Tag: prospect research

Have I Mentioned…?

Posted on by Chris

Have I mentioned my new book? (It’s the vain author’s constant refrain.)

Yes, I know I have. But that was pre-publication. Now I have an actual copy in my hands, so that means that the orders have started shipping from Policy Press.

This is a book for practical people. It’s about how high-value philanthropy is evolving across Europe, so practical people in fundraising, in prospect research, in social investment, in policy making and in education will all find – I hope – useful information here.

If you are a major donor fundraiser interested in why your donors keep asking about impact, you’ll find an answer here.

If you are a private banker or wealth adviser who wants to understand why your clients keep on asking about foundations in France, you’ll find out why, here.

If you are a policy maker wondering whether to recommend further tax relief for donations, then you’ll find the arguments here.

If you are a prospect researcher, wondering where to look for potential supporters in Switzerland, you’ll find some answers here.

And if you are the director of an NGO, wondering what your strategic priorities should be, you’ll find some suggestions here.

The book includes case studies, detailed research, some how-to, and a bibliography of more than 300 sources and references in (count ’em, ladies and gentlemen) seven languages. Its focus is Europe, meaning that this is not about the UK + the Continent + Ireland – it’s about the Continent + Ireland, plus the UK.

I hope you find it useful.

 

Order “How Philanthropy is Changing in Europe” directly from Policy Press, here.

Divided Rules

Posted on by Chris

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

Posted on by Chris

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

Posted on by NicolaW

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!

Data Protection, Consent and Prospect Research

Posted on by NicolaW

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.

Factary and Europe

Posted on by Chris

Dear customers, friends, colleagues

A brief note to reassure you that Factary will continue to provide services – consulting, prospect research and training – across Europe despite this morning’s referendum vote.

We will be following the negotiations closely and will continue to act, as always, in the best interests of our customers, our colleagues in the non-profit and philanthropy sectors, and of the beneficiaries that you serve.

We will monitor any implications that this vote may have for cross-border philanthropy and fundraising, and we are ready to discuss any concerns that you may have in this area.

Do feel free to contact us to discuss any questions that you may have, at any time.

All the best

Chris Carnie
chris@factary.com
Martine Godefroid
martine@factary.com
Marc Low
marc@factary.com
Nicola Williams
nicolaw@factary.com

A Window on Philanthropy in Italy

Posted on by Chris

Another window on high-value philanthropy just opened in Italy thanks to UNHCR and Gruppo Kairos, a private banking and wealth management firm. In March, UNHCR published the results of a survey carried out with the finance firm. I am grateful to Giovanna Li Perni at UNHCR for a copy of the report, and for her presentation of the results at last week’s Festival del Fundraising.

During October-November 2015 Kairos asked its HNWI clients to complete a questionnaire; 91 of them, 44% women, 56% men, did so. This is not therefore a balanced representative sample of people of wealth in Italy (so we cannot safely extrapolate the results) but does give us at least some insight into how this group of people reacted. The group included a wide range of wealth levels from €1m to more than €30m, and a spread of age groups with, as you would expect, a bias toward middle age and older (85% were aged 46 or over). Almost all of the group were donors – 91% had made at least one donation to a social cause in the previous year (against 26% of the general population). The percentage who gave rose with increasing wealth, reaching 100% of people with wealth over €30m.

When asked about their largest gift during 2015 to any one organisation, most reported €5,000, with 73% of women giving at this level and 49% of men. Older people tended to give more, so 22% of the over-65s gave €25,000 and 11% gave €50,000. Of course these people were giving to a number of organisations, so 30% of this older group gave away a total of between €50,000-€100,000 in 2015.

Asked about the causes to which they made their largest gift in 2015, 21% chose scientific or medical research, 19% favoured children’s causes, and 16% poverty in Italy. Importantly for UNHCR, 10% chose help and protection for refugees as their top cause. 62% gave principally to causes in Italy.

Why did they give?

More than half (52%) said that their main reason for giving was because they felt privileged. 26% said it was giving made them feel useful. Interestingly just 4% of donors said that they gave because of their religious values, with 9% saying that they want to change things, to make a difference and the same percentage saying that they gave to continue a family tradition of philanthropy.

In choosing a non-profit, two major reasons stood out; the cause, and ‘transparency of the organisation and exhaustive documentation on results.’ This focus on transparency is interesting and is part of a trend we can see across Europe toward greater transparency in the non-profit sector. New laws (for example, in Holland) and new organisations (for example Fundación Lealtad in Spain) are encouraging this trend toward transparency.

