Fundraising Due Diligence

You can see on Shark Tank and over here other business shows how a shrewd pitch can be destroyed when the past of a potential client is exposed. They might reveal the pending suit, a hidden credit card debt, or other issues that keep them from giving you money. This is known as due diligence or DD, and it’s what fundraising teams have to 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 fundraising due diligence procedure differs depending on the stage of your company’s growth and industry. It is crucial to keep in mind that this is a crucial phase in the growth of your business, especially when you’re seeking investment from venture capitalists.

Investors will want to understand the significant dangers that could stop your company from realizing its full potential. Investors want to know the specific risks that could hinder your business from achieving its full potential.

Educational establishments and non-profit organizations also conduct due diligence on prospective donors to ensure they’re mission and values coincide with the charitable donations they’re looking to make. They’ll also take into consideration how a gift will affect the organization’s leadership and operations, and in some instances the possibility that a specific project is at risk of being overwhelmed by an unjust influence from a supporter.

The creation of a clear uniform risk rubric that will guide the due diligence process of prospective donors will allow you to simplify DD efforts and speed up timelines for fundraising. This will allow your company to avoid having to start again after an unexpected setback or delay. Keeping a dataroom that is “DD ready” will help you cut down on legal costs and ensure you can provide potential clients with the information they need to make a decision.