Not to Be Indelicate, but …

More than 50 million consumers have had their personal data compromised this year, a statistic grim enough to elicit spasms of paranoia in donors’ hearts about identity theft, data security and privacy. But, in reality, there have been few cases of privacy infringement reported in the nonprofit world — not enough to spawn a skittish donor pool.

It does, however, raise two important questions for nonprofit fundraisers. First, with the explosive growth in data collection and compilation, to what extent is it moral, ethical or legal to mine data on potential donors? And secondly, what proactive measures can be taken to safeguard donor privacy?

Jim Harper, director of information-policy studies at the CATO Institute, says most privacy advocates are incensed by “private, for-profit use of data” and fall mute on what charitable groups do with all the personal information they collect on donors and prospects.

“Nonprofits want to appear on the good side of the privacy issue, but like any other organizational user of data, like the big financial institutions, they need a lot of data and need to do a lot of things with that data,” says Harper, who also serves as editor of Privacilla.org, a Web-based think tank devoted exclusively to privacy issues. “Limiting the use of personal information is probably not beneficial.”

Harper cautions organizations about making explicit vows to donors without first considering the consequences.

“If you promise donors not to rent a mailing list, that’s giving away revenue,” he says.

Harper, an active member of the Department of Homeland Security’s Data Privacy and Integrity Advisory Committee, stresses tact and trust when talking privacy with donors.

“One of the ways to stay ahead of the curve is to take a lesson from the recent security breaches and know who has access to donor data within [your organization],” Harper advises. “Every nonprofit that has personal information [on donors], including credit card information, can safeguard [data] by encrypting it and protecting it from insider access. Everyone thinks it’s about computers, but it’s not. Very often it’s about people inside an organization.”

Plug the holes
Chicca D’Agostino, president of Focus USA, a Hackensack, N.J.-based list firm that maintains myriad compiled files on donors, likens her job to hurtling down a highway in a big rig carrying precious cargo.

“This is how all fundraisers should view their donor files,” she says. “Your database might contain gift amounts or charitable-trust information and should be seen not just as a collection of names and addresses, but rather as a file of precious information about individuals that must be protected at all costs.”

To start, D’Agostino recommends segmenting Social Security information from the raw body of your housefile to eliminate any chance of releasing it to a list renter.

“Be sure to have a list-rental agreement signed by the end user before you ship your names,” D’Agostino says. “A list-rental agreement spells out just how your lists will be used and not be used. It references state and federal laws that must be adhered to, including the financial laws of the Fair and Accurate Credit Transactions Act and the Gramm-Leach-Bliley Act.”

[Editor’s note: For specifics, see the Fair and Accurate Credit Transactions Act and the Gramm-Leach-Bliley Act]

D’Agostino says the best way to verify a list renter’s credibility — and ultimately protect the privacy of your donors — is to read the mail piece. If your file is overlaid with demographic data and the list renter wants to rent names of high-dollar donors with children, make sure the piece doesn’t mention the child at all, especially by name.

“[Donors] are already concerned that we know too much about them,” D’Agostino says, commenting on the crucial need to afford direct-mail recipients the choice to opt-out.

Like their direct-mail brethren, online fundraisers try to allay potential donors’ privacy fears. San Francisco-based VolunteerMatch President Deborah Dinkelacker says she’s committed to protecting her users’ privacy and conveying a legitimate interest in “using technology to help build better communities through volunteerism.”

Clear from the start
VolunteerMatch’s informative yet carefully worded privacy policy got it off to a good start.

“The biggest challenge we faced in creating the policy was making sure it was comprehensive enough to include all of our users, while also ensuring that it was well-written and easy to understand,” Dinkelacker says. “It took several weeks to reach a final version that we felt comfortable with but, of course, it remains organic and undergoes revisions when and if we deem [it] necessary to take new steps to safeguard our users’ privacy.”

On its Web site,VolunteerMatch walks visitors through a simple introduction of what it does and how it uses personal information collected online. It reads, in part:

“Our ongoing commitment to the protection of your privacy is essential to maintaining the relationship of trust that exists between VolunteerMatch and all of our users, whether they be nonprofit organizations, volunteers, volunteers with a personalized account, readers of our newsletters or other visitors to the site … We use the information we collect about you to facilitate the volunteering process and to provide information to you about VolunteerMatch ... We use return e-mail addresses to answer the e-mail we receive. Please be aware that, to the extent required to provide our services, we share your information with volunteers, nonprofit organizations or our partners, as applicable. … For newsletter subscribers, we may use our e-mail lists for sending out our newsletter and other VolunteerMatch ... communications. We do not ... sell, rent or trade our volunteer, administrator, nonprofit or general newsletter e-mail addresses to outside parties.”

Responding to user feedback about its privacy policies, VolunteerMatch decided to remove an online feature that allowed visitors to its Web site to list their names below volunteer opportunities.

“The thought behind this functionality, which had existed on VolunteerMatch since its inception, was that some volunteers might like to see their name associated with the organization or cause that they were interested in, as a way to show personalized support and to lend a sense of familiarity and camaraderie to each volunteer opportunity,” Dinkelacker says.

With advancements in search-engine caching technology — namely Google’s — self-searching can unearth cached pages of VolunteerMatch.org containing people’s names, and organizations they once had been interested in.

“Typically, the individual had forgotten they’d opted-in to list their name publicly on our site and subsequently asked that we remove them,” she says. “To prevent this from occurring in the future and to safeguard users’ privacy, we’ve removed this feature from our site.”

Do it for the donors
While a privacy policy is developed for an organization, the ultimate intention is to protect users, visitors and donors. Dinkelacker says a good privacy policy considers its stakeholders first, puts organizational goals secondary and fosters trust.

“We feel our policy communicates to users that we are committed to safeguarding their private, personal information, which in turn strengthens the trust they feel in us and what we do,” she says.

When President Clinton signed the Gramm-Leach-Bliley Act in 1999 — requiring financial institutions to protect the security, integrity and confidentiality of consumer information — fundraisers scratched their heads, wondering what, precisely, constitutes a “financial institution.” The Federal Trade Commission noted in its analysis that “nothing in the definition of a ‘financial institution’ excludes nonprofit entities,” opening the floodgates for subjective interpretation as to whether a charity is “substantially engaged in activities ... financial in nature.”

This has complicated efforts of planned-giving fundraisers who foster trust relationships. The FTC states that when a financial institution serves as a trustee of a trust, neither the grantor nor the beneficiary is a consumer or customer under the rule. The trust itself is the institution’s customer, so the rule doesn’t apply because the trust is not an “individual.” Thus, nonprofits that meet the definition of a financial institution need not send disclosure notices to donors and beneficiaries of charitable trusts.

“While nonprofits don’t have to adhere to the letter of the law in most cases, they should adhere to the spirit of it,” says Tanya Howe Johnson, president of the National Committee on Planned Giving, which has encouraged all organizations maintaining planned-giving programs to consult legal counsel to determine if they have disclosure obligations under the Gramm-Leach-Bliley Act. “We haven’t come out and officially said that charities should incorporate privacy policies regarding donor information because approaching donors with integrity is implied.”

Fundamental to successful fundraising at any level is the existence of a relationship built on trust, she says.

Paul Barbagallo is the former senior editor of FundRaising Success magazine and a freelance writer.