Italians will tell you that business in the country is based on personal connections, and it seems that this might be true for philanthropy also. It is certainly the case for this group of philanthropists, who say that the most common channel for hearing about the organisations they support is via their personal network (28% of respondents, the largest single group), while 15% say that they chose the cause because they knew the leader of the organisation in person.

What does this tell us about strategy?

The information in this report is gathered from the clients of one bank, so we should be careful about extrapolating from it. But given that there is almost nothing else available on HNWI philanthropy in the Italian market, we might at least test some conclusions.

The research should help push up the pricing of ‘major donor’ programmes. Individuals responding to this survey have made gifts in excess of €100,000 to single organisations, and 20% of them have made gifts of €25,000 or more. We can even venture a Gift Capacity calculation for this group, defining ‘Gift Capacity’ as ‘The largest total gift that one person could give to any one cause, in ideal conditions, over five years’ (see my previous blog on this topic.) Five of the respondents with net worth of €5-€10m made gifts to single organisations of €100,000 or more, between 1% and 2% of their net worth.

The research makes the case for prospect research. It shows that personal networks are the means by which these HNWIs have been reached by their non-profit partners, and that these networks are their primary source of information. Prospect research has the tools to identify personal networks. Sadly, the number of prospect researchers in Italy is still in single figures.

This research was carried out in partnership with Gruppo Kairos, and we have here a strategic clue that a number of NGOs in Europe are starting to follow up. Private wealth managers and bankers are increasingly interested in philanthropy, and we would all do well to focus more attention on this key group of intermediaries.

This is the second year in which UNHCR and Kairos have carried out this study, and the plan is to continue the annual series; another opening window on the world of HNWI philanthropy in Europe.

The Edge of Privacy

Posted on by Chris

We live in interesting times, privately.

Confusing, contradictory times, when lawmakers require us to lock-down data whilst revealing their intimate thoughts on Twitter. Times when it is OK for a dominant search engine to track our billions of tiny searches, for our wrist watch to measure and transmit our sleeping and walking in the name of fitness. Times when we choose to tell our life stories in Facebook.

And times when our private underbelly is revealed to the world. Two stories have exposed privacy in all its moral complexity; the Panama Papers, and the Ashley Madison data breach. Both have been stories about activities that are legal (being a director of an offshore company and having an affair, or both simultaneously, are not illegal activities.) Both are about normal immorality.

Both stories are to some degree about power. The Panama Papers show us that the powerful are willing to mix their businesses with drug dealers, dictators and money launderers in order to avoid taxes. If you need to be reminded about just how powerful these people are, bear in mind that just one person was prosecuted out of the 1,000 UK names released in the last big tax-related data breach; the Falciani/HSBC affair [Source: ‘Tax Havens don’t need reform, but abolition’, Richard Brooks, Guardian Weekly, 8/4/16]

Both the Panama Papers and Ashley Madison are about relationships, a subject at the heart of prospect research. John knows Jane because both of them invest in the same company in the British Virgin Islands. And John knows Mary because he signed up for Ashley Madison and she’s his new friend.

John is a donor to your charity. He’s in your database, and he has turned up in a screening (carried out, naturally, by Factary). We’ve spotted him in Companies House, a public domain data set, as a director of an investment firm in Holborn, so we have flagged him as interesting.

When you transferred the data to Factary you took the utmost care over the process, using our sFTP (secure FTP) site and thus ensuring that John’s details were encrypted and safe. You checked that the computer link was over a HTTPS network. You made sure that the data would be stored in servers in the UK, in a physically safe and secured building. You did that because you are a conscientious prospect researcher, using the best practice required by the law.

John did not take the same care. When he invested in the British Virgin Islands via Mossack Fonseca he did so through the open web, by email. He joined Ashley Madison the same way, signing up on their website; no encryption, no security. Worse, he was voluntarily exporting his data outside of the protection offered by the European Union through its Data Directive.

And now John has a photograph of him and Mary together at a work conference and he’s posted it on his Facebook page.

Where is the edge of privacy?

Is it the frontier between long standing public domain records and the new stuff, between Companies House and Facebook, for example?

Is it between voluntarily released information and stuff that is Wikileaked?

Is it between Victorian morality and modern – between a marriage notice in the Telegraph, and Ashley Madison?

