Due diligence is a procedure that involves a thorough examination of possible contributions or investments. It includes exploring the horizon to find evidence of claims made by the organization, such as contracts, performance testing results, and market research information. The goal is to find and minimize any risks that could negatively impact the organization.

The importance of thorough donor due diligence is highlighted by recent scandals that have damaged the reputation of several charitable organizations. Media criticized universities in the US and UK which named buildings after the convicted criminals. They lost substantial donations to philanthropy.

Some critics believe that a strict approach to due diligence could dissuade donors from making generous donations. This viewpoint emphasizes the need for a balance approach that is focused on identifying risks to reputation however, it does not put unreasonable large limits on a donor’s’ right to privacy.

It’s important to have a secure, central platform that is able to share and organize information with all stakeholders, whether it’s for the purpose of fundraising or a due diligence. This will help you quickly find the documents required and reduce the time it takes to locate important agreements. Virtual Data Rooms (VDR) are a popular tool for organizing and collecting due diligence information because they offer the ability to host index and share confidential documents with multiple users in one central location.

In addition to VDR, a unified process of due diligence and fundraising is required to include public online data in order to support Deal Flow Management the identification and assessment of reputational and operation risks. This vast collection 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 allow you to avoid costly mistakes.