The study Charity Bank Accounts: The Opportunity for UK Retail Banks, authored by Accenture for the independent Philanthropy Review, found that over one fifth of donors and 18% of affluent and High Net Worth Individuals (HNWI) would open a charity bank account.
Over half said they would increase the amount they give to charity. A similar idea in the USA has proved successful. Schwab Charitable, one of the largest providers of charity accounts, saw a 23% increase in donations to charities in the last financial year.
Over 150,000 tax-effective charity accounts already exist in the UK with specialist providers, such as C. Hoare and Co, Coutts and Co. and the Charities Aid Foundation. Through them £190m is given to charity each year, which while sizeable may temper expectations of a revolution in giving if more high street banks were able to offer such charity accounts.
The report outlines three considerations to the business opportunity for charity bank accounts:
• Market sizing, both the potential number of accounts and projected deposits levels
• Cost implications for banks to roll out a charity bank account
• Benefits of launching the product, both potential revenue streams and non-financial benefits
All three are dependent on the product design and target customer segment, which will be defined independently by banks looking to launch a competitive product.
The report lays out four scenarios for the number of accounts opened, based on achieving different levels of the suggested take-up, indicating there could be up to 3.6 million accounts if offered to all taxpayers, or up to 430,000 accounts if only offered to the affluent/high net worth subset.
A range of individual annual deposits into a charity bank account have been estimated by Accenture who suggest the potential total annual deposits from all taxpayers could range from £270m-£540m, and from the affluent/ HNW group from £260m-£520m, based on assumptions around medium deposit levels.
This indicates that, despite being a smaller segment, the affluent/HNW group could return a comparable level of deposits if the estimated account take-up and individual deposits are realised.
Given that almost all donations from a charity bank account would be eligible for the gift aid supplement the charity sector could receive donations worth 125% of the figures estimated, it says.
The report is free to download from The Philanthropy Review website.