Due diligence is a process that involves a thorough examination of potential investments or contributions. Due diligence involves going beyond the surface and obtaining evidence of organization claims such as contract copies, performance test results and market research data. The objective is to identify and minimize any risks that may negatively impact the organization.
Recent scandals have tarnished several charitable organizations’ reputations highlighting the need for thorough due diligence. For instance institutions that named buildings after criminals who were convicted in the US and UK were quickly condemned by the media and subsequently lost an enormous amount of philanthropic money.
Critics believe, however, that a strict approach to due diligence may dissuade donors from making generous donations. This argument argues for a balance approach that concentrates on identifying the risk to reputation however, it does not put unreasonable high limits on a donors privacy rights.
It’s essential to have a secure and central platform that is able to share and organize information with all stakeholders, whether it’s for an event like a fundraising or due diligence. This will make it easier to find relevant documents at the time of a request, and reduce the time spent searching for important agreements. Virtual Data Rooms are popular tools due diligence and fundraising processes to organize and collect due diligence data. They permit multiple users to access, index and share confidential files in a central place.
In addition to VDR software and a unified fundraising and due diligence program should be able incorporate public online data to support the recognition of operational and reputational risks. This vast repository of publicly accessible data covers everything from news articles to corporate blogs, databases, and grey literature. A central, efficient and flexible data collection process that integrates this information from the public can increase the effectiveness of your efforts, and also help you avoid costly errors.