Donor Due Diligence and Fundraising Processes
In the fundraising world due diligence is a thorough process through which possible contributions or investments are thoroughly scrutinized. Due diligence involves going above the surface and collecting evidence of claims of the organization, like contract copies, test results and market research data. The aim is to determine and eliminate any risks that may adversely impact the organization.
Recent scandals have damaged a number of charitable organizations’ reputations highlighting the need for thorough due diligence. Media criticized universities in the US and UK that named buildings for the convicted criminals. They were unable to recover substantial money from philanthropy.
Critics believe, however, that a strict approach to due diligence may discourage donors from making generous donations. This viewpoint emphasizes the need for a balanced approach that is focused on identifying the risk to reputation, however, it does not put undue limits on a donor’s rights to privacy.
It’s essential to have a secure and central platform that is able to share and organize information with all stakeholders, regardless of whether it’s for a fundraising or due diligence. This will allow you to quickly locate the documents you require and will reduce the time required to locate important agreements. Virtual Data Rooms (VDR) are an extremely popular tool for storing and organizing due diligence information as they allow you to host, index and share confidential documents with multiple users https://dataroompro.blog/what-is-a-capital-call/ in a central location.
In addition to VDR and due diligence, a unified method of due diligence and fundraising should be able incorporate public data from the internet in order to assist in the identification and evaluation of reputational and operation risks. This vast collection of publicly available data includes everything from news articles to corporate blogs, databases, and grey literature. A central, efficient and flexible data collection process that incorporates this information available to the public can enhance the effectiveness of your efforts and assist you avoid costly mistakes.
