Due diligence in fundraising is the process that fundraising teams employ to assess potential donors. This helps nonprofits recognize any potential risks that could impact their mission and image. It also helps them make decisions on whether to pursue a potential donor or not. In this age of digital technology, devastating revelations can be shared quickly and can have lasting consequences. A fundraising team must be able to recognize and evaluate potential risks as they arise or risk embarrassing the organisation and possibly losing valuable resources in the form of time for staff and donations.
Investors who are conducting due diligence on your startup will want be aware of how sustainable your business operations are. This involves looking at sales, top management teams and HR procedures. Investors typically conduct inspections on site to observe the workplace and the corporate culture.
It is crucial to get your funding process right as delays could eat into your fundraising goals and lead to an erosion of investor confidence in your startup. Make sure you have a clear and consistent process that includes workflows, decision-timelines, contacts and a communications outreach plan for your team.
Your donor screening tool should be able search across online sources to verify the authenticity of the donor, their affiliations, as well as interests. This will save you a lot of time and effort, and provide you with comprehensive reports that are easily read and easily reproduceable. It’s also recommended for your team to make a list of warning signs or triggers they should be looking for in their research of potential buyers. This could include international clients and unsubstantiated wealth sources. scandals or criminal activity, and solicitations of an amount of dollars (including naming gift).
