Divided Rules

Prospect researchers are at the nexus of a storm between five government agencies. Thanks to the monetary penalties imposed by the Information Commissioner in December 2016 on two leading charities we can now see the extent of the battlefield.

In one corner is the Information Commissioner’s Office, ICO. In its press release announcing fines for the RSPCA and the British Heart Foundation, ICO condemned the use of “information from publically[sic]-available sources to investigate income, property values, lifestyle and even friendship circles.”

This appears to put the ICO in direct opposition to the Charity Commission. In a series of papers entitled ‘The Compliance Toolkit’ the Commission reminds charities that they have a duty to check on donors and potential donors. Tool 6 in the suite is called ‘Know Your Donor’, and here the Charity Commission asks;

“Have any public concerns been raised about the donors or their activities? If so, what was the nature of the concerns and how long ago were they raised? Did the police or a regulator investigate the concerns? What was the outcome?”

How would you find out whether “public concerns” have been raised, if you did not use “publically-available sources”?

You simply have to use newspapers, government sources, and a search engine if you are to find out whether public concerns have been raised. There is no other way. And of course the Charity Commission says so, recommending that “full use should be made of internet websites” to check donors.

Your duty

The Commission goes further, and reminds trustees that “…if the trustees have reasonable cause to suspect that a donation is related to terrorist financing, they are under specific legal duties under the Counter-Terrorism Act to report the matter to the police. In the case of money laundering, reports can be made to the police, a customs officer (HMRC), or an officer of the National Crime Agency.” The Commission suggests a threshold for reporting – donations of £25,000 or more.

But we are not done yet. Because if you have the slightest suspicion that the donor may be a bit iffy, the Charity Commission requires you to “…check the donor against the consolidated lists of financial sanctions targets and proscribed organisations.”

Gosh.

That means this list.

The list contains 8,885 names of individuals who are under sanctions. It includes their date and place of birth, their passport or ID number, and a biographic note such as “Manager of the branch of Syrian Scientific Studies and research Centre.”

That is personal information held in the public domain, that the Charity Commission requires us to review.

The Libya Connection

Why are four government agencies – the Police, HMRC, the National Crime Agency and the Charity Commission – interested in these checks?

In part, the story is linked to the London School of Economics, and the controversy over a gift from Libya. The result of the controversy was the Woolf Inquiry, which published its report in October 2011.

After a detailed study of the history of this gift, Lord Woolf made a series of recommendations on accepting funds from “less well known” high-value philanthropists including an inquiry into the sources of their funds (p. 69) and a thorough due diligence assessment (p. 22).

These searches are only possible with public domain information.

Catch-22

Under questioning at last year’s CASE conference, ICO spokesperson Richard Marbrow did allow that we could use public domain information for due diligence purposes. But he went on to say that this same information could not be used for assessing gift capacity because that would be an “incompatible purpose” for the use of data.

But that leaves us prospect researchers in Catch-22.

I cannot carry out full due diligence on all my prospects. To do so would be a scandalous waste of charity resources. The Charity Commission suggests that the threshold should be £25,000. So if I am to decide that Mrs A or Mr B must be checked via due diligence…I have to assess their gift capacity.

To do that, I need the help of a fifth government agency, Companies House.

Open for Business

Mr Marbrow cited Companies House various times during 2016, telling fundraisers and prospect researchers that because the information in Companies House was collected for one purpose – regulation – it could not be used for another – prospect research.

What does Companies House say? Here is their July 2014 press release*

“Companies House is to make all of its digital data available free of charge. This will make the UK the first country to establish a truly open register of business information.
As a result, it will be easier for businesses and members of the public to research and scrutinise the activities and ownership of companies and connected individuals. … This is a considerable step forward in improving corporate transparency…

It will also open up opportunities for entrepreneurs to come up with innovative ways of using the information.”

So, Companies House wants us to “research and scrutinise the activities and ownership of companies and connected individuals,” and to find “innovative ways of using the information.”

The Battle for Philanthropy

Prospect researchers are caught in the centre of a battlefield between government agencies, between “innovative ways” of using information, terrorism legislation, due diligence and privacy.

We must defend our corner of this bloody battlefield.

We need our friends in fundraising and philanthropy, in Parliament and in civil society, to support the sensible, ethical, managed use of public domain information in the search for philanthropists.

 

 

*I am grateful to a colleague at a leading University for pointing this out.

Chris Carnie is the author of “How Philanthropy is Changing in Europe”, published by Policy Press. He writes in a personal capacity.


In Defence of the Public Domain

A university, a museum, or a charity does not raise £10m or £50m or more by accident. An alumna did not wake up one morning thinking “I must give £1m to my alma mater.”

This happened because a dedicated group of professionals managed a process that led to the alumna being asked for a very large philanthropic gift.

