Fundraising due diligence is the method by which fundraising teams evaluate potential donors. This helps nonprofits identify the potential risks that could affect their mission or reputation. It also assists them in making choices about whether to pursue a prospective client or not. In today’s world of technology, the news of damaging events can be spread quickly and can have a lasting impact. A fundraising team must be able to identify and evaluate potential risks as they arise or risk embarrassing the organization and possibly wasting valuable resources in the form of staff time and donations.
Investors conducting due diligence during fundraising should be aware of the day-today operations of your startup and how long-lasting they can last. This includes analyzing sales, top management teams and HR procedures. It is also common for investors to make on-site visits to see the business environment and work environment firsthand.
It is vital to ensure that your fundraising process is in order, as delays can eat into your fundraising goals and result in the loss of investor confidence in your startup. Make sure you have a consistent and clear policy for your team including workflows Discover More decisions, deadlines for decisions, contacts, and a communication outreach plan.
Your donor screening tool should be able of searching across online sources to verify the authenticity of the donor, their affiliations, as well as interests. This can save time and effort, and give you comprehensive reports that you can easily replicate. It is also an excellent idea to create a list of red flags or triggers that your team should be looking at when investigating potential buyers. This may include things like international prospects, unverified sources of wealth, well-known criminal activity or scandals, and solicitations for more than the threshold of a certain amount (including namesake gifts).