Fundraising Due Diligence

Due diligence in fundraising is a method that fundraising teams use to evaluate potential donors. This helps nonprofits recognize potential risks that could negatively impact their mission or their reputation. It also assists them in making choices about whether to pursue a prospect or not. In the digital age embarrassing revelations are quickly spread and can have lasting effects. A fundraising team needs to be able to spot and evaluate potential risks as they arise, or risk embarrassing the organisation and possibly losing valuable resources in the form of time for staff and donations.

Investors who are conducting due diligence on your startup will want be aware of how long-lasting the company’s operations are. This includes examining sales, top management teams and HR policies. It is also common for investors to conduct visits on the spot to see the working environment and culture firsthand.

It is essential to make sure you are following the correct funding procedure, as delays can reduce your fundraising goals and result in a loss of investor confidence in your startup. Ensure you have an organized and consistent policy with deadlines for decisions, workflows, contacts, and a communication outreach plan for your team.

Your donor screening tool will be able to search online sources to confirm identity, affiliations, and interests. This can save you a lot of time and effort and provide you with detailed reports that are easy to read and easily reproducible. It’s also a good idea for your team to create a list of red flags or triggers they should be aware of when analyzing potential clients. This could include things like international prospects, sources of wealth that are not verified of wealth, known criminal activity or scandals, and solicitations above an amount of money (including the naming of gifts).

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