Fundraising due diligence is the process by which fundraising teams scrutinize potential donors. This helps nonprofits recognize potential risks that could impact their mission or image. It aids them in deciding whether or not to pursue a certain prospect. In this digital age, damaging revelations can spread quickly and have lasting consequences. A fundraising team needs to be able to determine and assess any potential risks that might arise. Otherwise they could be embarrassed by their organisation and losing valuable resources like staff time and donations.
Investors who are conducting due diligence on your startup will want know how sustainable the company’s operations are. This includes examining the top management teams, sales and HR processes. It is also common for investors to conduct visits to the site to experience the workplace environment and culture firsthand.
It is crucial that you ensure that you have the right funding process. Delays can lead to failure to meet your fundraising goals and a loss of investor confidence in your startup. Ensure you have an organized and consistent policy with timelines for workflows, decision-timelines, contacts, and a plan for communication outreach for your team.
Your donor screening tool will be able to search websites to verify identities, affiliations, and interests. This can save time and effort, and provide complete reports that you can easily replicate. It’s also a good idea to have your team create a list of red flags or triggers that they should look out for when analyzing potential clients. This could include international prospects or sources of wealth that are not verified, criminal activity or scandals, and solicitations for a certain dollar amount (including namesake gifts).