At the heart of that process was, and is, the prospect research team. The team used – like we all do – public domain information to identify and understand potential supporters.

But now one government agency, the Information Commissioner’s Office, wants to stop us using public domain information. In the emotionally-worded press release that accompanied the penalties for the British Heart Foundation and RSPCA, the ICO says that “companies used other information from publically [sic]-available sources to investigate income, property values, lifestyle and even friendship circles.” ICO staff members at fundraising and research conferences throughout 2016 told us that the information on directors held by Companies House is compiled for one purpose (regulation of business) and therefore cannot be used for another (prospect research.)

So perhaps we cannot use public domain information to identify and understand potential supporters.

Purposes

But think for a moment.

Why do I have my profile in LinkedIn? What is my ‘purpose’? Is it just a marketing tool, showing potential clients what a clever chap I am? No! I had all sorts of purposes in mind when I created my profile in LinkedIn. I wanted to reassure clients that I was, and am, a decent person. I am proud of what I have done and wanted – sorry folks, this gets personal – to boast a wee bit about setting up Factary, about the books I have written and the languages I speak. I wanted access to the profiles of other people with whom I might work or even play. I wanted to explain who I am and how I got here – it’s cathartic. And I wanted a useful depository for my lifeline – to remind me of exactly when I went to school or which year I started in fundraising.

I had a whole variety of ‘purposes.’

Expectations

As a result, I have a very wide variety of ‘expectations.’ This word is important, because the ICO believes that “millions of people who give their time and money to benefit good causes will be saddened” by the news that charities targeted them for more money; in other words, this is about what people expect. With my profile in LinkedIn I expected that people would look at my personal story. I expected that Southampton Uni, my alma mater, would contact me about a donation (they did.) I expected that I would be networked to, and with (and indeed welcomed that opportunity.)

The person who has her biography in Who’s Who, or who gives a personal interview in the Times, or who is listed as the director of a company, or as the trustee of a charitable foundation has the same wide range of expectations.

The ‘purpose’ of a personal interview in the Times is to sell advertising space on the facing page of the newspaper; “All the papers that matter live off their advertisements,” said George Orwell, in Why I Write*.

But that is not the ‘purpose’ that the interviewee had in mind when she was approached by the journalist. Nor is it the ‘expectation’ of the interviewee. She knows, when she agrees to give the interview, that her warts-and-all will be exposed to public view. She expects that she will receive praise, opprobrium, investor pitches, car sales teams and an approach from a headhunter as the result of her interview.

The Public Domain

Information on company directors in Companies House – the Registrar of Companies for England and Wales – is made public for various purposes. The Registrar was created by The Joint Stock Companies Act of 1844. In the debate of the Bill that would create the Act (3rd July 1844), Mr Gladstone said “The principal object of the Bill was, that there should be established a public office, to which all parties soliciting to take part in Joint Stock Companies might repair, in order to know the real history of these companies.” Mr Gladstone was talking very clearly about corruption; “…it was most important that the Legislature should put a stop to the system that had been so long carried on of attaching the names of hon. Members, and men of importance and property, to schemes in order to entrap the unwary.”

So here again, at Companies House, we have a variety of purposes for information in the public domain. It is right and proper that prospect researchers use Companies House information to establish the “real history” of “men of importance and property”, and, 172 years after Mr Gladstone’s speech, of women of importance and property too.

All the universities that are engaged in raising funds, along with our theatres, museums and charities, manage a process that results in high-value philanthropy. At the heart of that managed process is prospect research. And alongside every prospect researcher is public domain information.

People in the public domain – in Who’s Who, or LinkedIn, the Times or Companies House – are there for a variety of ‘purposes.’ They expect that the information will be used in a variety of ways – including, yes, by people who will lead them into great philanthropic acts.

We prospect researchers do great works with public domain information. It is wholly legitimate that we use public domain information for this purpose. We must defend our right to do so.

Chris Carnie is the author of “How Philanthropy is Changing in Europe”, published by Policy Press in January 2017. He writes in a personal capacity.

*The fuller quote, given here is:

“Is the English press honest or dishonest? At normal times it is deeply dishonest. All the papers that matter live off their advertisements, and the advertisers exercise an indirect censorship over news.”


ICO rulings and Database Screenings

The ICO fines for BHF and RSPCA that were announced this week have caused understandable concern for prospect researchers and wider fundraising teams across the sector. This blog post is Factary’s initial response to this news.

The ICO has so far issued two statements about the fines levied (these can be seen here and here). The statements outline that the fines are being issued for various infringements of the Data Protection Act through wealth screening, data appending and data sharing. To be clear, this blog post refers only to the situation with wealth screening, or, as we call it, Database Screening. Data appending and data sharing of bulk data are not services we provide at Factary so we won’t comment on the situation with these fines.

