Fundraising Due Diligence

Due diligence on fundraising is the process through which fundraising teams evaluate potential donors. This allows nonprofits to recognize potential risks that could negatively impact their mission or image. It also helps them make decisions on whether to pursue a prospect or not. In the age of the internet, embarrassing revelations are quickly spread and can have lasting effects. A fundraising team needs to be able to recognize and investigate potential risks as they arise or risk embarrassing the organisation and possibly losing 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 the extent to which they are sustainable. This involves looking at sales, top management teams and HR policies. Investors often conduct on-site inspections to observe the working environment and the culture of business.

It is vital to make sure you are following the correct funding procedure, as delays can reduce your fundraising goals and cause the loss of investor confidence in your startup. Ensure you have an organized and consistent policy with the workflow, decision-timelines and contacts and a communications outreach plan for your team.

The tool you use to screen donors should be able search across websites to verify identities, affiliations, and interests. This will save you lots of time and effort, and provide you with detailed reports that are easy to read and easily reproduceable. It is also a good idea to develop a list of red flags or triggers that your team should look for when examining potential clients. This could include international clients, unverified wealth sources, criminal activity or scandals and solicitations of an amount of money (including the naming gift).

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