Due diligence is a procedure which involves M&A costs a thorough investigation of any possible investments or contributions. Due diligence involves going above the surface and obtaining 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 them.
Recent scandals have damaged a number of charitable organizations’ reputations making it clear that they must conduct due diligence. For instance institutions that named buildings after convicted criminals from the US and UK were swiftly condemned by the media and subsequently lost a substantial amount of philanthropic donations.
However, critics argue that a rigid approach to due diligence can deter donors from generous giving. This view emphasizes the need for a balance approach that focuses on identifying reputational risks but does not place unreasonable large limits on a donor’s privacy rights.
It’s essential to have a secure, centralized platform that allows you to share and organize information with all stakeholders, whether for a fundraising or due diligence. This will make it easier to find relevant documents at the time of a request. It will also reduce the time required to locate important agreements. Virtual Data Rooms (VDR) are an effective tool for storing and organizing due diligence information as they allow you to host, index and share confidential documents with multiple users in one central location.
In addition to VDR, a single process of due diligence and fundraising is required to include public online data in order to aid in the identification 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 central, efficient and flexible data collection system that integrates this information from the public can increase the effectiveness of your efforts and assist you avoid costly mistakes.