The first thing to mention is that we are expecting more comprehensive information about these fines to be issued on Friday 9th December by the ICO. The full penalty notices will be published on the ICO website and Twitter feed along with details of the enforcement action. Until we have reviewed the full documents it will be difficult to respond properly to this situation. That said, since the Daily Mail broke the story (ahead of the ICO announcement) of the fines on Tuesday 6th, we have received many emails from concerned clients, colleagues and friends worrying about the implication of these fines for non-profits and prospect research, so we wanted to issue a response as soon as possible to answer some of the most pressing questions, some of which are…

Can we still carry out Database Screenings?

It seems that one of the main reasons for the fines levied for ‘wealth screenings’, as explained in the information we have seen from the ICO so far, was because “Donors were not informed of these [Screening] practices, and so were unable to consent or object” to them. The lesson here is not that Screening is unlawful from the ICO’s viewpoint, but that non-profits and Screening service providers need to be open and transparent about what they will use personal data for. This is something that we mentioned in our previous blog on data protection.

The problem still remains, of course, that we feel neither the ICO nor the Fundraising Regulator have been too clear on how this information should be presented to supporters or indeed what information is necessary / sufficient. Hopefully they will do more to educate the sector and provide greater clarity. In the meantime we would expect that the vast majority of non-profits have completed and published, or are working on, improved privacy notices that include information about prospect research so that their supporters are fully aware of what their data is used for. The RiF ‘data protection working group’ will be drawing together samples of these, and this is something Factary will be helping with. We’ll post news on this here on the blog, on our Twitter feed and the RiF committee will also post on their Twitter feed, so keep an eye out.

If you’d like to discuss privacy notices or statements please do email me.

What about previous Screenings?

One of the questions many are asking now is, “When I last undertook a Screening, the non-profit I work for did not have a robust privacy policy in place. Is there a chance that we will be fined, too?” The short answer to this is, of course, that it is entirely possible more fines will be issued. The long answer may have to wait until we have received more information from the ICO on the nature of the fines against BHF and RSPCA in relation to Screening; until we know the full extent of the infringement, it will be difficult to understand the full impact.

Either way, there is very little you can do about previous Screenings; you can really only make sure you are fully prepared and compliant for the next.

What can the sector do?

From our point of view, some of the ICO’s latest statements set a tone which portrays Screening (and prospect research more generally) negatively. The ICO statements said, “The millions of people who give their time and money to benefit good causes…will be upset to discover that charities abused their trust to target them for even more money”. This kind of reporting will no doubt result in harmful press articles (aside from the inevitable articles from the Daily Mail which I won’t reference here) such as the BBC and even Third Sector where they have reported negatively that charities are “secretly screening donors” with a “disregard for people’s privacy”.

We feel the general tone used to report on these fines suggests a lack of understanding of what Screening is and why it is used – and, by extension, what prospect research is and what it is for. We should, as a sector, take some responsibility for this as we have not historically been very open in explaining how Screening and prospect research benefits donors and helps to improve their relationships with the causes they support. That said, we can’t shoulder all the blame, as many people I have spoken to have found the ICO’s approach to communication on these issues (and when directly speaking at conferences during 2016) to also be quite negative. For example, many of the emails I have received since Tuesday start with, “One of my trustees has read the Daily Mail article…” or, “Our compliance team has seen the ICO report…”, followed by concerned questions about the legality of Screening / research. This highlights that the negative and sometimes misleading reports that are in the public domain are already having a troubling impact on our abilities to carry out the normal functions of prospect research. We understand the genuine reasons for the ICO’s actions, but it serves no purpose to paint a negative image of the sector, who largely do incredible work for people and society.

This means it is up to us push back on the negativity and educate our supporters, the wider public and even (in some instances) our own colleagues about prospect research. This echoes what was said at the RiF Conference; we need to take ownership of communicating the need, impact and benefits of prospect research through privacy statements, protocol and policies. We need to be positive in our communication and underline the benefits to donors and non-profits of prospect research – and, to highlight the negative consequences of fundraising without prospect research.

What should we do now?

  • Be clear on why prospect research is vital for fundraising in your organisation
  • Educate trustees (and wider colleagues) if necessary on the need and impact of research
  • Ensure privacy notices are robust and include information on Screening and research
  • Share best practice with colleagues from other non-profits on privacy notices
  • Also, note that when including information on Screening in a privacy notice you’ll need to link to the privacy statements of your chosen Screening company to ensure that the company is also compliant with data protection (as examples, Factary’s is here and Prospecting for Gold’s can be found here)

What happens next?

