Due diligence is a crucial element of fundraising, mergers and acquisitions, and corporate finance. It is also a crucial element of donor research and a thorough due diligence investigation can help identify potential risks to reputation and guide teams in the creation of comprehensive donor profiles. Many organizations are reviewing their due diligence practices in light of recent scandals that have involved universities naming buildings for people who committed financial crime.
A thorough due diligence analysis isn’t a simple task and is only achievable if your team has the right tools at ready. Even the largest teams be a challenge to navigate through the growing seas of publicly available data online, including corporate blogs, news media, and even grey literature. Tools for specific software are required to manage, organize, and distribute this information.
The COVID-19 pandemic has increased the development and use of new techniques and tools to identify potential reputational risk in donors, and reduce the time required to conduct donor research. However despite the rapid development of methods and techniques in this field it is vital that institutions preserve the most essential elements of their due diligence process, including the need for thorough background research about donors and their families and the need to develop clear and consistent guidelines to limit the risk of reputational damage and accepting gifts from potential donors.
Due diligence is a concept that will be familiar to anyone who has watched Shark Tank, or any other show where millionaires put entrepreneurs starting their own businesses through the ring. Investors are not likely to invest in a business unless they are 100% satisfied with the financial, operational, legal, taxation and compliance information and documents presented to them. This is read review why it is vital for startups to prepare themselves for the due diligence process in advance, by having all documents and information ready for investors prior to the start of a pitch.