The Importance of Data Privacy for Nonprofits

From marketing to fundraising to financial management, data should be at the forefront of your nonprofit’s operations.

It allows you to make well-informed decisions that increase your impact and push your mission forward.

However, the more data you collect and use, the greater responsibility you have to your constituents to keep this information secure and protect their privacy.

In this guide, we’ll explain why data privacy is so important for nonprofits and how your organization can make a plan to protect sensitive information.

What is data privacy for nonprofits?

Data privacy refers to the practice of protecting donors’ personal information through responsible data collection, usage, and storage. It requires nonprofits to be transparent about data collection, securely store donor data, and actively follow all relevant data laws and regulations.

Why is data privacy important for nonprofits?

While data privacy is important for all organizations, it’s especially important for nonprofits because they rely on donors to fuel their causes. Nearly 70% of donors consider it essential to trust a charity before donating, and protecting their privacy is a primary way to demonstrate your organization’s trustworthiness. Plus, nonprofits owe their continued success and sustainability to donors’ generosity; they must return that respect by keeping donor data private and secure.

When nonprofits prioritize data privacy, they can do the following:

• Build trust with donors. As NXUnite by Nexus Marketing puts it, “[S]ome nonprofits make the mistake of viewing their donors as blank checks instead of people.” Showing your donors that you value them as individuals doesn’t just entail thanking them for their contributions. It also includes protecting their personal information and assuring them that the sensitive details they’ve shared with you are safe. That way, you can build trust and maintain long-lasting relationships with them.
• Comply with data privacy regulations. Besides your responsibility to donors to keep their information secure, you also have a responsibility to follow all data privacy laws and regulations. While you should consult the specific legislation that applies to your country, state, or region, implementing data privacy best practices can help prepare you to comply with any new policies that arise.
• Mitigate risks of data breaches. Donors and beneficiaries may share particularly sensitive data with your nonprofit, such as financial information, health data, and personal identifiers. In case of a data breach or cyber attack, keeping this information secure can prevent hackers from leaking it or using it for malicious activities like identity theft or fraud.
• Retain support. According to Deep Sync’s first-party data guide, people are more likely to engage with your organization when they understand how you’re using their data and have control over the process. Data privacy is instrumental in keeping supporters around and ensuring they have a positive experience with your nonprofit.

Additionally, when donors feel confident that you’re protecting their personal data, they’re more likely to recommend supporting your nonprofit to their friends and families. As a result, you can build a positive reputation in your community and grow your supporter base over time.

What can nonprofits do to protect data privacy?

Now that you know why it’s crucial to safeguard donor information, you may be wondering how you can put data privacy into practice. We recommend following these tips to protect sensitive information:

• Develop a data privacy policy. Let donors know how you plan to collect, use, and store their information through a comprehensive data privacy policy. Share this policy with all relevant stakeholders, feature it on your website, and alert donors of any policy updates to keep them informed.
• Obtain consent for data collection and usage. Donors should always have the choice of whether to let your organization collect and use their personal data. You must also let donors know you’re collecting their data and what you’re using it for. For example, before adding a donor testimonial or story to your annual report, you should obtain their consent and let them know the personal information you plan to include in the report.
• Use secure software. Select a donor database or constituent relationship management platform (CRM) that offers security features like data encryption, multi-factor authentication, and access controls.
• Keep your database clean. When your database is accurate and up-to-date, you can easily adhere to donors’ communication and data preferences. For instance, a donor may have noted through a survey that they would not like you to contact them via phone calls or text messages. By keeping track of this information and following data hygiene best practices, you can communicate with donors on their terms and respect their wishes regarding data use.
• Vet any external data providers. If you’re working with a data provider to access third-party data or implement data hygiene solutions, ensure they follow data privacy regulations and best practices. Look for a provider that lists their security measures on their website, clearly states where they source their data, and prioritizes respecting supporter preferences.

Remember to train your staff on any new data privacy policies or procedures you enact to ensure everyone is on the same page. Additionally, consider auditing your data privacy practices regularly to assess their effectiveness and close gaps in your strategy.

If your organization uses data in any capacity, you must prioritize data privacy. Doing so will help you build strong supporter relationships, comply with data laws and regulations, and remain a reliable, positive asset to your organization’s community.