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THE EUROPEAN UNION & DATA PROTECTIONTHE BIGGEST CHALLENGE IN FUNDRAISING FOR A GENERATION?

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On 7th July at the Institute of Fundraising (IOF) Convention, senior fundraisers from charities with a combined voluntary income of over £1 billion met to discuss European Union (EU) proposals for new data protection laws.

The session, sponsored by Medialab, saw the possible effects on our relationships with donors bought into the very sharpest focus and the potentially disastrous implications of the changes laid bare.

Worryingly, more than half those in attendance admitted they didn’t know much about the proposals and with the new rules in force as early as 2017 - only two and half years away – isn’t it time for a wake-up call to all of us whose job is to raise the money that funds so much vital work here and abroad?

We think so. Strategic planning is often done on three year cycles. Five is common too, which puts the new laws smack bang in the middle of many fundraisers’ long term plans. Ignore them at your peril.

THE EUROPEAN UNION & DATA PROTECTION

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Slow train comingSo what’s being proposed and what effect will it have on how we raise money?

Anyone who works in fundraising needs to know about data protection. Even now we have strict standards that shape our plans and tie up resources on compliance and best practice. Fail to clear the hurdles and the consequences can be severe. It might take only one high profile blunder by a well-known charity for us to face a backlash from the donors on whom we all depend.Earlier this year the British Pregnancy Advisory Service was fined £200,000 for a data security breach.

In January 2012, against the backdrop of the privacy debate and the explosion in social media, the EU announced plans for a comprehensive reform of data protection law. The aim? To increase peoples’ control of their personal data and cut costs for business. A laudable goal, yes, but how it hopes to achieve this could make it less likely for donors to get a good and relevant experience from the charities they support, make it harder for us to tell them how their money is spent and drastically limit the number of people we can ask for support when we need it the most.

I hereby (don’t?) consent…The effects will depend in large part on changes to the rules on consent. Currently this is based on an opt-out for direct mail and telephone and an opt-in, or soft opt-in, for email and SMS. Under the EU proposals consent ‘will have to be given explicitly before a company could process personal data’. In other words we might not be able to rely on the opt-out or soft opt-in as consent to make any fundraising contact with donors at all.

The first thing to be hit would be volume. A lot of fundraising depends on big numbers and economies of scale; by generating enough new donors, the cost of finding and keeping each one gets small enough to make donor recruitment profitable. Regular giving recruitment, lotteries and mass participation events are classic examples. The current direct mail opt-out law is one of the reasons why the amount of data available for mail is so high. But the third party list rental market, still a huge source of new donors for dozens of charities,

could face a loss of up to 50% in numbers. Unless consumers have opted-in for their name and address to be shared on a third party list then they won’t be available for any charity to approach. Stephen Pidgeon, a director of Medialab, is succinct: ‘If the EU introduce compulsory ‘opt-ins’ for direct mail then the cold mailing lists that still drive minor donor fundraising will disappear and, with them, millions of pounds.’

That said, those that do opt-in should be more responsive. There’ll be value in this, even if there’s fewer of them. But payback and a positive ROI comes from keeping new donors, and then having them give again. Even the most responsive and generous new donors might be off limits because they would have to give consent again to your charity, and they’re probably less likely to do that under new laws, than they were not to opt-out. Yes, donors might still give, but the fact is that many people give when they are asked and because they are asked. If we can’t ask them they won’t give as often, they might give less when they do, or they might not even give at all.

If the EU introduce compulsory ‘opt-ins’ for direct mail then the cold mailing lists that still drive minor donor fundraising will disappear and, with them, millions of pounds.Stephen Pidgeon, Director at Medialab

Stephen Pidgeon, Director at Medialab

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Picture this

Forget-me-not?

At the moment we don’t need consent for donor profiling. In future we may need explicit consent for it: no consent, no profiling! This could limit our ability to paint a picture of our supporters and to target new donors like the ones we have now. And as any analyst knows, conclusions are valid only with enough data. Less consent could reduce volume to the extent as to make a lot of analysis worthless. The result could be scatter-gun acquisition, lower response rates and lower lifetime value.

We’re not certain yet what the exact laws will be and it would be premature to make wholesale changes to our fundraising right now. But there are some things we could be doing to prepare. And with so much depending on explicit consent, it’s here that efforts should be focused. We could start testing how to get consent in a way donors will understand and accept. The problem will be how to do this without long explanations that may only turn them off. Imagine trying to explain in a simple sentence why it’s a good idea that they let us track their IP address? That will be easier said than done. Partly it will be a matter of creative, of finding the right words and the right tone that will make donors say ‘yes’. There’s opportunity between now and 2017 for some small group research and then some live testing. We could use the time wisely. Make sure too that any creative agencies you use are up to speed, and ask them for their suggestions on how to communicate. And if they don’t have any, ask them why not!

Under current law if a donor asks for their data not to be processed then we have to comply. In future we may have to delete the data entirely, not just stop processing it. Suppression files – the ones that mean we can remember to forget – could be made illegal, and if a name comes in on cold data then we’ll have no way of knowing if that person already asked not to hear from us. The result? We’ll contact them again. Not great for our reputations to say the least, and certainly not great for the donor.