  • Friday 9 December: The penalty notices will be published on the ICO website along with details of the enforcement action. Hopefully this will give us more of an idea of what the scale of the Screening problem is (in comparison to the data appending and sharing), and exactly what the RSPCA and BHF have been fined for
  • The Institute of Fundraising is likely to respond properly to these fines when the full report has been released, keep an eye on their Twitter feed or the feed of Dan Fluskey, IoF Head of Policy and Research, who has been working with RiF on this issue. He wrote a great piece in fundraising.co.uk about this issue yesterday
  • The ICO is organising “an educational event in partnership with the Charity Commission and the Fundraising Regulator” (no date for this has been announced, presumably early 2017), keep an eye on their announcements for more information on this
  • The ICO will also present an in-depth report in regards to charity fundraising practices to Parliament in 2017; based on the negative stance the ICO has taken on fundraising practices, this has the potential to be damaging and as a sector we need to be ready to respond to this

As ever, if anyone has any questions on this please do not hesitate to contact me at nicolaw@factary.com.

We would also like to take this opportunity to thank many of our colleagues and friends from the sector who have contacted us with messages of support in the past 48 hours – we really appreciate it!


Annus Horribilis

2016 has been my personal annus horribilis, at least in the public domain. (Privately, I’m fine thanks.)

It has been the year when two of my working-life projects have fallen apart.

First, my life as a European was cut off at a stroke by England’s vote for Brexit.

And then as an early Christmas present, the Information Commissioner decided that more or less everything that I had dedicated my working life to doing – understanding philanthropists so that charities could work better with them – was illegal, immoral and subject to multi-thousand pound fines.

The Brexit decision is too political a story for this blog. Suffice it to say that when one choses as a UK citizen to live in another EU country, learn its languages, learn and enjoy its rich cultural traditions, and feel thoroughly welcome as an immigrant, it is physically painful to know that a cabal of alt-right Ministers in Westminster are determined to throw you out.

So let’s focus on the Information Commissioner’s announcement yesterday. We would expect the Commissioner to use cautious language. She does not. She piles right into the topic by claiming that ‘millions of people who give their time and money to benefit good causes will be saddened to learn that their generosity wasn’t enough.’

This is a clear example of evidence-based policy making. The Commissioner has evidence, we assume, that there are ‘millions of people’ who will be saddened that their generosity did not suffice. Given the paucity of information on donors in the UK, it would be so helpful if the Commissioner would share this data with the rest of us.

If the subjects gave their permission, of course.

Given that we are living in an age of austerity in which the ICO’s paymasters in government (of whichever colour) are cutting back on benefits, rights and payments, I would be utterly astonished if there were even ten donors, let alone millions, who would feel that their generosity was enough. It is never enough. Ask any of the homeless people in London if it is enough. Or the 960,000 people living in poverty in Scotland.

The Commissioner then applies the same broad brush approach to what she describes as ‘wealth screening.’ The language is purposefully vague and catches within its apparent scope almost all customer-focused, relationship-building, fundraising. It appears, on one reading of the statement, that it is somehow wrong to use information including ‘supporters’ names and addresses, dates of birth and the value and date of the last donation.’ It appears that to investigate ‘income, property values, lifestyle and even friendship circles,’ may be illegal, along with the ability to model ‘donors most likely to leave money in their wills.’

Adrian Beney has pointed out in an excellent blog that this is to do not with information or privacy, but our attitudes to money.

For me, it’s an Edwardian view of ‘charity.’ It’s a penny in an old man’s hat. Thanks guv’nor. Lord bless your little ones. It is about a one-way relationship, donor to ‘charity.’

There is a load of evidence (yes, actual evidence Commissioner) that this is not how donors want to relate to ‘charities’ (or, as we now call them, non-profits, or Social Purpose Organisations.)

Here is just one of dozens of research reports I could cite; ‘Donors respond to personalised communications from charities that they have a relationship with, and prompts from family, friends or colleagues.’ (source, Bagwell, Sally, Lucy de las Casas, Matt van Poortvliet, and Robb Abercrombie. ‘Money for Good UK: Understanding Donor Motivation and Behaviour’. London: New Philanthropy Capital, March 2013. http://www.thinknpc.org/publications/money-for-good-uk/., page 3).

And yet the Commissioner rails against non-profits that identify ‘friendship circles.’

The Commissioner has, either purposely or unwittingly, threatened the development of high-value philanthropy in the UK. By using this broad language, by focusing on an evidently outdated view of ‘charity’, and above all by fining organisations that are trying to build relationships with their supporters based on mutual understanding and knowledge, she has ensured that UK charities will step back, return to the door-knock and the ‘appeal’, never knowing (because the ICO bans such research) who is behind the door or receiving the letter.

This lack of research will drive a wrecking-ball through relationships between high-value philanthropists and non-profits. It is not coincidental that so many people of wealth are now establishing their own foundations; it is already hard enough to persuade them that they should build a relationship with an existing non-profit.

