Due diligence is a vital element of fundraising processes. If it’s reviewing a prospective donor’s financial history or identifying potential reputational risks, comprehensive due diligence research can help ensure that philanthropic partnerships are ethical and productive.
However the process isn’t free of challenges. Inconsistent implementation and resource allocation may lead to an inconsistent method that could affect the trust of donors. Concerns about data protection can also arise when nonprofits do not comply in their obligation to safeguard sensitive information. In reality, the misuse of donor information is an increasing concern for the entire sector, particularly when it comes to major and principal donation fundraising.
The need for comprehensive due diligence research has never been more urgent. In this age of information, news propagates quickly and reputational harm can last a long time, especially for non-profit organizations.
It’s also important to start early. It’s not a good idea to wait until a prospect has been identified and developed typically means that the risk of reputational damage is discovered too late, which could result in wasting time and resources on a relationship which is against the organization’s core values.
It is essential to have a consistent unifying policy that has clearly defined guidelines. This will make it easier for teams to identify and address risks before they become a problem. It’s also helpful to have an centralized repository for all documents related to due diligence in order to make them available to investors on demand. A scalable and automated data room can make a big difference.