Due diligence is a procedure which involves a thorough investigation of any potential contributions or investments. Due diligence involves going beyond the surface to gather evidence of the claims of the organization such as contract copies, tests and market research data. The goal is to identify any threats that could negatively impact the organization and limit them.
The importance of ensuring that donors conduct due diligence is evident in recent scandals that tarnished the reputation of several philanthropic organizations. The media has criticized universities in the US and UK that named buildings after the convicted criminals. They lost substantial philanthropic funds.
However, critics argue that a strict approach to due diligence may deter donors from making generous donations. This view emphasizes the need for a balance approach that concentrates on identifying potential risks to reputation however, it does not put unreasonable excessive limits on donors privacy rights.
It is essential to have a secure, centralized platform that allows you to share and organize information with all stakeholders, whether for an event like a fundraising or due diligence process. This will Deal Flow Management help you locate relevant documents at the time of a request and will reduce the time needed to find important agreements. Virtual Data Rooms (VDR) are an extremely popular tool for organizing and collecting due diligence information as they are able to host index and share confidential documents with multiple users in one central location.
In addition to VDR, a unified process of due diligence and fundraising should be able incorporate public data on the internet to aid in the identification and evaluation of reputational and operational risks. This vast collection of publicly available information includes everything from news articles to corporate blogs, databases and grey literature. A centralized, intelligent and flexible data collection method that incorporates this information available to the public can enhance the effectiveness of your efforts and allow you avoid costly errors.