Thanks to the ICO, that job just become harder.

 

Chris Carnie is the author of ‘How Philanthropy is Changing in Europe‘, to be published by Policy Press in January 2017.


International Research – some Resources for RiF

At the Researchers in Fundraising Conference, 25th November 2016, I promised a list of the sources I mentioned. Here it is.

Bilanz 300 Die Riechsten
Type Magazine Article
URL www.bilanz.ch
Publication Bilanz
Date Annual
Language German
Abstract Annual rich list published by Swiss business and economics magazine.

CNMV – Informe anual de Remuneraciones de los Consejeros de las sociedades cotizadas
Type Report
URL http://www.cnmv.es/portal/Publicaciones/PublicacionesGN.aspx?id=46
Institution Comisión Nacional del Mercado de Valores
Language Spanish
Abstract Annual survey of salaries of company directors in quoted companies in Spain. Shows breakdown of average salaries, and is useful for estimating income.

FIN Association of Foundations in the Netherlands/ Vereniging van fondsen
Type Web Page
URL http://www.verenigingvanfondsen.nl/
Abstract FIN, the Vereniging van Fondsen in Nederland, is the association of leading Dutch foundations

Fondsenboek 2015 and Fondsendisk
Type Book
Author Sophie Duijts
Place Zutphen
Publisher Walburg Pers
ISBN 978-90-5730-987-8
Date 2015
Language Dutch
Abstract Directory of foundations in the Netherlands, including information on 737 foundations. €49.50 price.
# of Pages 448

Helen Brown Group
Type Web Page
URL http://www.helenbrowngroup.com/index.htm

Kamer van Koophandel
Type Web Page
URL www.kvk.nl
Abstract Legal register for all companies in the Netherlands. Includes company ownership information and accounts

Miljonair
Type Magazine
URL http://www.miljonair.nl
Language Dutch
Abstract Lifestyle magazine aimed at HNWIs in the Netherlands. Includes some profile interviews, and occasional features on philanthropy.

Moving Mainstream. The European Alternative Finance Benchmarking Report
Type Report
Author Robert Wardrop
Author Bryan Zhang
Author Raghavendra Rau
Author Mia Gray
URL http://www.jbs.cam.ac.uk/index.php?id=6481
Place Cambridge, UK
Pages 44
Date 02/2015
Institution University of Cambridge, Judge Business School
Language English
Abstract Includes details on crowdfunding, with data on growth, with peer-to-peer fundraising

Paperjam
Type Web Page
URL http://paperjam.lu/
Abstract Business website and magazine for Luxembourg. Publish an annual “Paperjam Guide” including a business directory and biographies of company leaders.

Portal de la Transparencia
Type Web Page
URL http://transparencia.gob.es/
Language Spanish
Abstract Spanish Government website showing structure, funcion, curricula and salaries of top civil servants.

SOCIETE.COM
Type Web Page
URL http://www.societe.com/
Accessed 05/09/2013, 16:03:03
Language French
Abstract Company information from the French Registre du Commerce

Transparente ANBI
Type Web Page
URL http://www.transparante-anbi.nl/ANBI/Home/2274
Abstract Listing of ANBI including foundations in the Netherlands, following the transparency law. Searchable by foundation name.

How Philanthropy is Changing in Europe.
Type Book
Author Christopher Carnie
URL http://policypress.co.uk/how-philanthropy-is-changing-in-europe
Place Bristol
Publisher Policy Press
ISBN 978-1-4473-3110-0
Date 01/18/2017
Language English
Abstract There is a new age of philanthropy in Europe – a €50 billion plus financial market. Changing attitudes to wealth, growing social need and innovations in finance are creating a revolution in how we give, aided and sometimes abetted by governments. Mapping the changes, Christopher Carnie focuses on high-value philanthropists – people and foundations as ‘major donors’ – investing or donating €25,000 upwards.


It Will Take a Researcher

It will take a researcher to wake up the fundraising community.

You.

Because it is time to wake up your fundraising colleagues to a new reality in philanthropy. A reality that is working its way through many of your major donors, your trust donors, your finance sector and bank donors, and even your government grants programme.

This is not some insidious virus, although it could eventually cause the extinction of some organisations. Its effects are dramatic on the organisations and people it touches, showing then a new reality, new priorities and a new and different way of reaching their goals.

This is Venture Philanthropy and Social Impact Investment (VP/SI), the subject of last week’s EVPA conference in Paris. The conference confirmed the coming of age of VP/SI, with a mix of leading foundations, banks, philanthropists and a growing band of intermediaries working in the “financial ecosystem” around this mix of investment and philanthropy.

