by Kevin Scott
The charity sector is facing an unprecedented funding crisis after a series of negative press stories over aggressive fund-raising strategies. With the third sector being so significant to the data marketing industry, MSPs, data agencies and list owners are having to adapt to meet the changing needs of a troubled sector.
The data marketing industry is in the midst of great change. Much of that change is due to be enforced through the GDPR as firms get ready for compliance ahead of the deadline. Other aspects are voluntary, particularly in the charity sector, where a series of negative press reports have left charities facing a potential £5bn donor shortfall.
As charities work to rebuild a reputation that has been severely damaged with reports of aggressive fundraising, their data partners must work with them to rebuild this reputation and restore the faith that donors held in these charities.
The issue over fundraising practices came to a head with the tragic death of Olive Cooke, whose death was linked to the stress of charities’ relentless pursuit of her. Mrs Cooke’s granddaughter may have said that the reason for her death had “nothing to do with the charities,” but regardless, the damage to the sector was done, and the charity sector must now rebuild. And how.
“A lot of charities have been lazy: relying on the same tried and tested methods without ever challenging the status quo,” says Jon Cano-Lopez, CEO of REaD Group. He compares is to choosing an IBM computer back in the 80s. “As long you make a return on investment, there’s no reason to change, but it’s no longer acceptable for charities to carry on this way,” he adds. “Increased consumer and media attention means that the sector will have to adapt – and fast. The UK population is very generous. They will continue to give, but only when appropriate and at the right levels.”
Much of the work to begin the clean-up has been spear headed by the Fundraising Standards Board (FRSB). Around 2,000 charities and suppliers are part of the self-regulating group, representing around 60% of all voluntary income raised in the UK.
In an investigation report into charity fundraising practices the FRSB, it was established that the sharing of Mrs Cooke’s personal details by charities she supported led to her receiving ever-growing amounts of fundraising mail and feeling ‘overwhelmed’ by the volume of approaches from charities.
Mrs Cooke had been a generous charity supporter, giving to at least 88 charities in her lifetime. Of the 1,442 charities that participated in the FRSB’s investigation, 99 had Mrs Cooke’s details on file – 19 began contacting her prior to the year 2000 and a further 80 charities had begun corresponding with her since then, with 32 charities initiating contact in the past five years.
“Mrs Cooke’s experience demonstrates the inevitable consequences of a fundraising regime where charities have been willing to exchange or sell the personal details of donors to each other, and to commercial third parties,” says Andrew Hind, Chair of the Fundraising Standards Board. “But Mrs Cooke was not alone. Her experiences were echoed in the many complaints that the FRSB received following her death.”
Cano-Lopez says that REaD Group has consistently argued against the over-targeting of specific segments of the population, particularly the so called ‘Dorothy Donor’.
“There are vast swathes of people out there who care about particular causes and want to donate,” he says. “They may not give quite as much, but there are far more of them so ultimately, it’s far more lucrative.”
Why change must happen
In the three weeks that followed the news of Mrs Cooke’s death in May 2015, the FRSB received 384 complaints about charity fundraising. Of the complaints received:
• 70% related to direct mail activity;
• 42% addressed the frequency of charity communications;
• 35% were specific to fundraising approaches made to the elderly or vulnerable people;
• 16% were about how consent is given for charities’ use of contact data, with concerns that the current opting out measures for charity communications was unclear.
Research from YouGov on behalf of REaD Group has highlighted the true extent of the challenge faced by the sector. With 42% of UK adults less likely to donate to charities following the recent press coverage, the report claims that the sector stands to lose nearly half of the £10.6bn it receives from the UK public each year. The RNLI alone has forecast a drop of £36m in its income by 2020 – and it isn’t alone. The impact of this donor deficit on Britain’s charity income could be devastating.
However, it’s not quite the end of days for the sector. Research carried out by Wood for Trees’ partner About Loyalty showed that over 90% of donors score high on trust and satisfaction with charities they donate to. Jon Kelly, Director of Analysis, Wood for Trees, says: “Perhaps donors are happy with the role charities are playing for them,and they’ll be willing to continue to share their details if done in the right way and for the right reasons.”
Wood for Trees works with over 50 charities and says that in the wake of recent coverage relating to the nature of opt-ins, there is even more appetite for charities to become proactive with their engagement strategies. Wood for Trees’ role in this is to help with targeting supporters in a more cost effective way which ultimately drives income.
To help achieve this, MyLife Digital (a sister company to Wood For Trees) has developed a Trust Platform that puts the control of an individual’s data back into their hands by allowing them to decide who they share their data with, who can see it and what can be done with it, all with informed consent.
