Wednesday, 8 March 2017

Will the latest marketing and consent guidance result in a financial shortfall for charities?

Concern has been mounting that the attitude the Information Commissioner’s Office is currently taking towards charities will result in it becoming even harder to raise funds from supporters and potential supporters. New guidance about how charities should obtain consent to contact supporters, and how this consent should be used, has recently been published by both the ICO and the Fundraising Regulator.

But are the regulators really raising the bar? Or are they just reminding charities what the rules actually are?

In the eyes of some, the Information Commissioner, together with the Fundraising Regulator, are enforcing privacy standards that make life much more difficult than should be the case for reputable charities to carry out fundraising initiatives. Pre-ticked boxes are out. Consent for direct marketing must clearly relate to each of the different methods that charities plan to use. Silence does not indicate consent.

In the eyes of the regulators, however, it is important that charities should be observing the rules that have been place for many years, as well as preparing for new requirements, to be introduced in May 2018 by the General Data Protection Regulation. Specifically, much more light needs to fall on the opaque practices of marketing, data matching and tele-appending.

As far as the ICO is concerned, data matching and tele-appending are different practices to those of purely direct marketing. So, supporters must be informed about these practices. Such views were met with considerable alarm by some charities, who were concerned about what their supporters might think (and how they might act) if they were really knew how their personal data was being used.

When speaking at a Fundraising & Regulatory Compliance Conference in February 2017, Information Commissioner Elizabeth Denham reminded delegates that:

“The Data Protection Act is a principles based law. It doesn’t address the legality of particular activities. You won’t find a clause that says wealth screening is against the law, for example. But you will find principles that say data must be processed fairly and lawfully.

Some of the activities that we investigated charities for will never be accepted as being fair. It’s hard to imagine, for example, a circumstance where searching out phone numbers or addresses that have not been shared could be fair.

Wealth screening, as least how we have seen it being done, is not fair either.

Let me be clear. It’s not that the activity is against the law but failing to properly and clearly tell your donors that you’re going to do it, is.”

So, whether charities like it or not, the transparency bus has rolled into town. For good.

A number of charities have recently started to revise their contact preference strategies, and to be more transparent about how they use their supporters’ details.

Before doing so, however, the lack of empirical evidence as to the likely effect of changes in existing contact strategies, or in being more transparent, caused some fundraising executives great concern.  Fortunately, evidence is emerging to support the contention that a transparency-based agenda is not such a disastrous strategy - for highly-regarded organisations, at least.

In 2015, for example, the RNLI decided to change the way it raised money for its lifesaving service. Initially, it was concerned about the potential adverse financial impact when changing its practices and moving to opt-in communications for its supporters. 

By late 2015, the RNLI’s supporter database held about 2m contacts. But, many of these contacts had not been active for some time, and it only had regular communications with and responses from around 885,000 people. So, would a change to an opt-in model ensure that the charity would continue to be able rely on sufficient numbers of engaged supporters?  It had braced itself for a potential reduction in income, after all mitigating factors were taken into account, of £35.6m over 5 years.

That’s a lot of money, potentially, to lose.

However, the RNLI had a pleasant surprise. The original assumptions proved to be wrong. The opt-in rate did not drop to 25% of the original database, the actual rate was closer to 40%.   The charity exceeded its original intention of opting in 250,000 supporters by the end of 2016. By February 2017, over 375,000 have said that they still want to keep in touch.

And, it wasn’t just their existing supporters that responded –the charity also attracted new support, with over £175,000 in unsolicited donations via the opt-in marketing campaign.

As far as Elizabeth Denham is concerned, what charities now have to do is to find a way to excel within the boundaries of the rules. They can cling to the belief that regulators have got the law wrong, or that it doesn’t apply to the charitable sector, or that the regulatory burden is too great. Or, they can commit to positive change.

Change that, in her view, is not only achievable, but will reap its own rewards.