Home is where the iPad is Our home and email addresses are personal data. By 2017 our IP addresses – the unique number that identifies any device that connects to the internet – could be classed as personal data too, and off limits for processing without that all-important consent. Web analytics and profiling will become far harder. How effective are our online campaigns, how good is our targeting and how successful are our tests? We may know now, but we won’t in the future if we don’t get consent to track online behaviour. And even with some consent, will there be enough to give us the numbers

to make statistically valid decisions? Making IP tracking nigh on impossible seems crazy given its central role in letting donors have a more personal experience.

Simon Burne, Director of Fundraising, The Children’s Society

What terrifi es me is the IP address proposal and what that will mean for digital recruitment.Simon Burne, Director of Fundraising, The Children’s Society

With the huge growth in online fundraising, Simon Burne, Director of Fundraising at the Children’s Society and a member of the panel on 7th July, is particularly concerned: “What terrifies me is the IP address proposal and what that will mean for digital recruitment. It would make life worse for our supporters and not better. If you want a personal experience with the charity you support some of these proposals will stop that happening”.

Preparation meetsopportunity

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If a lot of fundraisers haven’t heard it’s likely that a lot of fi nance directors, CEOs and trustees won’t have either. Don’t wait till 2017 to brief them.

Eventually, online and offline material will need to be adapted with new words and design, an expensive business that needs to be factored into budgets. Plan ahead for this. Design a system that will be able to adapt to the changes when they are agreed. Talk to your database managers as they should know how to make any changes that you might need. Also, talk to your processing and fulfilment suppliers about any changes they may need to make themselves.

Prepare for a potential rise in requests for personal data to be deleted with a cost effective system, and brief everyone in your charity about what the new regime will be. A donor won’t always ring a supporter care number. They may ask a local member of staff, they may call a switchboard, they may write or email. Everyone needs to know the correct procedure.

Build models and look at the scenarios. A well-made spreadsheet with all the right variables is a powerful tool for testing the effects on your income. Make sure too that someone in your charity keeps abreast of developments and adapt your model when it’s clearer what the new laws will be.

Use your model to start talking to senior management about what might be coming. On July 7th a lot of fundraisers admitted that they didn’t know much about the changes. Mark Astarita, Fundraising Director at the British Red Cross, was one of many senior people there:

“If a lot of fundraisers haven’t heard it’s likely that a lot of finance directors, CEOs and trustees won’t have either.

Don’t wait till 2017 to brief them”.

Keep all your fundraisers informed as well. It will often be down to frontline staff to take the requests to be deleted, to explain

to donors why consent is needed and why it will help us raise more money. Bringing them on board now will be a lot easier than on the day that changes become law.

In terms of marketing and fundraising, not all channels need opt-in consent for recruitment so consider inserts and door-drops as a potential alternative in case third party lists suffer. That said, opt-in might still be needed for further contact so testing the right words is still critical. And it’s possible that increased demand for these channels will push up their prices so roll-out projections should be cautious ones for now.

Look at other marketing channels for recruiting donors too. Online Value Exchange, where donors opt-in for free content, can get a cause in front of new supporters

who have proven to be more responsive because there’s been an exchange of benefit and they are engaged. Custom audiences –matching existing donors to social media data and then targeting new ones accordingly – is another possibility worth exploring.

Finally, make sure you comply with current law. Meeting new restrictions

will be harder if you don’t meet the current ones. If your charity doesn’t have a designated data protection officer now you may need one if you have 250 employees or more.

Mark Astarita, British Red Cross Fundraising Director

Mark Astarita, British Red Cross Fundraising Director

Daniel Fluskey, Head of Policy and

Research at the IOF

Join the Debate A lot of people at the July event felt that only the IOF is in a position to lobby on behalf of fundraisers and donors. Daniel Fluskey, Head of Policy and Research at the

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Better Together?

Ever Drifting Uncertainty

If a lack of consent will hit income so hard, should the fundraising sector join together to tell the public why they should opt-in to hear from their favourite charities? Cross sector initiatives aren’t new. ‘Remember a Charity’ has promoted legacy giving for over ten years and is funded by its members. When we’re more certain what the law will be, could a joint message from many charities be the best way to tell donors why they should consent to data being used? And will charities be willing to pay? Given the potential loss of revenue then yes, perhaps they should be.

Will it really be quite as bad as we think? The answer is hard to give because it’s still not clear what the final changes will be, nor exactly when they’ll come into effect.

In March this year the EU parliament adopted its preferred draft of the regulations. This held out the hope that an opt-out for direct mail will remain a ‘legitimate business interest’, and stay in force. This could mean it might still be possible to collect third party consent under the current opt-out rules. There is also hope that data can in fact be retained for suppression purposes and not deleted after all. This is encouraging, but by no means set in stone.

IP address changes might not have quite the effect some fear. Recent new Cookie laws didn’t

And in January next year the Presidency will change again, to Latvia.

What will that country do in its six months at the head of the table?

