There was a recent article in SmartMoney titled “Are charities spying on you?” (June 2010 print; May 16, 2010 online). Many aspects of this article talked about bothered me. It sounded like non-profits are kind of staking me out and collecting quite a bit of information about me. As a donor, this creeped me out. 
Then it also went on to say that wealthy patients get extra perks or get priority treatment. That is so wrong. I didn’t want to believe the article but I have also seen some evidence myself that charities know more about me than I care to admit. So I did some research about this so called “prospect analysis” to know what is being collected and how. I don’t want to make any judgments here or give my personal opinion, just the facts.
What are these non-profits looking for?
Every non-profit needs money to carry out the mission they are working for. A lot of non-profits are competing for the donor’s dollars. Just because someone is wealthy doesn’t mean he’ll give anything. They need to ask the right person for the right amount of money, without spending too much money for that effort. For efficient fund raising and to win the money they need answers to the following questions —
- Who is more likely to give?
- Who is more capable of giving?
- How much should you ask for?
To answer these questions, they use publicly available data to collect information about you, which includes – basic information about you (Name, address, phone number, age), employment information, employment sector, club associations/other affiliations, degree/major, educational institute, income, donation history, previous participation in funding drives, credit usage, number of children, marital status, hobbies/interest, preferences, real estate and stock holding. They use the data along with various modeling techniques and pattern detection software to (1) generate a list of highly capable prospects who have the inclination to donate (2) generate more information about these protects like their qualification and capacity to give.
Where and how do they get information about me?
You gave them the information. Or you have it online for everyone to access. Other sources include libraries, SEC filings, public records, newspaper articles and other online databases.
Basic Information : You are in their database (or in a cooperative database) if you donated in the past. There is tons of basic information out there in Facebook, MySpace, Orkut, Twitter, Flickr or personal webpages.
Employment information and employment sector : LinkedIn and other professional websites.
Degree/Major/Educational institutions : Again LinkedIn gives basic information on when you graduated and what your degree was. You might also be in the alumni database of your educational institution.
Salary : Salary is not publicly available (there are exceptions like the salary if the CEO of a company which is mentioned in the SEC 10k form). So it is estimated. Your LinkedIn profile will have your company name and your title; your address is probably in their database if you ever donated to that charity or shared by another charity if you didn’t opt-out (more about this below); along with your city, company and title it is easy to get a ball park estimate of your salary from Payscale or Glassdoor.
Stock holdings of the common person is not easy to get and the non-profit is not sifting through your garbage to get this. If you are in a high level position, your salary and stock holdings are reported in SEC filings.
Real Estate values : With your address and the wealth of data available, it is not difficult to get a ballpark estimate of your real estate value. County records or online home property calculators like Zillow can easily give an estimate of your home.
Interests/Affiliations/Hobbies : Social networking sites provide a lot of information than you would never consciously want to let everyone know. You might be sharing information with your friends, but it could be available for anybody to see. You could be “tagged” or you would have “liked” some clubs or you might be a “fan” of a music group or “follow”ing your favorite artist.
Other derived information : Studies and surveys of donors can give insights on patterns, like the 2010 Millennial Donor Study which states “among people between age group 20 and 40, 91 percent are at least somewhat likely to respond to a face-to-face request for money from a nonprofit organization, with 27 percent being highly likely to respond to such a request. Only 8 percent are highly likely to respond to an e-mail request”.
Just one piece of information might not offer much insight, but putting together all the pieces of the puzzle, your whole life is pretty much accessible.
All this information is stored and indexed in a donor database. Some commercial companies like Prospect Generator from WealthEngine or Target Analytics, a Blackbaud company form cooperative databases that combine the information from various non-profit organizations and serve as a powerful comprehensive data mining source. Most of the non profit organizations will have some kind of donor privacy policy. The most strict policy will promise never to share or sell your information. Some organizations require you to “opt-out” – meaning by default you are giving them permission to share your information with other non-profits or databases like the cooperative databases. You can specifically ask them to exclude you when they share. Some non-profits, don’t have a policy in place at all, which means they are free to share or sell your information!
Just because I have a big house they ask me for money?
Yes and No. Just because a person is wealthy doesn’t mean he will donate money. He/she should have the inclination and should feel connected to the cause. So along with the collected data, there is quite of bit of statistical modeling that goes into prospect research to single out the right person to ask. Wealth, interest and linkage should fall in place. There are three widely used approaches :
- Statistical Modeling (predictive modeling and behavioral modeling)
- List Matching
- Combination of 1 and 2
Statistical Modeling : Modeling answers the questions about linkage (which says whether a potential donor has had any prior relationship or interaction with the charity) and interest. It also models giving behavior using the data, for example, it tries to predict who will respond to a mail as opposed to a face-to-face request; who is likely to name the charity as a beneficiary of their will; who are likely to give for a specific request or who will generally support the cause? Various mathematical models are used for this. For example, RFM model, uses Recency (how recent was the gift?), Frequency (how frequently the donor contributes?) and Monetary value (how big was the gift every time?) to come up with a prospect score which is used to define further action (more research on a high likelihood donor, dropping a donor from the prospect list, etc.)
List Matching : The list matching process involves matching the donor list in a charity’s database to the other databases including real estate reporting database, SEC information database, company databases or even other charity’s donor database. The list matching gives more detailed information on short listed candidates. While the statistical modeling defines the linkage and interest, list matching gives insight into the capacity and qualification of the interested donors.
Hybrid approach : Statistical modeling is done on a large number of prospective donors and the short listed candidates are studied more using list matching.
