If you watch Shark Tank or other business shows, you can see how a smooth pitch and a confident appearance could suddenly be ruined when a prospective client’s history is exposed. They may reveal the pending litigation, a hidden debt or some other issue that stops them from donating their money. This is due diligence–or DD–and it’s what fundraising professionals must do to ensure that their prospective customers and donors safe from legal, financial and reputational risks as well as compliance.
The amount and depth of documentation requirements of a due diligence process differs based on the stage of your company’s growth and industry. It is important to remember that this is a crucial stage in the development of your business, particularly if you are seeking investment from venture funds.
Investors will want to understand the risks that could prevent your company from realizing its full potential. Investors want to know the specific risks that could prevent your company from realizing its full potential.
Educational institutions and nonprofits also conduct DD on potential donors to ensure that their mission and values are in line with the charitable contributions they’re seeking to eurodataroom.com make. They’ll also consider the impact a donation could have on the organization and its leadership, in some cases the possibility that a specific project is at risk of being overwhelmed by an improper influence from a supporter.
A clear, consistent risk rubric to guide the due diligence process for prospects will help you reduce DD efforts and accelerate the timeframe for fundraising. This will allow your company to avoid having to re-start after an unexpected setback, or delay. Additionally, having an area for data storage that is “DD ready” will reduce your legal costs and allow you to provide prospective clients with all the information they need to make a decision.