The banks and advisors are very excited by this new market. They like the mixture of social change and financial tools, and they are building teams to help their HNWI and UHNWI clients work in this area; I met a seven-person team from one French bank including account managers, due diligence staff and social investment experts.

Welcome to your newest competitors. They are well-resourced, hungry for new business, have loads of great customer relationship data, and have a dizzyingly good contact book.

Your HNWI and UHNWI donors and prospects, along with trusts and foundations that you work with, are being courted now, by the banks. If your fundraising colleagues are not aware of this trend then maybe it’s time for you to give them a wake-up call.

Doing that could be easier than you think.

Transparency

One of the remarkable (at least in Europe) characteristics of this market is its transparency. I chaired a session on failures in philanthropic investments, and 50 people in the room ‘fessed up to one or other bad decision, and then shared the leanings from their failure.

For prospect researchers the new transparency means that there is an increasing volume of well-researched information on the sector.

Start with the EVPA website, where there are high-quality research reports, and a full list of members (Factary is an Associate Member). Then check the HNWl offerings of banks such as JP Morgan, Credit Suisse or Rabobank. Next take a look at foundations operating in this space. Esmée Fairbain Foundation or Impetus /PEF in the UK, Fondazione CRT and Fondazione Cariplo in Italy, Noaber in the Netherlands… The list is growing, and in Europe alone EVPA has 200 members. In Asia the growth is even faster and EVPA’s sister there, AVPN now has 300 members.

Then look at how organisations, many of them small social change non-profits, have taken up the challenge of working with these demanding but exciting investors. The EVPA website includes case studies and examples. Check out Factary’s reports on the sector.

And finally talk to your colleagues. Tell them that there is a significant new movement in high-value philanthropy. It’s a movement of people who want to invest, not give. Who want to participate, truly participate, in your work; these people do not want a packaged project on a gilt plate. Tell them that in the view of many VPs, traditional fundraising is a costly, inefficient way of winning funds. And tell them that this will take time but that it could transform your organisation and, more importantly, transform the lives of the people you work with.

But do, please, tell them. Because no-one else is. Amongst the 500 delegates at the EVPA conference I counted just three fundraisers. Three! In a hall full of philanthropists.

Your research could help your colleague to be number four. Do it, now.

 

 

Chris Carnie’s latest book – How Philanthropy is Changing in Europe – is to be published in January 2017 by Policy Press: pre-order your copy here!


Data Protection, Consent and Prospect Research

Many of Factary’s clients and colleagues have been in touch with us recently voicing their concerns, frustrations and confusion over recent news regarding the use of personal data in fundraising and prospect research. It’s not surprising that there is confusion; this year has seen a whirlwind of news and opinion from various regulatory bodies, some of it conflicting.

Our clients have asked if we can provide some clarity – this is a tall order right now as the situation is not completely clear and evolving more-or-less by the day, but below we have outlined recent events, the current situation and news on what is happening over the next few months.

The current situation – how did we get here?

As we know, 2015 was a challenging year for fundraising and charities in the UK. Negative press reports regarding certain fundraising practices ultimately resulted in a review of all fundraising and the publication of the Etherington Review in September 2015, which outlined recommendations for the future of fundraising.

Recommendations in the Etherington Review included that a new Fundraising Regulator be established (to set and promote standards for fundraising practice) and a ‘Fundraising Preference Service’ (FPS) be launched. The Fundraising Regulator launched in July 2016 and is in the process of setting up the FPS so that “individuals only get the fundraising communications they want and need”.

Whether or not people feel the FPS is necessary (alongside the MPS, the TPS and PECR), the decision has been made and the Regulator is aiming to launch it sometime in 2017. The official consultation period on the FPS has passed but the proposal papers can be viewed here.

The Etherington Review also worked closely with the ICO in developing the recommendations. It was outlined in the Review that the ICO had not been communicated with sufficiently in the past by either the Institute of Fundraising or the (now defunct) Fundraising Standards Board and that a stronger relationship between the new Regulator and the ICO should be established.

The upshot of this is that the ICO turned its attention to the non-profit sector and began reviewing if and/or how charities were adhering to the Data Protection Act (DPA) and PECR through fundraising practices such as direct marketing, telephone fundraising and electronic communications.

The general issue of consent

The ICO have been in attendance at many fundraising conferences, seminars and events this year, usually alongside representatives from the Regulator. The ICO have outlined their concerns over how well (or otherwise) non-profits have been adhering to the DPA, with a particular focus on the apparent lack of evidence around ‘consent’ for non-profits to use the personal data of their supporters. This is not just about obtaining consent from supporters for non-profits to hold personal data on a database but also about obtaining consent for how the data is then used for marketing, fundraising and, importantly for us, in prospect research.