After these analyses the prospective donors are segmented into appropriate categories. If the prospect is identified to give a major gift by asking personally, that task might get assigned to someone who does face-to-face fund raising. If the prospect is more likely to answer a specific need when requested via mail, out goes the mail.
Is that legal? Isn’t there some law that protects my privacy?
First of all the non-profits are not getting the data by any illegal means. Only publicly available research is used. There are code of ethics followed by the researchers. Non-profits only have access to stock holdings and sale information which is reported publicly to the SEC. Anyone can get the same information that I have mentioned from the same sources.
Donor privacy rights : If the non-profits have the privacy policy they are bound to follow it by law. If you request them not to share or sell your information they won’t.
I don’t want to be solicited and I definitely don’t want to be in the “we-know-what-color-you-like” database. How can I get out?
As I mentioned before, as a donor you choose where your information is listed and you choose who to give it to and when.
Check before giving : Make sure the charity is a legitimate one. There are various watch dog organizations that rate charities. ChartityNavigator is my favorite, but there are others – CharityWatch from American Institute of Philanthrophy or GuideStar. You can also find information about a charity in the BBB Wise Giving Alliance website or your state’s attorney general’s office. Along with checking out the legitimacy of the charity make sure you check their privacy policy. If they require you to opt-out, pay attention to the checkbox that does that when you donate. CharityWatch also has a sample note to send along with your donation or even as a reply to a solicitation mail, if there is no specific way to opt-out.
Know who you are giving to : Most of these charities “outsource” the bulk fundraising, so you will get a call from an outside company who calls everyone in the comprehensive donor list. If you donate through them they get a cut (some keep up to 95c on every $1) and give the rest to the charity. This alone is a good reason to not donate through these telemarketers. Always donate via the charity’s webpage or volunteer who is bound by the charity’s privacy rules.
Have a chat with your charity : If you have given before (and/or are a continuing donor) but never paid attention to the privacy policy, give your charity a call. Ask them about the status of your information and make sure it is flagged as private.
Track down the renting organization : At some point, you might have received address labels as a complement from a charity along with a donation request. You might not have donated to them before, so you might be wondering how they got your name and address. They “rented” it. Call the charity that mailed you and ask them to remove your name. Most probably they won’t have the ability to remove your name from the master list! The mailing list was sent by another company that does this for various charities. Get the name of that mailing company and ask them to remove your name.
Enlist yourself in the do-not-call list : Register with the National DoNotCall list; check if your state has its own do-not-call list and register with that too. Charities that are calling on their own behalf to solicit charitable contributions are not covered by the requirements of the national registry. Most of the charities will remove your name from the call list if you just ask. However, if a third-party telemarketer is calling on behalf of a charity, a consumer may ask not to receive any more calls from or on behalf of that specific charity. If a third-party telemarketer calls again on behalf of that charity, the telemarketer may be subject to a fine of up to $16,000. A telemarketer (this applies to any purpose not just charity) has to honor your request and also tell you the source of their information (more information on consumer rights here).
Note: If you are a resident of PA, ME, or WY, you can also register for DMA’s Telephone Preference Service (TPS) for $1 , which allows you to “opt out” of national telemarketing lists.
Reduce your marketing mails : Register with the Direct Marketing Association’s Mail Preference Service (MPS). DMAChoice is the online tool developed by Direct Marketing Association for this very purpose. Take charge of your mail!
Limit the number of charities you support : If you donate small amounts to a lot of charities, they often sell your information to make more money, because your small donation barely covers the cost of solicitation. Instead choose one or two charities that match your interests and give generously.
Donate Anonymously : Some sites like NetworkForGood or JustGive lets you donate anonymously (they do take an administrative fee, so try this if all else fails).
My thoughts on the SmartMoney article :
It was quite sensational. Personally I was alarmed by the scope of the research that goes on. But when you actually get into the details of prospect research, you find that first, it is not something new. This part of fund raising has been going on for decades. Second, this “research” is not just done by charities Every market researcher uses the same information (and more) to sell us products. The charities actually use only a fraction of the data used by these marketers!
Final thoughts :
As I mentioned at the beginning of the post I sort of knew that charities know more about me that what I explicitly told them. Most of them made my experience pleasant (for example my favorite charity knows I don’t like getting mails, my preferred calling hours and that I prefer a single receipt at the end of the year via email instead of a paper one), although some of them left a bad taste in my mouth.
After reading quite a bit about prospect research, I am in two minds. On the one hand, I totally understand the need for this. We expect a lot from our charities. Especially during difficult times they need to provide more when the donations are very low. So they have to operate efficiently. After all, when I research my charity I reject charities that spend too much on fund raising, so I should be able to accept this prospect research as an efficient way to use technology. They need to function more like businesses in their operations and marketing to serve people. At least they are not selling me anything (about which I will be writing a future article). But on the other hand, I feel don’t feel too good about being manipulated into donating more. I don’t want to be made guilty or told that I could afford to give more. I have auto-donations every month in place based on my budget. I will give generously for the causes that are close to my heart, when I want and to whom I want to! I hate receiving mails with starving babies and injured cats.
What do you think? Do you think it is an efficient use of technology or manipulation?
References:
- http://home.comcast.net/~lambresearch//index.html
- http://www.plannedgivingedu.com/
- http://www.donorperfect.com/
- http://www2.ed.gov/policy/gen/guid/fpco/ferpa/index.html
- http://www.aprahome.org/
- http://www.hhs.gov/ocr/privacy/
- http://en.wikipedia.org/wiki/Prospect_research
- http://www.prospectresearch.org/financial.html
- http://www.foundationcenter.org/getstarted/faqs/html/cultivation.html
- http://en.wikipedia.org/wiki/SEC_filing
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