Above all, is it where people of power dictate it should be? So that we are allowed to see the company directorships of the little people, but cannot see into the murky world of British Virgin Islands connections? Or into the equally dark corners of political connection and patronage?

This is where we are, like it or not, in prospect research. Prospect researchers live on the edge of privacy, using personal information that is in the public domain, for public good. We research John Doe in order to help our fundraising colleagues reach out to him for a donation that will benefit a poor person, or a scholarship kid, or an eye-opening cultural event.

But the power of research comes with a responsibility; it is our profession that must lead the debates on power and privacy, on public domain and private.

Thank goodness it is us, because prospect researchers have a special moral compass. We have chosen to work for causes we believe in, to make sacrifices (anyone want to talk about pay rates for researchers?) for something we believe to be right and good. We have chosen not to sit in the glory seat in fundraising; we are clearly not in this for vanity or fame. We know the value of information, and we have seen the intimacies and the inanities that people are willing to share on the web. We chose every day between information that is right and relevant, and rubbish.

Prospect researchers are the best placed people in the non-profit sector to describe where a private life becomes public.

But we had better get out there and get talking; our donors, our colleagues and our organisations need our guidance as we walk, together, along the edge of privacy.

Foundations of Wealth Revisited: A Story of Growing Potential…

Posted on by willw

For three years Factary produced a ‘Foundations of Wealth’ report focused on the Ultra High Net Worth Individuals (UHNWIs) and High Net Worth Individuals (HNWIs) (minimum estimated wealth of £10m) that founded grant-making trusts and foundations, featured in Factary’s New Trust Update during 2012, 2013 and 2014. We have now revisited these trusts and foundations to see how they are performing financially and what this means for hopeful beneficiaries.

These three reports, all available for free to New Trust Update subscribers via the new online archive service, contain profiles of 104 philanthropists and their grant-making trusts and foundations, of which nearly half are not on Trustfunding.org. Top of the list in terms of estimated wealth is Mrs Usha Mittal (£9.2bn) with other billionaires including the Swire family, the Fleming family, Ian Livingstone and Spiro Latsis. Together they have a combined estimated wealth of £34.36bn – the question is, how much of their wealth are they giving to charitable causes?

Based on financial information from the last financial year 98 trusts and foundations (six are still yet to submit their first set of accounts to the Charity Commission) had a total expenditure of £26.17m. Only seven had a total expenditure of over £1m in the last financial year whilst over one in 10 had an expenditure of £0 despite some having been registered for three years now. This is somewhat disappointing, especially when compared to their estimated wealth which shows that the average expenditure as a percentage of estimated wealth is a meagre 0.08%! Only seven individuals gave over 1% of their estimated wealth to other organisations in the last financial year, with the most generous person giving just under 3% of their estimated wealth as grants. This is well under the ‘5% of total assets’ figure that is often used as the basis for estimating gift capacity for major donors…

The biggest giver in terms of charitable expenditure was Sir Peter Harrison – former Chairman and Chief Executive Officer of computer network company Chernikeeff. The Peter Harrison Heritage Foundation had a total expenditure of £4.5m in 2013/14 which included a grant of £2m to the Clarence House Restoration Project and £1.75m to the Imperial War Museum.

The most generous philanthropist, giving away the greatest percentage of his estimated wealth as charitable expenditure, was Sir Mick Davis – former Chief Executive Officer of the mining company Xstrata plc from 2001 until its merger with Glencore in 2013. The Davis Foundation had a total expenditure of £2.2m in 2014/15 which equates to 2.95% of his estimated wealth. Grant recipients were not disclosed.

Other significant grants awarded by these new philanthropists in the last couple of years include £6m from The Dorothy & Spiro Latsis Benevolent Trust to Great Ormond Street Children’s Hospital and £1m to Boston Children’s Hospital (both in 2013 and hence excluded from this analysis of activity in the last financial year), £2m to the UBS Optimus Foundation by The Holroyd Foundation, £1m to the Royal Shakespeare Company by Lady Sainsbury’s Backstage Trust and £770,125 to  Clinton Health Access Initiative by the Surgo Foundation UK.

