Monthly Archives: July 2010

Keeping Donor Information Private

The issue of a not-for-profit organization keeping donor data confidential is probably not one that comes up a lot, especially when the donors are profit-driven organizations.  The main reason many profit-driven organizations contribute and partner with not-for-profit organizations is for public relations purposes.  They want the public to know who they gave to and how much they gave.

Some individual contributors to causes and groups can view privacy differently.  The nonprofit can also want to guard the data.  Some individual donors are just private or humble people and they simply do not want the information known.  Others want to avoid the phone calls and social pressure to contribute to a myriad of other causes that come once it is learned how much disposable income they might have to throw around.  A nonprofit’s interest in protecting the identity and the gifts is to protect its’ lifeblood.  The nonprofit does not want potential funding to be siphoned off to other organizations that may make pitches to the nonprofit’s most prized donors.

Finally, both individuals and corporate donors may zealously desire privacy when the cause is not mainstream, is unpopular or downright counter-culture.  At the time this article is posted, this scenario is currently being played out in the media concerning funding of the Park 51 project or “Cordoba House”, an Islamic center proposed to be built in downtown Manhattan, New York City.

Donors who make privacy a requirement for the donation may want to take certain precautions.  Nonprofits seeking those dollars may want policies and agreements in place to protect that privacy.

Confidentiality and privacy, two related concepts in this discussion, are bolstered through two things:  enforcement of the agreement between the donor and recipient organization and enforcement by the recipient organization of internal policies mandating confidentiality by organization’s employees, directors and volunteers.

Confidentiality of donor data is a matter of some ethical concern.   The “Donor Bill of Rights” maintains that the donor has a right “to be assured that information about their donation is handled with respect and with confidentiality to the extent provided by law.”  The Donor Bill of Rights, which is actually not a law, was created by the Association of Fundraising Professionals, the Association of Healthcare Philanthropy, The Council for Advancement and Support of Education (CASE) and the Giving Institute: Leading Consultants to Non-Profits.

Some not-for-profit organizations (“NPO”) may not even have any policy denoting their understanding with donors, nor a policy aimed at maintaining confidentiality and privacy of donor data.   Before adopting any policies or creating any agreements within the NPO, the non-profit corporation should seek legal counsel to assist with those policies.

Any time an organization adopts a policy which creates rights in others, it also creates a legal obligation for itself which can result in legal liability.  This means that a donor can sue the NPO  in a court of law if she feels that the NPO  has not met an obligation which the donor feels is a legal obligation.

Regardless of the merits of any such claim,the NPO can still be sued and be required to retain an attorney to represent it and present any defenses to the court that the attorney and the NPO feels are appropriate. People bring non-meritorious claims in court all the time, and it can cost the defendant thousands, if not tens of thousands of dollars, to defend itself.  In addition, the donor could try to revoke the gift by filing a lawsuit or by exerting social pressure, which could result in the NPO’s loss of reputation in the community.  Neither of these is desirable for the NPO.

When crafting a policy or agreement to govern interactions with donors, the NPO could recognize the so-called “Donor Bill of Rights” and make sure the donor’s name and gift amount is kept confidential through an “opt out” policy.  In essence, the donation is confidential unless the NPO causes the donor to opt-out of the confidentiality.  Or, the NPO could craft a policy that all contributions are publicly available unless an agreement is reached to the contrary with the donor, i.e. an “opt-in” policy.  Both methods have merit.

In addition, if the NPO wants to take on the potential liability of protecting donor data, the NPO will need to set in place policies and procedures to be assured that the employees, directors and volunteers who come in contact with that information safeguard it and keep it confidential.  Non-profits that have a heavy volunteer base that works with fundraising often have volunteers changing frequently.  Policies that create levels of security can be helpful.

Finally, one of the reasons that the NPO needs to obtain legal counsel is that laws requiring disclosure of donors exist.  In certain instances, the NPO must report the donor’s name and amount to the Internal Revenue Service.  In addition, if the NPO is involved in government policy and/or elections, a maze of rules of disclosure apply.