UK texting and charity giving

Mike Short: We saw over 100 billion UK text messages sent in one year for the first time in 2009. What is the history of UK texting?
Martin Ballard: Text messaging developed as a technical standard from the use of a ‘spare’ engineering radio channel in the GSM spectrum. It gained popularity rapidly but really took off in the UK after the MDA, an industry neutral trade body, interceded with the network operators to encourage cross-network operation. Some headlines on text messaging:

• The first text message (or 'telenote' as it was originally called) was sent on 3 December 1992 by Neil Papworth to colleagues at Vodafone and said 'Merry Christmas'. The commercial launch of SMS took place in 1995.
• In 1998, interconnect between UK Operators O2, Orange, Vodafone and T-Mobile was put into place following the MDA’s championing of this facility.
• The first recorded UK monthly text message total was 5.4 million in April 1998, with a UK total exceeding a billion for the first time in any year in 1999.
• August 2001 was the first month when over one billion messages were sent in the UK.
• The first local and mayoral electoral vote in the UK by text message took place on 23 May 2002.
• December 2002: 1 billion SMS per day were exchanged globally.
• The Rt Hon Tony Blair MP became the first UK Prime Minister to use text message technology to talk directly to the people on 25 November 2004, answering questions submitted in advance by text message from members of the public as well as in real-time in a mobile phone chat-room, transmitted live from No.10 Downing Street.
• In December 2009, over 9 billion text messages were exchanged in the UK alone.
  

[Source: http://www.text.it/mediacentre/facts_figures.cfm]

MS: When did UK short codes begin and what types of mobile content services are sold today via premium rate?
MB: Short codes were in use from 2000; used by individual networks for various purposes. By 2003 the need for common (cross-network) mobile codes and a single set of rules had become apparent and the networks had set up a Short Code Management Group (SCMG) to manage the codes and their use. The Code of Practice for the common shortcodes was released in March 2003 with a public launch of common short codes in June of that year. The Code can be downloaded from www.short-codes.com

Premium Rate Mobile Terminated Short Codes were, and still are, used to provide news alerts, financial information, logos, ring tones and more. The ring tone industry, for example, was estimated to be worth over $1 billion globally as early as 2002. The UK PRS market (fixed line and mobile) was worth £816 million in 2010 (compared to just £100 million in 1997) with:

Entertainment (over 52 per cent of the PRS market ):
• competitions and quizzes
• voting and other participation TV
• games
• flirt/date/chat
• adult entertainment
• gambling, lotteries etc.
• tarot/astrology/psychic
• other entertainment (music, video, TV and other entertainment content paid for by phone).

Information services, including phone-paid information delivered across any platform (around 40 per cent of the market):
• sports and news updates
• tipster lines
• specialised information services such as legal or technical advice
• text-information services such as AQA
• location-based information services (paid maps, find-the-nearest etc.)
• business information lines (e.g. customer service, product help lines).

Personalisation (ringtones, wallpapers etc.) accounting for around 4 per cent:
• call services and payments (charity donations, donations made using premium text or calls)
• payment of non phone-based services such as Wi-Fi access, parking etc. (each at just under 2 per cent of the PRS market).

Source: PhonepayPlus report ‘Current and Emerging trends in the UK PRS market 2010’

MS: Hasn't the arrival of email and instant messaging replaced text messaging?
MB: In spite of the rapid spread of smartphones and instant messaging technology, the text message remains the undisputed leader for personal messaging, growing at over 30 per cent year on year and expected to exceed 120 billion again in the UK in 2011 (source Mobile Data Association). This is because texts working across all GSM handsets made in the last decade, are not dependent upon social networks and are accepted across the generations. Surprisingly, smartphone users even send more text messages than users with regular handsets.

Smartphone sales were at 48 per cent of total handset sales by Q1 2011 with nearly half of teenagers owning one compared to around a quarter of all adults. Mobile Internet access is now used by around one third of all mobile phone users (up from less than one quarter in Q1 2009) and this is being driven largely by social networking and email. Facebook accounts for around 5.5 hours of usage per month per user, more than 3.5 times the amount of use for the next highest use for Google searches.