The issue of gaining consent is simultaneously very clear and also incredibly complex. On the one hand, it is straightforward because there is universal agreement in the sector that supporters and donors should have proper control over their data, be able to communicate preferences to their chosen charities and have those preferences acted upon. The complexity comes with how and to what extent non-profits are expected to communicate with current and future supporters to gain consent for the use of personal data.

With the looming presence of the GDPR, scheduled to come into force in May 2018, the issue of consent becomes even more important (that said, to what extent the current format of the GDPR will be implemented is Brexit-dependent, so even this is unclear).

Current guidance on consent – where can you go for help?

There are several documents detailing regulations and guidance from the ICO in relation to consent and data protection:

Unfortunately, whilst useful, these aren’t hugely specific to the non-profit sector and only go some way towards clarifying the situation.

Helpfully, there are some other places where we can gain more clarity:

  • The Fundraising Regulator will be translating the ICO regulations and issuing some guidance on the consents that charities should obtain, sometime in the autumn/winter of 2016 (so, very soon).
  • In February 2017, the Regulator will also be starting a 3-month consultation period on updates/changes to the Code of Fundraising Practice, which will include reviewing guidance on data protection and consent (this is according to Head of Policy, Gerald Oppenheimer, speaking at the CASE Development Services conference in October 2016). Keep an eye on the Regulator’s website and Twitter feed and try to make sure you are a part of the consultation next year. The Code will potentially have a huge impact on fundraising practice – including prospect research – so try to make sure you and the organisations you work for have a say on the development and changes.
  • The NCVO have produced a report ‘Charities relationships with donors; a vision for a better future’. This report contains sample statements showing how non-profits can obtain consent to use personal data and it will inform the Regulator’s development of guidelines for the Code of Fundraising Practice. It is worth noting that these guidelines conflict with the ICO’s recent statements around how consent for prospect research should be obtained (see below).
  • CASE are also in the process of writing guidelines on consent for education institutions. These will be available on 25th January 2017. These guidelines will contain example privacy policies and sample donor communications, hopefully also including information on prospect research. Whilst the guidelines will inevitably be steered towards alumni databases and communications, they will no doubt be helpful to all non-profits, so they’ll be worth looking out for. Keep an eye on the CASE Twitter feed for more information.

But what does this all mean for prospect research?

All the guidance and regulation noted above is (or probably will be) quite broad, relating to consent for all forms of fundraising/marketing – but the ICO review process has also had some interesting consequences for those of us working in prospect research and, by extension, major donor fundraising.

Throughout the course of 2016, a representative of the ICO has stated at various events that non-profits will not only need to obtain consent to use personal data for fundraising/marketing but also for all forms of prospect research. This could mean that consent will need to be obtained for each part of the research process (e.g. data screening, segmentation, data modelling, appending wealth, profiling etc.). Additionally, the ICO have outlined that this isn’t just about gaining consent to use the personal data given when a supporter, for example, makes a donation, but also for any data pertaining to the person in the public domain; so, in practice, this might mean obtaining consent from individual supporters to access their details on Companies House or other common research sources.

There are clearly numerous concerns with this.

The main problem is that, as this has been a relatively fast moving situation, there is currently very little guidance on how non-profits should go about incorporating prospect research consent into their privacy policies, consent forms or fundraising communications. Nor has then been any clarity on how explicit the consent will need to be. Our view is that it is unworkable to expect supporters to give separate consent to each and every fundraising, marketing and research option that they may be presented with.

Also, on a practical note, in this post on the GDPR, Christian Propper at Graham Pelton Consultants asks two pertinent questions:

  • How can we ask for consent for database screening, profiling and other research techniques in a way that doesn’t unduly worry supporters?
  • How can non-profits future-proof their current consent/privacy statements to encompass research practices they may adopt in the future (but might not yet even know about)?

In short, how can prospect research ensure it is on the right side of regulation whilst also being able to continue contributing to fundraising in all its myriad, wonderful ways? The short answer right now is that, unfortunately, there is no clear guidance on this. All we know is that (as outlined above) the Regulator is working on best practice guidelines on consent which we assume will include consent for prospect research.

There are a few papers/articles that might be helpful to review around this issue;

  • The NCVO report, mentioned above, which can be downloaded here, is useful to read if only from the point of view that the ‘best practice’ sample statements on consent only mention research in passing and certainly not to the extent that the ICO has suggested is necessary, e.g. ‘We may from time to time use your data for profiling, targeting and research purposes so that our communications to you are as appropriate and cost effective as possible’ . It will be interesting to see if this approach is adopted by the Regulator when they bring out their official guidance.
  • The team at the Commission on the Donor Experience are working on a project around ‘giving choices and managing preferences’. Ken Burnett from the Commission wrote this article in which he outlines a practical way to ensure ‘continuous donor choice’. This step-by-step guide could easily be modified to include information on prospect research and is one sensible option for communicating with supporters. The Commission is working with the Regulator so something akin to this approach may be adopted in the guidelines for the Code of Practice.
  • Adrian Beney at More Partnership produced an excellent briefing paper on ‘More Partnership briefing for NCVO on Wealth Screening and Profiling’ earlier this year in response to the initial draft report from the NCVO. The paper puts prospect research into context and questions some of the ICO’s opinions on how data is used in fundraising and the types of consents non-profits should reasonably be expected to ask for. If your role encompasses prospect research this paper would be an excellent reference guide to understanding ICO regulations and prospect research.

