In the fundraising world due diligence is a meticulous process through which potential investments or contributions are thoroughly examined. Due diligence involves looking beyond the surface to gather evidence of organization claims such as contract copies, performance tests and market research data. The goal is to identify any threats that could negatively impact the organization and limit their impact.
The importance of thorough donor due diligence is emphasized by recent scandals that tarnished the reputation of several foundations and philanthropic institutions. For instance the universities that named their buildings after criminals who were convicted in the US and UK were quickly attacked by the media and ended up losing an enormous amount of philanthropic money.
However, some critics believe that a strict approach to due diligence may deter donors from generous giving. This viewpoint emphasizes the necessity of a balancing approach that is focused on identifying risks to reputation, but doesn’t put unreasonable restrictions on the rights of donors to privacy.
It’s important to have a secure, centralized platform that is able to share and organize information with all parties involved, whether it’s for the fundraising or due diligence process. This will allow you to quickly find the documents needed and cut down on the time required to track down important agreements. Virtual Data Rooms are popular tools for organizing and collecting due diligence information. They allow multiple users to access, index and share confidential documents in a central place.
In addition to VDR, a single process of due diligence and fundraising should be able to integrate publicly available data to assist in the identification of and assessment of reputational and operation risks. This vast repository of publicly available information includes everything from news articles to corporate blogs, databases, and grey literature. A central, flexible and intelligent data collection process that can integrate this public information will improve the efficiency of your team’s efforts and read review make it easier to avoid costly mistakes.
