used by many banks and fintech firms), efficient, and frictionless way to contribute, enhancing their overall experience.

Therese explained: “We’re still in the process of fully implementing open banking, but once we offer it to our supporters, we expect it to revolutionise our fundraising. The goal is to be present in as many relevant digital spaces as possible, ensuring we maximise efficiency and donor satisfaction.

CAFOD wants a seamless and secure process that will offer donors peace of mind that their contributions are handled efficiently and with minimal dilution of fees. Faster transaction times and reduced administrative overheads further contribute to operational efficiency, allowing CAFOD to allocate more resources directly to its programmes.

Challenges and considerations

While the potential benefits are clear, Therese and her team are mindful of several challenges, primarily donor education.

“Ensuring donors understand and trust the new payment method is crucial,” she said. “We plan to address this by providing clear information and support to donors, helping them transition smoothly to the new system. And internally, gaining acceptance and understanding from various stakeholders is also important.”

The digital fundraising team is working with colleagues to highlight the benefits and processes involved in open banking to ensure a unified approach. It represents a significant step in modernising its wider fundraising efforts and demonstrates how embracing new technologies can drive efficiency and enhance donor relations.

CAFOD is focused on being present in as many relevant digital spaces as possible, ensuring they meet supporters “where they are”. The team has found one of its biggest challenges is to put in place processes that suit requirements of its audience.

“With the closure of some local banking facilities, parish groups have fed back they can no longer go into a branch to make payments. They’re making bank transfers instead. It’s why the continued growth of digital fundraising is a priority, with open banking playing a crucial role in this evolution,” said Therese.

CAFOD’s adoption of open banking marks a significant step toward a more efficient and donor-friendly digital fundraising future. It’s a move that aligns with broader trends across the charity sector.

According to Charity Digital’s 2023 Digital Fundraising Report, over 60% of charities have embraced digital payment solutions as part of their fundraising strategy. Furthermore, the Charities Aid Foundation’s UK Giving Report revealed that 73% of donors prefer to use digital methods to contribute to causes they support.

As the growth of digital payments continues, CAFOD is demonstrating that embracing innovations such are open banking is key to meeting donor expectations and ensuring long-term sustainability.

*This varies from provider-to-provider