So, what should I do now?

Our advice would be, first of all, not to panic about the conflicting news and opinion you may have heard. If you feel there are possibly areas where your organisation needs to improve communications around consent to use personal data then, alongside your day job, you could perhaps:

  • look into the consent options, donor communications, privacy policies and data processes that are in place in your organisation, alongside reviewing the ICO documents for direct marketing and PECR (links above)
  • consider undertaking a ‘privacy impact assessment’ to highlight areas your organisation may falling short on data protection
  • ensure you are a part of the Fundraising Regulator’s consultation process in 2017; the more involved we all are, the more likely that the guidelines will be workable for us
  • attend the Researchers in Fundraising conference in November 2016 – a representative from the ICO is speaking on the topic of data protection and consent
  • support the Researchers in Fundraising ‘data protection working group’, who are working with the ICO and the Fundraising Regulator to ensure prospect research is part of the conversation – keep an eye on the RiF news webpage and Twitter feed for developments on this

Also, keep an eye on Factary’s Twitter feed or let me know if you’d like to join our mailing list to be kept informed of any further news or announcements relating to this topic. We’re keeping a close eye on developments and would be happy to disseminate information.

And finally; remember that prospect research has an enormously positive role to play in fundraising. We need to keep in mind that our work is of tremendous consequence. So, when it comes to drafting future communications / privacy policies with supporters, please keep in mind this excellent Tweet from Adrian Beney at More Partnership wherein he encourages us to, “Tell people what you’re doing. Be honest. And open. And unashamed of what we do to help create a better world.”

If you’d like to discuss any of this in more detail or if you are concerned about consent or data protection, please contact me nicolaw@factary.com.


How Much Can She Give? Some maths, from Spain

Prospect research in continental Europe is tough. You spend your life saying ‘if only we had [fill in name of favourite source]’.

There are rays of light, as Europe gradually opens up to transparency, but they are rarely truly illuminating.

The hardest part is to try to estimate Gift Capacity. At Factary we define Gift Capacity as ‘the largest gift that an individual could give to any cause in ideal circumstances, over three years.’ By defining it that way we are saying, as objectively as one can in the murky world of money, that this is the best of the best, the biggest possible gift. Not ‘how much she will give to my charity‘, but how much she can give. And not ‘how much can she give this year?‘, but an amount spread over a period of three years.

How much she actually donates to your cause depends on many factors, including the strength of the connection to her, her positive and negative feelings about your organisation and, of course, how much you ask for.

But here in Catalonia and Spain, even the starting point for Gift Capacity research is difficult. So it is a Red Letter Day when some data on wealth appears.

The annual publication on directors’ salaries by the Stock Exchange Control Committee (CNMV, www.cnmv.es) is just such a day. The 2015 report was published last week.

In part the interest is vicarious. Learning that the Executive Chairs of Ibex-35 companies are now earning an average of €3.45 million is galling when you are a prospect researcher in Spain (average salary unknown but unlikely to be more than €25,000, and mostly under €20k); those Chairs earn more in three days than you earn in a year of labour.

But the data – the full report is here – does help us. Non-Exec directors are now earning an average of €763,000, up a staggering 48% on the previous year (clearly these are hard-working men and women), and the average across all quoted company directors is €344,000, up a mere 8.2% on the previous year.

So now you have an idea of how much she is earning, can you reliably calculate gift capacity?

Unfortunately, there is very little data to help you do that.

A 2006 study of tax returns [1] showed that people earning more than €600,000 per annum were giving an average of €3,268 – meaning 0.54% of their income. This was their declared giving on their declared income, and both figures are likely to be conservative.

So at your most cautious you could say that the Executive Chair of an Ibex-35 company might give 0.54% of €3.45 million, which would be €18,760.

That’s a start!

1. Sánchez Pérez, Elisa. ‘Evolución y situación actual de la filantropía en España’. In La Filantropía: Tendencias y Perspectivas, 125–46. Papeles de la Fundación de Estudios Financieros 26. Madrid, 2008. http://www.fef.es/new/publicaciones/papeles-de-la-fundacion/item/189-26-la-filantrop%C3%ADa-tendencias-y-perspectivas.html.