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What to Expect When Adding Due Diligence to Your Donor Research Workflow

November 02, 2022

We’ve all seen the evidence on the nightly news and in social media feeds.

When a person closely associated with a charitable organization becomes the subject of a scandal, the organization’s reputation can be tarnished too. And this isn't just people who work with your organization. 

The players that can impact your reputation include:

  • High-value donors
  • Prospective board members
  • Corporate sponsors
  • Partner foundations
  • International donors
  • Celebrity spokespersons

That's why adding due diligence to your donor research workflow is paramount to the protection of your organization. And this is when a diligence tool can make your life 10x easier. 

Why donor due diligence is important

When negative news surfaces, donors lose trust. Corporate donors may withdraw support. The financial fallout of reputational damage can devastate your ability to fundraise to further your mission.

Case in point: When a cheating scandal embroiled the brand ambassador of one well-known cancer non-profit, the organization lost a major corporate sponsor—one that helped the organization raise $100 million. In addition, in just a three-year period, the non-profit saw revenue decline from $47 million to less than $17 million.

Furthermore, Give.org survey found that 63% of people say that trusting a charity is essential to spur giving. So conducting due diligence on individuals or entities that could impact your reputation—and your ability to successfully fundraise—helps you protect your mission.

Protecting your reputation with donor due diligence pays dividends

The survival of your organization depends on having a positive reputation. It can help you:

  • Win more donors
  • Inspire confidence in your organization’s ability to achieve its mission
  • Encourage community collaboration
  • Turn donors into champions for your cause
  • Attract passionate employees and volunteers

In addition, when a crisis arises, having a solid reputation makes it more likely that your donors give you the “benefit of the doubt”—especially if you’ve been proactive about mitigating reputational risk and handle the crisis with transparency. As Warren Buffet famously said, “It takes 20 years to build a reputation and five minutes to ruin it.” By putting together a solid donor research and due diligence process, you can better protect your reputation and your ability to move your mission forward.

Efficient donor research and due diligence demands the right tools

As a development professional, you probably wear many hats. Donor research is just one of many tasks you need to accomplish in a day. Adding due diligence to the mix can feel overwhelming, especially if you rely on open web search. Instead of finding relevant information quickly, you have to dig through results that are destined to surface promoted content first.

The challenge is made even greater because of the amount of misinformation, disinformation, and out-of-date data available on the open web. You can spend an excess amount of time just verifying sources of information to determine its reliability.

Instead of inefficient open web search for donor research and due diligence, consider platforms built for your intended purpose. Look for a due diligence solution that features a comprehensive collection of sources—all in one place.

  • News: General news helps you stay alert to trends, but for mitigating reputational risk, you’ll want the ability to narrow in on negative news. Given the increased focus on environmental, social and governance (ESG) commitments, it’s also useful to have the option to narrow to ESG news. Not only can this help you identify donors who might NOT be a good fit, but it can also help you identify prospects who align with your own mission.
  • Sanctions, watchlists and PEPs lists: Geo-political volatility like we’re currently experiencing means that sanctions and PEPs (politically exposed persons) are changing rapidly. Doing business with a sanctioned individual or entity could do more than put your reputation at risk; it can lead to regulatory risk and fines.
  • Legal news: This type of news can help you see if an individual or entity has a litigious past that could put your organization in jeopardy.
  • Company and executive information, including beneficial ownership: When it comes to corporate sponsors, you need to look beyond the entity itself. For example, a company may have hidden beneficial owners who might not be a good association for your non-profit. Likewise, corporate hierarchies can show tangential relationships that could prove problematic or another likely corporate sponsor, but the only way you’ll know is to do your due diligence.

Beyond offering these and other types of sources, make sure that the platform you choose offers both pre-and post-search filtering so that you can quickly narrow down results to what matters most. You should also consider the sharing capabilities, such as the ability to set up Alerts for ongoing monitoring of key individuals and organizations. With due diligence, it’s also important to have report-building capabilities so you can maintain an audit trail of your work.

 

Use Nexis Diligence and Nexis Donor Profile for next level donor research

If adding another step to your donor research sounds like just adding more work to your already full plate, that's where Nexis can help. Our industry-leading slate of research tools can help you source prospects and make sure they pass a due diligence test. 

Sign up for a 7-day free trial of both Nexis Diligence and Nexis for Donor Professionals and get started on next-level research today.