The marketing “soft opt-in” for charities: an exciting opportunity?

Insight

17.12.2024

On 25 November, 19 major UK charities, including Oxfam and WaterAid, wrote an open letter to the Secretary of State for Science, Innovation and Technology, Peter Kyle, urging the Government to extend the “soft opt-in” for email marketing to charities and other non-commercial organisations.

The soft opt-in derives from Regulation 22 of the Privacy and Electronic Communications Regulations 2003 (PECR) whereby businesses can email or text existing customers about their products and services without needing to obtain their specific consent (ie the “opt-in”). As long as a customer provided their contact details as part of an earlier purchase and did not opt out of marketing communications initially (or at any time afterwards), the business can keep contacting them about similar products and services. However, this rule does not apply to non-commercial promotions such as charitable fundraising.

The previous Conservative government had proposed a bill known as the Data Protection and Digital Information Bill (DPDI), which would have amended Regulation 22 of PECR to extend the benefit of the soft opt-in rule where “the direct marketing is solely for the purpose of furthering a charitable, political or other non-commercial objective”. However, the DPDI did not make it through Parliament in time for the July general election and has now been supplanted by Labour’s own Data (Use and Access) Bill (DUA). The DUA is currently at the committee stage in the House of Lords, but unlike its predecessor it does not make any changes to the scope of the soft opt-in. One Liberal Democrat peer noted during the DUA’s first reading that “there are some regrettable omissions from the previous Bill, such as those extending the soft opt-in [that has always existed for commercial organisations] to non-commercial organisations, including charities”. The ultimate purpose of the charities’ letter, co-authored with the leading industry body, the Data & Marketing Association (DMA), is to push through an amendment to the DUA to extend the soft opt-in as was previously proposed by the DPDI.

The letter estimates that by extending the soft opt-in to charities, annual donations in the UK would increase by £290m. The letter also notes that:

“The omission of the soft opt-in will prevent charities from being able to communicate to donors in the same way as businesses can. As representatives of both corporate entities and charitable organisations, it is unclear to the DMA why charities should be at a disadvantage in this regard.”

The letter includes supporting statements from the various charities as well. The Macular Society’s fundraising director noted that fewer than 20% of their database had explicitly opted in to email communications, whereas reliance on a soft opt-in would considerably increase the charity’s reach and revenue. WaterAid’s fundraising manager criticised the preferential treatment currently afforded to businesses, claiming that:

“This disparity suggests that a person's relationship with a charity is valued less than with a retailer—an implication that is far from reality and undermines the essential support charities rely on to carry out their vital work.”

Whilst there is a discrepancy between businesses’ and charities’ access to the soft opt-in, the DUA does not discriminate when it comes to sanctions against organisations breaching PECR or related data protection legislation. The Bill is proposing to increase the maximum amounts that an organisation (business or charity) can be fined under PECR, including for a breach of the direct marketing/fundraising rules in that legislation. The maximum fine is currently £500,000 but will go up to £17.5m or 4% of one’s global turnover if the Bill is passed in its current form. Charities therefore face a “double whammy” of potentially much higher fines for their fundraising in breach of PECR, but without the benefit of the soft opt-in exception that the commercial businesses have enjoyed for some time now.

The DMA and charities’ letter states that an amendment will be tabled in the House of Lords to include the DPDI’s soft opt-in extension for charities in the DUA, but it remains to be seen whether this will be implemented. If the legislation is amended in favour of charities, it will undoubtedly present a promising fundraising opportunity. Some of the salient issues charities will then need to consider are:

Implementation: ie ensuring that internal systems can distinguish between recipients who have historically provided an express opt-in and those whose soft opt-in they are now relying on. Relatedly, charities will need to design and implement sufficiently clear, consistent and effective opt-out tools. It is not unheard of for organisations’ email software to ostensibly collect opt-out data but fail to action the opt-outs due to some error or deficiency, meaning that individuals keep receiving marketing communications in breach of PECR.
Consistency: PECR (and the DPDI’s updated wording) permit the soft opt-in for when you are promoting similar goods, services or charitable objectives. Charities must be mindful of this and avoid, for example, relying on the soft opt-in to advertise a third-party’s unrelated products.
Vigilance: Whilst more trivial instances of direct marketing in breach of PECR will probably not attract substantial fines, charities can ill afford to be sanctioned for breaches of the rules. The Information Commissioner’s Office (ICO), as the UK regulator for PECR and GDPR compliance, has various other enforcement powers aside from fines, including warnings and reprimands. Given the proposed increased fines for non-compliance under the DUA (and the ICO’s other powers), charities will need to be mindful of their new responsibilities when relying on soft opt-ins, including in relation to the points mentioned above.

This is a (potentially) pleasing development for charities and one which could afford substantial advantages for non-commercial and not-for-profit organisations, as well as posing new legal and compliance challenges. We will continue to provide advice and support to clients leveraging our extensive experience within the charities sector, as well our expertise on information law.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.