Nov 11, 2024
Due diligence is a vital element of fundraising. Due diligence research is essential to ensure that philanthropic relationships are productive and ethical.
The process is not without its challenges. Uneven implementation and allocation of resources can result in a sporadic and inconsistent approach, which has the potential to affect trust between donors. In addition, data protection concerns board management arise when nonprofits do not protect sensitive information. In fact, the misuse of donor information is becoming a major concern for all industries especially when it comes to major and principal donation fundraising.
The need for comprehensive due diligence research has never been more pressing. In this age of information, news propagates quickly and reputational harm can last a long time, especially for non-profit organizations.
It is also crucial to begin early. It’s not a good idea to wait until a prospect is identified and analyzed often means that reputational risk issues are identified too late, thereby wasting money and time on a relationship that goes against your organization’s values.
The key is having an unifying, standardized policy that has clearly defined criteria for reviewing. It is easier for teams to recognize risks and tackle them before they become a major issue. A centralized repository for all due diligence documents is beneficial, too to be able to offer them to investors at the drop of a hat when the need arises. This is where an automated and adaptable data room system can make all the difference.