Charities Must Demonstrate They Protect Donors' Privacy
By Henry Goldstein
Reprinted with permission from The Chronicle of Philanthropy, January 2005

The American Civil Liberties Union has generated a major controversy within its ranks by conducting undisclosed research on donors and potential donors. The situation has already sparked an investigation by the New York State attorney general that could have serious implications not just for the civil-liberties group but also for many other charities unless the organizations move quickly to reassure donors that protecting their privacy is paramount.

Like most other charities, the civil-liberties union conducts sophisticated electronic research on its donors to aid its fund raising, a technique often referred to as data mining. The organization got into trouble with its board members and donors over those practices because it lustily criticizes businesses for doing basically the same thing -- collecting information on customers to boost marketing efforts.

New York's politically ambitious attorney general and candidate for governor, Eliot Spitzer, is looking into whether the civil-liberties union is violating its own privacy policies. He is also investigating whether the union's board was fully aware of the research activity conducted by a company hired to analyze the giving potential of donors.

Anthony Romero, the executive director of the ACLU, who previously worked as a program officer at the Ford Foundation, says the organization acted properly and simply examines information in the public record, and does not use data collected under circumstances where people are not given the option to keep it private, such as driver's-license information and credit-card histories.

It is easy for other charities to dismiss the matter, saying that it is an internal squabble over one organization's board policy -- and that the question of the ACLU's apparent hypocrisy will not spill over to other organizations.

But that is not necessarily the case. To be sure, most charities are conducting research on donors and on potential contributors. Whether the research is done by a staff member sitting at her computer searching Google, or the job has been farmed out to a specialist, nonprofit groups all use pretty much the same databases, such as census information, Securities and Exchange Commission reports, online biographical information, corporate directories, and the like. Indeed, an entire industry of data-mining consultants has been spawned. But unless directly confronted, virtually none of the charities tell their donors explicitly what privacy policies it follows on donor information, or specifically whether they are gathering information other than name and address, gift amount, and gift history.

Charities are hardly the only organizations in society that have put Americans' historic and protected right to privacy under siege. But for nonprofit groups, the privacy flap further damages the do-good image that is already sinking in the public's esteem, as Paul Light, a New York University professor and Brookings Institution scholar, has found in his extensive polling of Americans' attitudes toward charities. Even as the industry struggles to explain away this increasing lack of confidence, mostly through denial, Senate hearings on excess compensation to charity and foundation officials, as well as pending legislation to strengthen regulation of charities in states across the country, strongly indicate all is not well.

In 1993 the Association of Fundraising Professionals and other charity leaders adopted what they call the Donor Bill of Rights, a good step forward. But the Donor Bill of Rights does not deal specifically with donors' right to privacy. The closest it comes is to state that donors should have “the opportunity for their names to be deleted from mailing lists that an organization may intend to share.”

Two specific actions can and should be taken:

First, a provision should be added to the Donor Bill of Rights to deal specifically with privacy and make clear that any data-gathering activity will be clearly disclosed.

Second, every charity that is doing external research should disclose that to its donors and prospective contributors, and offer a way for anyone to avoid being the target of such research, just as charities offer donors an option to avoid having their names and addresses shared with others.

Americans know that their commercial transactions are recorded, segmented, analyzed, and exchanged with other marketers. From to Wal-Mart to the corner drugstore, marketers are always peeking into your life. That charity has caught up with business, or, rather, been caught up by it, may sadden but cannot shock.

The ethical test is simple. The donor has a right to know.

Henry Goldstein, president of the Oram Group, a fund-raising consulting company in New York, is a regular contributor to these pages. Click here to send an email.