In the fundraising world, due diligence is a careful procedure whereby potential contributions or investments are thoroughly examined. It is about looking beyond the surface to discover evidence of the claims of the organization such as contracts, performance testing results, and market research data. The goal is to identify and limit any risks that could negatively impact the company.
Recent scandals have damaged a number of charitable organizations’ reputations highlighting the need for thorough due diligence. For instance institutions that named buildings after convicts in the US and UK were quickly condemned by the media and subsequently lost an enormous amount of philanthropic funding.
Critics believe, however, that a strict approach to due diligence could dissuade donors from making generous donations. This viewpoint emphasizes the need for a balance approach that focuses on identifying reputational risks but doesn’t impose unreasonable large limits on a donor’s privacy rights.
It is essential to have a secure, central platform that can share and organize information with all stakeholders, whether it’s for the fundraising or due diligence. This will let you quickly locate the documents you require and cut down on the time required to track down important agreements. Virtual Data Rooms (VDR) are an effective tool for storing and organizing due diligence information as they are able to host index and share confidential documents with many users in one central location.
In addition to VDR software as well as a unified fundraising due diligence process must be able to integrate public data on the internet to assist in the identification of reputational and operational risks. This vast resource of publicly available information ranges from news articles and corporate blogs to numerous databases and grey literature. A centralized flexible and flexible data collection process that is able to incorporate this public information will improve the efficiency of your team’s activities and help you avoid expensive mistakes.