James Milligan, Legal and Public Affairs Adviser at the Direct Marketing Association (DMA) has been one of the people watching the progress most closely. He thinks there will be a hiatus. “With the new European Commissioners taking office towards the end of this year, we are anticipating that both institutions will be focused on internal organisational issues until November. This means that both the Commission and the Parliament will only be able to make little, if any, progress on the Regulation until then”.

WHAT’S ON HER MIND?Martine Reicherts, the new EU Commissionerfor Justice

Institute, is working with many in the sector to prepare a submission to the Ministry of Justice in London. He’s clear about the dangers. “We are concerned that, as originally drafted, the proposals will make it more difficult for charities to raise money as they are likely to be less able to reach donors effectively. The changes on profiling and IP addresses could also have a negative impact from the point of view of the donor. We would encourage any charities that have concerns about the proposals to get in touch so that we can better make the case that changes to the proposals need to be made”.

prove as bad as forecast, more a minor irritation for online experience than a major obstacle.

How the public reacts will matter too. Attitudes to data use might not be as hard-line as the media sometimes suggests. A recent survey by fast.MAP, an online market research agency, showed some surprising views (see chart on page 7). For example 51% of people will pass data to brands they trust, half will give details if they are given a choice and nearly as many will do the same if asked up-front and openly. The spectre of a mass failure to consent might not lurk so menacingly after all. Timing is uncertain too. Partly this is down to changes at the top of the EU itself. Viviane Reding, the former Commissioner for Justice and the chief architect of the proposals, was elected an MEP and stood down in July. Fellow Luxembourger Martine Reicherts has taken over. She may not put this at the top of the in-tray. Then again, she may want it done and out of the in-tray as soon as possible. Furthermore the Greek Presidency of the EU ended in June and the Italian Presidency has just begun. Will the Italians give it the same priority? No one knows yet.

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Conclusion Despite this pause, and the hope that concessions will be made, we mustn’t underestimate how serious the changes could be. There is a balance to be struck between the donor’s right to privacy and our ability to fundraise, and the current draft of the proposals doesn’t get this right. If just ten per cent of the income of those charities represented on July 7th is lost that’s £100 million gone from some of the most high profile causes in the country, and a lot more from thousands of smaller, less well-known but equally worthwhile organisations. There’s a lot of medical research that won’t get done, a lot of wildlife that might not be protected, a lot of children in the developing world who won’t get an education and a whole lot more besides if we don’t start preparing ourselves to adapt and change.

Why people might give consent

40%

50%

60%

70%

30%

20%

10%

0%

59%

45%50%

40%

To known

and trusted brands

Asked

up-front and openly

Given a choice

For something

of value in return

Source: fast.MAP

Fundraisers don’t just represent their employers, they speak for their beneficiaries and for their donors too. For them more than anyone else, it’s time to make sure we are prepared so that we can continue to raise money as best we can for so many great causes.

At the IOF debate and with this subsequent report, Medialab wanted to raise awareness about the threat from the EU. It’s a dry subject matter but one that’s hugely important. We want to help mobilise the charity sector so they are prepared for what might happen in the coming months and years. And then, we can all get on with the critical job of raising valuable funds.

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About MedialabBased in London, Medialab Group are an independently owned leading direct response media planning agency, focussing on data driven media. Working closely with the third sector, we help charities acquire new donors through direct marketing channels as well as communicate with and retain current donors. We plan and co-ordinate Direct Mail, Digital Media (including Value Exchange prospect generation), Insert, Mobile, Outdoor, Transport and Washroom cards, Door Drop and Press campaigns. We also offer data hosting, processing and analytical insight to help charities understand who their donors are, why they donate and how they’d like to be communicated to. We offer a fresh, analytical approach, integrating traditional and new media channels with innovation – but always with the aim of improving response and retention.

1. Final proposals could be agreed in early 2015 and implemented in early-mid 2017 – use this time to prepare

2. Ensure someone is responsible for tracking progress of current EU discussions and time frames

3. Use DMA’s toolkit to keep updated on news www.dma.org.uk/eu-data-protection

4. Support the IOF in highlighting concerns about the Proposals to MEPs and relevant decision makers: make your views known to Daniel Fluskey at the IOF

5. Wait until Proposals are agreed before implementing any structural change

6. Begin internal discussions about how consent is currently collected - and how it could change in future

7. Ensure your organisation is compliant with current Data Protection law

8. For marketing activity, look at channels that are already opt-in or less reliant on consent

9. Air your views on twitter to begin online debate, using #eudpfundraising

10. Contact Ben Ennis at Medialab Group to find out more

Ben Enniswww.medialabgroup.co.ukben.ennis@medialabgroup.co.ukTwitter:@medialabLinkedin:medialab-groupPhone: 020 7534 1760

Medialab Group Ltd Registered in England no. 4982335

Medialab Group, 1st floor, Portland House, 4 Great Portland Street, London, W1W 8QJ

Contact Medialab

What to do next

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About the authorAndy Taylor is a consultant at The Desired Effect and has over ten years experience as a fundraising director in large national and international charities. A direct marketing specialist, he’s a regular contributor to the voluntary sector media.

© The Desired Effect 2014