Privacy pricetag – Fundraising impact

Possible legislation to restrict the use of marketing data could force nonprofits to spend $8.8 billion more on fundraising, the Direct Marketing Association says.

Nonprofits, which raised nearly $60 billion in 1998 through direct-mail and phone solicitations, spent nearly 30 cents to raise every $1, the association says.

That cost could grow to 45 cents if nonprofits are barred from using personal data about donors in marketing lists acquired from other organizations, or from using other nonprofits’ donor data, according to preliminary results of a new association study.

“Severely restricting the use of marketing data will increase costs for every sector of the economy – and nonprofits are no exception,” said H. Robert Wientzen, the association’s president and CEO.

“Raising money for charities is difficult enough during a period of slowing economic growth, but with less access to marketing data, human service organizations will have significantly less to spend on improving the quality of life of their clients,” he said.

Lee Cassidy, executive director of The DMA Nonprofit Federation, says the “already bleak [economic] picture could get much worse for nonprofits if they were prevented from sharing marketing information with other like-minded organizations.”

The association plans to release the full study at its annual conference Oct. 27-31 in Chicago.

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