Source: Ofcom, The Communications Market Report 2011 (August 2011)

MS: When did charity text start and what were the key enablers?
MB: Charity text came about to resolve the issue of how to manage charity donations consistently via mobile micropayments. Originally VAT exemption only occurred through special waiver request, but the process now in place routinely exempts VAT being levied provided new charity text procedures are followed. Previously donations had been made using regular commercial shortcodes and the networks had set up specific arrangements to cater for the large national fundraising events such as ‘Comic Relief’ and ‘Children in Need’. The new process enabled smaller organisations to receive donations through short codes. A single point of reference helped to validate an organisation’s eligibility for exempt donations existing within the Charity community, making it easier and less time consuming to validate an organisation or application for such services.

Following informal discussions in 2008, the Mobile Data Association set up and chaired a working group of Mobile Network Operators in February 2009 and by July agreed a framework for charity codes to be available using the dedicated 70xxx range and complying with HMRC regulations. Full details can be found on the MDA’s Charity Text website www.charitytext.org. The code is currently being revised to incorporate recent changes in the regulatory regime and other changes brought about by the increased use of smartphones.

Some highlights of charity text donations:

• September 2011: over £1 million raised by text donation for the DEC East Africa appeal in 2 months.
• March 2011: over £15 million raised for Red Nose Day by text donation.
• March 2010: text donations raised £3.4 million for Sport Relief.

MS: What do you forecast will be the volume of donations through UK Charity Text this year?
MB: A conservative estimate for 2011 is in excess of £20 million being donated by text. (See above, £15m for Red Nose Day, £1m for East Africa appeal and ‘Children in need’). Other recent initiatives such as Just Text Giving will add to this figure.

nfpSynergy, in their report ‘Sending out an SMS - the potential of mobile phones for charities and non-profits’ produced for the Charities Aid Foundation (CAF), estimated this could grow to £100 million by 2014. CAF encourages text giving from their website: https://www.cafonline.org/charity-finance--fundraising/charity-fundraising--support/fundraising-support/text-donations.aspx

MS: Do these charity text figures include Gift Aid?
MB: No, although nfp recognised this barrier in its seminal report.

For charities and the general public to become more enthusiastic about text donations claiming Gift Aid needs to reach parity with cheques. There are a number of inherent problems with Gift Aid on text donations. Firstly the size of the donations is often small. Secondly, there is no easy way to put a Gift Aid declaration into 160 characters and give people a compelling reason to ‘sign’ it. Currently the only way to do this is to encourage people who have donated to register their donation afterwards, declare their taxpayer status and provide their address. Given that speed and simplicity underlie the strength of SMS donations this second step is cumbersome and Gift Aid conversion is low. There have been as many claims of solving the Gift Aid problem. None of these ‘solutions’ have satisfactorily made claiming Gift Aid on text donations as easy as for donations by cheque and direct debit. And they may never do so.

The possible and proposed solutions to Gift Aid to date include:
• Create a Gift Aid bounce-back with a link to an online declaration. Our anecdotal information is that this kind of mechanism can get about a 1-15 per cent response rate which is far from ideal.
• Make text donations donors register first and sign a Gift Aid declaration at that point. This makes the Gift Aid declaration sign-ups much, much higher but the mere act of registration reduces the number of people who will donate, as by definition it is not as spontaneous.
• A special exemption to be made for text donation by HMRC, but it’s difficult to see how that could work in practical terms.

Another solution has been proposed more recently by think-tank ResPublica, as part of a proposed broader overhaul of the Gift Aid system to meet the needs of our digital lives, including the acceptance of mobile phone numbers as proof of ID. The authors of this report, have suggested that the government simply adds Gift Aid to every text donation (although there has been no agreement from the Chancellor on this so far).

So for now Gift Aid on text donations has only imperfect solutions and the difficulty of claiming Gift Aid on SMS donations remains a barrier. Nevertheless, some charities have had some success at increasing the percentage of SMS donors who make a Gift Aid declaration: around 15 per cent of people who donate via CAF’s text giving service Gift Aid their contributions.

Source: ResPublica, Digital Giving: Modernising Gift Aid, taking Civil Society into the Digital Age, September 2010

MS: Next steps on charity text?
MB: Further programmes are in place to raise the awareness of these charity codes with the public and to reinforce confidence, validity and usefulness. The appeal of an instant donation by texting a short word to a 70xxx number is hard to resist and means that the many thousands of qualifying organisations, such as Community Sports Clubs as well as Registered Charities, can dramatically increase their donation income.

With a number of support initiatives in place such as public awareness campaigns and workshop days for small charities, the market for text donations should see even further strong growth in the coming years.