Last Thursday was one of those days that triggers concern and outrage– and led to this request that you take 3 minutes to complete this Confidential Agitator Survey.

Here’s why I’m asking you to take the Survey  and, more importantly, to get down in the weeds with me because these are some very important and expensive weeds.

The first call came from a long-time monthly giving consultant, justly enraged because her client was changing CRM (Constituency Relationship Management) systems.  She had just been informed that the current CRM operator and its payment processor would NOT release the credit card data for the monthly donors to the new payment processor.

Without that transfer of all the sustainers’ credit card data the client would surely miss a few months’ income plus go through lots and lots of hassle.  They would be forced to contact each donor individually, ask for their credit card information and manually enter it in the new system.

The result?  Lost income and, more seriously, lost sustainers that had taken the organization years and thousands and thousands of dollars in investment to build.

Seven minutes later my phone rang again with a related problem.  This time a veteran fundraiser told me that the CRM was willing to make the transfer to a new CRM and new payment processor. BUT they wanted to charge $1000 to do so.    Yes, One Thousand Dollars for a data transfer chore that a half-competent tech could accomplish in 15 minutes or less.

Quite frankly, it’s time to call Bullshit on this pernicious practice of holding a client’s data hostage in order to intimidate the client into staying rather than moving to another client.

The nonprofit sector needs to wake up to the reality that as competition increases because the number of CRM and payment processing providers is increasing and prices are declining, the problem will only get worse.

We warned about this last May in our post Can Your Monthly Donors Be Held Hostage. We also surveyed our readers about the problem.   And, the results we reported were shocking:

• Only 25% of the 98 organizations responding knew specifically whether transfer was permitted. (14% ‘yes’; 11.2% ‘No’)
• A whopping 36% were “Not Sure”.
• A total of 18% had never read the agreements with either their CRM or payment processor.
• 7% reported “I don’t deal with the issue. And only 10% could identify the person/position in their organization responsible for understanding and dealing with this issue.

So…what happens when an organization runs into resistance?  How did they solve the problem?

• 4% of the respondents never solved the problem.
• 5% solved it by “persistently badgering the vendor”.
• 1% hired lawyers to solve it.
• 9% solved it only by changing vendors and then individually contacting each donor to ask for their credit card or EFT information and then placing them on a new system.

You don’t have to be a fundraising genius to know that when you have to contact each donor individually and ask them anew for their payment information and commitment that you’re gonna lose a boatload of donors.  Unless…. you make an extraordinary effort.

What’s Happened Since Then

With the Survey results and readers’/victims’ comments in hand I interviewed 20 nonprofits –small, medium and large—that had run into the same problem. Most either threw up their hands and resorted to contacting donors individually.  About 30% hired lawyers and finally got the CRM and payment processors to relent and make the transfer.

Of the CRMs and Payment processors I interviewed many dodged the subject with a mist of obfuscation while others like Bloomerang, Classy, Donor Perfect, Neon, ROI, Vantiv, and Payment Solutions to name a few were unequivocal in stating that they would not block and would, in fact, step in to help facilitate transfers.

Although I’ve spent literally hundreds of hours on this since last May, I’ve resisted calling out the ‘bad guys’ publicly, partly because I have an aversion to fighting deep-pocketed plaintiffs in court and because I want to finish gathering more affidavits and evidence.

Meanwhile, I do think the time has come for the nonprofit community to give serious consideration to exposing and remedying these bad practices using far heavier artillery than the Agitator can provide.

Why the Survey is Important

And that’s one of the reasons I hope you will complete this Confidential Agitator Survey.  Included in the survey are a few questions regarding possible remedies.  For example:

• Should we ask our professional associations like the AFP, DMA and CASE to take on this issue?
• Should we go to Federal Trade Commission and/or the Federal Reserve, the two agencies that have jurisdiction over the payment processors and file complaints?
• Mindful that politicians, more than most, depend on fundraising and fundraising data for campaigns, seek a Congressional inquiring into the practices of the payment processors and the CRMs that split feees with them.

The more I think about this the more convinced I am that serious thought and study should be given to the creation of a Nonprofit Payment Processing Cooperative, owned and operated solely to benefit our sector.  Just as Act Blue processes billions of $ in contributions for 8,000 clients including for the Democratic party, its candidates and for the liberal advocacy sector should our sector do the same.  Or perhaps seek some assistance from the nonprofit Act Blue to help set up a new Cooperative?

Please give us your insights and suggestions by completing the Confidential Agitator Survey.

What’s Next

Nick and I decided that this subject was important enough to devote all of this week’s posts to it. So, on Wednesday and Friday we’ll be back with some detailed guidance on how the payment processing world works…why anyone who wants to charge $1000 or even $500 is to do the transfer is ripping you off…and steps you can take to avoid these problems in the first place.

Thank you for getting down in the weeds with us (after all details are necessary to create the big picture) and thank you for taking the Confidential Agitator Survey.

Roger

P.S.  Please share this post with colleagues and other nonprofit friends. Ask them to take the Survey.  The more folks who take the survey the better.  Thank you.