Due diligence is a crucial element of fundraising. If it’s reviewing a prospective donor’s financial background or identifying potential reputational risks, comprehensive due diligence analysis can help ensure that partnerships with philanthropists are both ethical and efficient.
The process is not without challenges. Inequal implementation and resource allocation can result in a sporadic method that is inconsistent, and could undermine donor trust. Additionally, data protection issues arise when non-profits do not protect sensitive information. In fact the misuse of donor information is a growing issue for all sectors particularly when it relates to major and principal gift fundraising.
It has never been more important to conduct thorough due diligence research. In the age of digital news is quickly spread and reputational damage – particularly for nonprofits – can be sustained for many years.
It’s essential to start early. If you wait until the opportunity has been identified, it is possible that reputational risks won’t be detected at the right the time. This could result in being wasting time and energy on a relationship that goes against your beliefs.
The key is to have an established, uniform policy with clearly defined criteria for review. It’s much easier for teams to recognize risks and tackle them before they become a major problem. It’s also beneficial to have an all-encompassing repository for all the due-diligence documentation so you can give them to investors on demand. This is where an automated and Clicking Here adaptable data room system can make all the difference.