Notable names that have been less than generous with their charitable giving via their foundations to date include Michael Lemos (son of Greek shipping tycoon Constantinos Lemos) whose CML Family Foundation donated £3,406 which is 0.001% of his estimated wealth of £605m and Richard Higham (Group Chief Executive of Acteon Group Ltd) whose Higham Family Trust had an expenditure of just over £6,000 in 2014/15, which represents 0.004% of his estimated £150m wealth. Some of those whose trusts and foundations have shown no financial activity include former CEO of wealth management company Towry Andrew Fisher, Conservative Party donor and Domino’s Pizza franchise owner Moonpal Singh Grewal and Abhisheck Lodha, Managing Director of global real estate developer Lodha Group.

Of course there will be a number of possible reasons why these figures are so low – not all their charitable giving is directed through their foundation; this is not their primary foundation; the nature of their wealth means they do not have high levels of liquid assets; or they are still in the process of building up reserves.

It is this last point that is perhaps of most interest when we look at the figures. Whilst the total expenditure was only £26.17m in the last financial year, the total assets of the 79 trusts and foundations for which data was available was over five times this amount at £148.7m. 25 of these have assets in excess of £1m and 10 have assets in excess of £5m. This equates to an average of 0.62% of the philanthropists’ estimated wealth, with 15 building up assets of over 5% of their estimated wealth.

The foundation showing the largest asset amount is The Christie Foundation founded by Iain Abrahams, the former Executive Vice Chairman of Barclays Capital. The foundation has assets of over £21m for 2014/15 which represents over 40% of his estimated wealth, making him the also most generous benefactor. So far the only identified donation made by his foundation is of £150,000 to the Elton John Aids Foundation, of which he is also a Trustee.

What this shows is the considerable potential these trusts and foundations have for the sector. Whilst they may not yet be giving at a level in keeping with their vast wealth, these UHNWIs and HNWIs are ear-marking significant amounts of their wealth to be given away to charitable causes over the course of their lifetime and beyond, sustaining the charitable sector for years to come.

The financial data for these 104 trusts and foundations, along with the three Foundations of Wealth reports and all the past issues of New Trust Update dating back to 2005, is available online to NTU subscribers. If you want further information about New Trust Update and our searchable archive please contact Nicola Williams.

Measuring the Immeasurable

Posted on by Chris

We prospect researchers say it all the time. But I’m not sure that our fundraising colleagues really get it.

 

It’s immeasurable. No, we cannot give you a precise figure.

 

An individual’s wealth is a private affair. Just how private is being made clear by the Panama Papers. Here we can see how people from footballers to political leaders hide their wealth and their income from public view. These are just the types of people that we prospect researchers are asked to analyse and measure; what is her wealth, and what is her gift capacity?

 

Bear in mind that Mossack Fonseca is described as Panama’s fourth largest firm in this offshore business. The Legal 500 lists five more leading firms operating in this sector in Panama. There are hundreds more in Panama, and more in the British Virgin Islands, Cayman, Gibraltar and any number of other fiscal watering holes. We are seeing, even with the 2.9 terabytes of information from Panama, only a tiny slice of the full picture.

 

The OECD reports that 27 of the 34 OECD members “store or require insufficient beneficial ownership information for legal persons, and no country is fully compliant with the beneficial ownership recommendations for legal arrangements.” In other words, as campaigners such as Andy Wightman have shown in his books on land ownership in Scotland, we cannot know who owns companies or who controls trusts.

 

The UK is rolling out regulations that will expose some of this – although information on the control of trusts (not the charitable sort, these are legal trusts) will only be available to ‘competent authorities.’ A grey phrase that, we can assume, excludes the, er, incompetent public. Business shareholdings of 25% or more will mean a declaration of beneficial ownership. It is worth noting that many of the schemes outlined in the Panama Papers involve small but valuable shareholdings. As Jake Hayman has already noted in Forbes, this is relevant to philanthropy.

 

The Panama Papers have many implications for prospect researchers. They are another mine of information – you will have to decide for yourself whether this is good practice, or not – on wealth. They remind us that we must be cautious with our estimates of wealth and gift capacity. And they demonstrate that our due diligence is less than comprehensive; if we cannot know who controls a business that wants to donate to us, or we cannot say  which companies Samantha Supporter controls, then how can we measure whether she meets our due diligence requirement?

 

I suggest sticking this version of The Panama Papers on the door of the Prospect Research office in your organisation:

1. No, we can’t tell you how wealthy she is
2. No, we can’t tell you who owns that property
3. Don’t expect due diligence to be really diligent. We’ll do our best, but don’t ask us to hack any more Panama lawyers.