In the fundraising world due diligence is a careful process where possible contributions or investments are thoroughly analyzed. Due diligence involves going above the surface to gather evidence of claims made by the organization such as contract copies, performance tests, and market research data. The aim is to determine any threats that could negatively impact the organization and limit their impact.
Recent scandals have tarnished a variety of philanthropic organisations’ reputations, which highlights the need for thorough due diligence. Media has criticized universities across the US and UK that named buildings for convicted criminals. They also lost substantial philanthropic funds.
However, some critics believe that a too strict approach to due diligence can deter donors from generous giving. This viewpoint emphasizes the necessity of a balancing approach that focuses on identifying reputational risk however, it does not put undue restrictions on a donor’s right to privacy.
It is essential to have a safe, central platform that allows you to share and organize information with all parties involved, whether it’s for an event like a fundraising or due diligence procedure. This will aid in the search for relevant documents at the time of a request, and reduce the time needed to find important agreements. Virtual Data Rooms (VDR) are an extremely popular tool for organizing and collecting due diligence data since they are able to host, index and share confidential documents with multiple users in one central location.
In addition to VDR and due diligence, a unified method of fundraising and due diligence should be able to integrate public online data in order to assist in the identification of and evaluation of reputational and operational risks. This vast repository of publicly accessible data covers everything from news articles to corporate blogs, databases, and grey literature. A centralized, intelligent and flexible data collection process that integrates this information from the public can increase the efficiency of your efforts and assist you avoid costly errors.
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