I’m working with one of my very favorite people right now to help her craft a new due diligence policy for her nonprofit. A lot of executive directors and chief fundraising officers are understandably antsy in the wake of the Jeffrey Epstein and Sackler scandals, and my client wants to avoid future issues (to the highest degree possible) and create a protocol for her nonprofit to follow, as well as a checklist of sources for her research team to use. It’s been an interesting and fun exercise posing questions, doing our own research, and helping her figure out the right strategy for them.
Some of the questions that have come up in this process that I thought you might be interested in are:
- What are the trigger points that indicate due diligence research must happen? Is it a gift/solicitation level? Involvement level?
- What specific resources are available, and which will we use to do this research?
- What should our budget be?
- Will we outsource this work? Do some in-house and outsource some?
- What are other research shops doing?
- What priority will due diligence research have compared to other forms of research?
- What format should our due diligence research be presented in? Should there be an executive summary? Color-coded or numbered warning levels?
- Based on our organization type, are there some donors from whom we will never accept money based on their primary source of income? (alcohol, tobacco, pornography or firearms, for example)
- Should we create a review committee that meets monthly (or more often?) to review the due diligence research and make determinations about cultivation or gift solicitations that can go forward (or not)?
- Who has ultimate veto power if the due diligence indicates issues with a prospect but the fundraiser wants to go forward?
Together, my client and I are amassing a list of useful resources. Some of them are guidelines or overviews that others have created, such as the (UK) Charity Commission’s “Guidance on carrying out due diligence checks on donors, beneficiaries and local partners” and the (UK) National Audit Office’s “Due diligence processes for potential donations” The latter publication is more geared toward art museums but it has valuable information for any nonprofit.
We’re also putting together a list of resources that can be used as a research checklist each time due diligence research is done. Using a research checklist is always a great way to stay organized, but for due diligence research it’s particularly important so you can be sure you’ve quite literally ticked off all the boxes.
Its format hasn’t yet been determined, but at the moment we’re leaning toward a spreadsheet so that any information found by the researcher can be captured directly on the form.
Are there guides to follow?
Our UK prospect research colleagues have been doing due diligence research for quite a bit longer than we have here in the States and we have a lot to learn from them, even if the specific resources we use might be slightly different. It’s pretty easy to just swap out their resource of 192.com for portions of our version of Lexis Nexis when you figure out what they’re using 192 for. In other cases, the resources will be the same, for example Interpol’s ‘most wanted’ database called “Red Notices.”
As you decide to create your own due diligence research policy and create your checklist, you will be happy to know that some organizations have published theirs online.
Amongst the several available online, the University of Edinburgh has published “Procedures for the Due Diligence Review of Donations” as a helpful example. Also online are policies from the London School of Economics as well as the Universities of East Anglia, Leicester, Kent, and more, so you have plenty of great guides (and some checklists) to choose from if you want to do a search to find others.
If you’ve found others, or if you have published one of your own, please let all of us know in the comments!