Due diligence in fundraising is the method used to ensure that fundraising teams evaluate potential donors. This allows nonprofits to identify the potential risks that could affect their mission or their reputation. It aids them in deciding whether or to pursue a specific possibility. In the digital age embarrassing revelations can go viral quickly and can have lasting effects. A fundraising team must be able identify and investigate any potential risks that might arise. Otherwise they could be embarrassed by their organization and losing precious resources such as staff time and donations.
Investors conducting fundraising due diligence will need to know the day-today operations of your startup and how long-lasting they are. This includes looking at the management team, sales and HR policies. It is also typical for investors to make visits on the spot to see the workplace environment and culture in person.
It is important that you make sure you are following the correct funding procedure, as delays can affect your fundraising goals and result in an erosion of investor confidence in your startup. Be sure to have a clear and consistent policy involving workflows, decision-timelines, contacts and communication outreach plan for your team.
The tool you use to screen donors should be able to search through online sources to verify the identity, affiliations, and interests. This will save time and effort, and provide complete reports that you can easily replicate. It’s also recommended for your team to develop a list of red flags or triggers they should keep an eye on in their research of potential buyers. These could include international potential customers and unsubstantiated wealth sources. criminal activity or scandals and solicitations for the amount of a certain amount (including name gifts).
https://eurodataroom.com/fundraising-due-diligence-checklist/