Consent has, in fact, become the key to the health of data’s future. In the third sector, a number of additions and amendments to the Fundraising Code of Practice were introduced over November and December to reflect complaints over the tone and persistency of callers. “Organisations MUST NOT engage in fundraising which: Is an unreasonable intrusion on a person’s privacy; Is unreasonably persistent;” and “fundraisers MUST NOT, at any point in a telephone call, be unreasonably persistent or place undue pressure on the recipient to donate, and MUST NOT ask for a donation more than three times during that call,” exemplify these changes.
The Institute of Fundraising (IoF) has welcomed a report from The Public Administration and Constitutional Affairs Committee (PACAC), which found the failure of Trustees to fulfil their responsibilities as the cause for what it called “last summer’s charity fundraising scandals”.
IoF Chief Executive Peter Lewis said there was broad support for recommendations in the PACAC report, which includes a levy-funded fundraising regulator. He says that universal application, stronger sanctions and more effective regulation are all things that its members had been calling for.
“Fundraisers perform a vital role asking members of the public to generously support the causes they care about. The Select Committee’s report makes some helpful recommendations for ways to make sure that charity fundraising is carried out to the highest standards, particularly on the role of trustees and charity governance. The Institute of Fundraising and our members are committed to supporting and promoting the highest standards in fundraising and look forward to strengthening public trust working alongside the new Fundraising Regulator.”
So what can data do?
“Will the public really stop being charitable because we cannot communicate directly to their inbox?,” asks Kelly. “I’m a big fan of the ‘if you don’t ask you don’t get’ mantra but the truth is that overall charitable giving in the UK has hardly changed in the last 10 years – despite increased communications.”
Using best practice from prospect management features found in commercial CRM systems, Donorfy is one company that has applied this to the charity sector. The new features of its cloud-based donor management platform captures prospect research information such as the amount they typically give, the kinds of causes they support and their capacity to give in the first place.
As funding opportunities develop, Donorfy lets fundraisers keep track of all their touch points relating to that donor and that ask. Robin Fisk, CEO, comments: “We’ve found that charities are increasingly looking to major funders for strategic support, be they high-net-worth individuals or a grant-making body of some kind. Which is understandable given the concerns charities feel they may have with individual giving programmes in the future.”
At REaD Group, its view of the population indicates those who want and are able to donate, as well as the causes that they are interested in. “Rather than simply target those so-called ‘easy’ sectors or recent donors, the third sector needs to be much smarter,” says Cano-Lopez. “Well targeted messaging works. The right message, to the right person, through the right channel is not only professional, it delivers better results.”
Andrew Hind maintains that charities perform an essential role in British society and must continue to have the right to ask for funds. “But, together with the poor practices exposed last summer, this investigation underlines the need for a charity’s right to ask for funds to be balanced with the public’s right to say no,” he says. “We believe that if charities fully comply with the newly strengthened fundraising standards and reposition donors at the heart of their fundraising activities, this will go a long way towards ensuring that donors in the future will not be placed under the same pressures as those confronting Mrs Cooke.”
Hind argues, however, that there needs to be an easier way for individuals to control how they are approached by charities and greater organisational commitment to meeting donors’ needs. “We support the development of the Fundraising Preference Service, although it will be for the new Fundraising Regulator to identify an effective way in which this can be implemented,” he says.
Cano-Lopez argues that MSPs, data agencies and list owners need to be braver with their clients. “We have seen significant laziness and a somewhat ‘cash cow’ attitude from some businesses and their advisors,” he warns. “We’ve also seen list owners and data agencies removing usage limits, therefore selling the same names numerous times in a very short space of time. This kind of poor practice is what led to the Olive Cooke scenario, where a vulnerable donor was bombarded with hundreds upon hundreds of letters.”
The challenge for the data industry is to get itself in shape for the changes that lie ahead. Whether its changes to consent, as recommended by the FRSB, or whether it’s the GDPR itself, the rules are changing and charities must begin to understand the new data world in which they will hve to operate. “Our challenge is to change the way we think and prepare ourselves for what is to come, and to view these changes as an opportunity rather than a threat,” says Kelly. “Charities who get themselves ahead of the data curve (both sharing and measurement) will be the ones best placed to maintain, or increase, their share of the generosity of the British public.”
Cano-Lopez adds: “In any other vertical sector, the suppliers are continually challenged. Clients do not want to be the same as their competitors, they strive to be better. As such, agencies are expected to constantly look for improvements and will consistency suggest fresh strategies, even if the current one is working well. It’s time for charities to expect the same.”