Due diligence is a key element of fundraising processes in mergers and acquisitions and corporate finance. Due diligence is an essential component of research on donors. A thorough investigation can help identify possible risks to reputation and guide teams in the creation of complete donor profiles. Many organizations are re-evaluating their due diligence procedures in light recent scandals that have involved universities naming buildings after criminals who committed financial crime.
A thorough due diligence audit isn’t a simple task and can only be accomplished if your team has the right tools at hand. Even the largest teams struggle to navigate through the growing seas of publicly available data online, including corporate blogs, news media and the grey literature. Specialized software tools are needed to manage, organize and share this information.
The COVID-19 pandemic has accelerated the development and application of new tools and techniques to detect potential risks to reputation in donors and cut down the time needed to conduct research on donors. Despite the rapid development of tools used in this field institutions must keep the most essential aspects of their due-diligence processes including the need to conduct thorough background checks on donors and their families and the need for clear and consistent policies for limiting risks to reputation and accepting donations from donors.
Anyone who has watched Shark Tank or any show where millionaire investors put startup entrepreneurs through their paces will be familiar with the concept of due diligence. Investors will not invest in a company until they are satisfied with the financial, operational, legal, taxation and compliance documents and data presented to them. It is important that startups prepare for the due diligence by preparing all documents and information in advance.