Due diligence is a crucial element of fundraising. Due diligence research is crucial to ensure that philanthropic partnerships are productive and ethical.
The process is not without challenges. Unequal implementation and resource allocation can lead to a patchy and inconsistent approach, which 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 comes to major and principal donation fundraising.
The need for thorough due diligence research has never been more urgent. In the age of digital news quickly spreads and reputational damage – particularly for non-profit organizations – can last for quite a long time.
It’s also important M&A costs to start early. If you wait until the prospect has been recognized, it’s possible that reputational risks won’t be discovered in the right time. This could result in spending time and money in a partnership that goes against your ideals.
The key is to establish a standardized, unified policy with clearly defined criteria for review. This makes it easy for teams to identify and take action on risks before they become a problem. It’s also helpful to have an centralized repository for all due diligence documents so you can give them to investors upon request. A scalable automated data room can make a huge difference.
