In the world of fundraising, due diligence is a meticulous process where potential contributions or investments are thoroughly examined. It involves exploring the horizon to find evidence of claims made by the organization, such as contract copies, performance test results, and market research data. The aim is to determine and reduce any risks that may adversely affect the business.
The importance of thorough donor due diligence is highlighted by recent scandals that damaged the reputation of several charities. For instance universities that named their buildings after convicted criminals from the US and UK were swiftly condemned by the media and subsequently lost significant amounts of philanthropic money.
Critics believe, however, that a strict approach to due diligence could hinder donors from making generous donations. This perspective emphasizes the need for a balanced approach that is focused on identifying risk to reputation however, it does not put undue limits on a donor’s rights to privacy.
It’s essential to have a safe, central platform that allows you to share and organize information with all stakeholders, whether for a fundraising or due diligence process. This will help you quickly locate the documents required and will reduce the time needed to find important agreements. Virtual Data Rooms are popular tools for storing and archiving due diligence information. They permit many users to access, search and share confidential files in a central location.
In addition to VDR, a unified process of due diligence and fundraising is required to include public online data in order to assist in the identification and evaluation of reputational and operational risks. This vast pool of publicly accessible information spans from corporate blogs and news articles to a myriad of databases and grey literature. A central, flexible and intelligent data collection process that can incorporate this public information can boost the efficiency of your team’s activities and ensure that you don’t make costly mistakes.