In the fundraising world due diligence is a thorough process through which potential contributions or investments are thoroughly scrutinized. It is about going beyond the surface to find evidence of claims made by the organization, such as contracts, copies of performance tests results and market research data. The objective is to identify and limit any risks that could adversely impact the organization.
The importance of thorough donor due diligence is evident in recent scandals that damaged the reputation of several charitable organizations. For instance institutions that named buildings after convicts in the US and UK were swiftly criticized by the media, and they lost significant amounts of philanthropic donations.
However, critics believe that a rigid approach to due diligence can deter donors from giving generously. This view emphasizes the need for a balanced approach that concentrates on identifying the risk to reputation but does not impose unreasonably excessive limits on donors privacy rights.
It is essential to have a secure and central platform that is able to share and organize information with all stakeholders, whether it’s for the fundraising or due diligence procedure. This will help you quickly find the documents that are needed and reduce the time needed to find important agreements. Virtual Data Rooms are popular tools to organize and collect due diligence information. They allow multiple users to access, index and share confidential data in a central location.
In addition to VDR and due diligence, a common process of due diligence and fundraising is required to include public data from the internet in order to support the identification and evaluation of reputational and operation risks. This vast pool of publicly accessible information varies from corporate blogs and news articles to countless databases and grey literature. A central, flexible and intelligent process for data collection that can incorporate this public information can boost the efficiency of your team’s efforts and help you avoid expensive mistakes.