Q: We are hearing a lot about organizations issuing privacy statements. For instance, some nonprofits have a disclaimer on all correspondence stating that donor contact information will not be shared or sold. Working with an animal welfare group, where many similar groups profit from sharing names, we’re curious what your opinion is on this topic.

A:  Your question raises two competing realities in today’s world. The sale, rental or exchange of names is big business. Yet, more and more, people are wearying of their loss of control over their personal information. They are demanding that those with whom they do businesses, including charities, treat such information with respect and protect it from unauthorized use.

Historically, selling, renting or trading one’s mailing list had little downside for nonprofits. The only legal restriction – set by Federal law in 1999 – was that any such transaction results in no partisan or political benefit. There was the clearly measurable increase to the bottom line resulting from sales or rental revenue or increased contributions.[1] Those donors who made minimal contributions to an organization actually had increased value as a marketable commodity. And, studies showed that people rarely reduced contributions to the charities on their original list in order to respond to appeals from new organizations. Instead, they found new money with which to respond.[2]

As recently as 2004, the online watchdog Charity Navigator surveyed close to 3500 charities. Only 18 percent had privacy policies to protect their donors, 7 percent stated that they either currently sold, rented or traded mailing lists or reserved the right to do so, and 75 percent did not reply to the survey. Charity Navigator’s executive director, Trent Stamp, drew the conclusion that at least a majority of the non-respondents probably engage in the practice of sharing names and preferred not making that fact publicly known.

Today, many people are clearly voicing displeasure at having their personal information made available to others without their consent. In response, Charity Navigator and the Better Business Bureau now let prospective donors know whether charities have a written privacy policy and whether it is prominently displayed. Groups like the Wise Giving Alliance recommend that donors use a unique spelling of their name with donations to different charities in order to be able to identify which charities are betraying their trust.

Since you asked my opinion about this issue, I will weigh in with my feeling that privacy statements are all about transparency and good stewardship. They provide a means by which you assure your donors that you value them, and by which you build trust. Both of these elements are essential to retaining donors long-term. If you make the decision to share names – or think there is a possibility that you will choose to do so in the future – be upfront about it and make it easy for donors to opt out.

What should your organization’s privacy policy include? The Better Business Bureau suggests providing the answers to the following questions: What information is collected about each donor? How it is used – e.g., Does the organization ever physically do mailings for another organization as a means of renting its names without losing control over those names? How can the donor review the information the organization has on file and make any necessary or desired changes? How can the donor opt out of having his or her name shared? And, what security measures have the organization adopted to protect its donors’ personal information?

 

[1] Increased contributions are at the heart of the decision of those nonprofits that provide their names to for-profit telemarketing firms. While such firms generally keep up to 85 percent of all contributions raised as a result of their calls, the remaining 15 percent is perceived as significantly more than the charity would have received otherwise.

[2] This may be changing as the trend builds to support fewer charities with larger gifts as opposed to more charities with smaller gifts.