The decision in December by the Information Commissioner's Office to levy fines totalling £43,000 against the RSPCA and the British Heart Foundation for breaches of the Data Protection Act has been the subject of much heated debate in the fundraising community.
The BHF and the RSPCA were penalised for swapping lists of donors with other charities; the practice of wealth screening, through collating personal data to assess how much money a potential donor might have; and telematching, which is using some data supplied by a donor to track down more information about them.
Initially, both charities said they would consider lodging appeals against the fines but both later took advantage of the 20 per cent reduction offered for swift payment, arguing that it would be cheaper to pay at once than become involved in expensive legal battles.
But the decision not to appeal the rulings has frustrated some fundraisers. Derek Glass, a consultant who runs Ask2, a direct mail fundraising agency based in Australia that works with charities in the UK, says: "There is not a single section in the Data Protection Act that prohibits data sharing, telematching or wealth screening. And that explains why hundreds of British charities have been doing it for 20 years.
"The ICO claims that data sharing, telematching and wealth screening are unfair. It decided, clumsily, to try to hang this all on the fairness section of the act."
Glass argues the fairness provision in the act is designed prevent companies such as banks and insurance companies from using data about race, religion, sexual orientation or trade union membership to deny people products and services.
The RSPCA's fine of £25,000 was steeper than the BHF's £18,000 in part because some of its data was accidentally shared despite donors having opted out. This was a clear breach of the Data Protection Act 1998, leaving little room for debate.
But on the other counts, would the charities have stood a good chance of winning any appeal? Vicki Bowles, a charity partner at the law firm Stone King, says that the subjective nature of the concepts of fairness and reasonableness leaves a lot of room for ambiguity in the law.
However, she says, although the practices carried out by the RSPCA and the BHF could be permissible, "it was how they went about it that was the problem".
The notices issued by the ICO announcing the penalties said these practices broke the Data Protection Act because they were not clearly explained to the donors. Both charities did have fair processing notices warning supporters that their data might be shared with other, similar organisations, but the ICO ruled they were not sufficient because they did not explain telematching or wealth screening and neither charity could prove their donors' data had gone only to similar organisations.
Elizabeth Denham, the Information Commissioner, reiterated this point at the Fundraising and Regulatory Compliance Conference in Manchester in February, saying: "It's not the activity that is against the law, but failing to properly and clearly tell your donors that you're going to do it."
And that, Bowles says, is where the case might have struggled in court. But there was another argument the RSPCA and the BHF could have made, in her opinion.
Went public in the press
The ICO fines were first revealed in the Daily Mail and not on the ICO website. When the regulator did publish the fine notices, they were headlined "ICO investigation reveals how charities have been exploiting supporters" and accused the charities of "secretly" screening wealth.
"My view on it is that it wasn't the fines themselves so much as the language used that could have been questioned by the charities," says Bowles.
She says it wouldn't be possible to appeal against the fines themselves on the basis of the way the ICO handed them down, but the charities might have been able to use it to appeal the level of the fines.
"The ICO has actually got quite a lot of scope for discretion in applying a fine, and one of the things it can take into account is public perception and what's going on externally," she says.
But although the charities could argue they were excessively punished by the way the fines were issued, Bowles says, the issue of public perception could go both ways: in the fine notices, she notes, Denham said she was issuing the fines specifically to serve as a deterrent.
And at the February conference, Denham revealed that she had already used her discretion to reduce the fines by 90 per cent.
Facing up to reality
Ultimately, Bowles says, there's a difference between having legal grounds to appeal and the realities of going to court, even before the costs are considered.
"The idea that the charities could appeal the fines is an argument you could have, but I wouldn't want to be the one making it," she says.
"I wouldn't be confident enough to say to my client 'let's go for it because we can get this overturned'."
If you’re interested in fundraising, you can’t miss Third Sector’s Annual Fundraising Conference, 23 and 24 May. Click here for more information and to book at the Early Bird rate.