An Insider's Guide to Donor Due Diligence
I love major gifts fundraising because it offers my clients, who are charity and non-profit leaders, with the opportunity to massively scale up their impact on the world.
Did you know it takes as much effort to raise $100k as it does $10k? This is why 'major gifts' is 2nd from the top of the list (behind 'bequests') when the different types of fundraising are ranked for their return on investment.
So if you are leading a charity or non-profit, you really need to focus much of your fundraising time on major gifts.
And when you do, it helps to have insights into how major donors think and the 'due diligence' questions they will ask of you so you can be on the front foot.
Donor due diligence
Philanthropy is changing. Funders (or 'major donors,' I use the terms interchangeably) are being inspired to make the most significant impact possible as part of a new movement call "high impact philanthropy." The leaders of this movement are encouraging more donors to undertake due diligence on charities and non-profits before they give.
The process starts when you ask a major donor for a gift (or someone recommends your non-profit or your leaders without your knowledge), and this triggers an initial review.
The initial review
When a philanthropist receives your proposal, the first step is to review it and to consider the alignment of your non-profit and project with their own criteria. These criteria are based on their unique interests, and they might be written down or just kept in mind.
If your non-profit or your leaders have been recommended to a funder and you aren't aware that they are examining you, there is no proposal to consider. But this won’t stop a donor from trying to deduce how you are seeking to solve an issue and how you might make use of their money!
The early stages of due diligence
If the initial review is positive, some form of due diligence will typically follow involving broader research and information gathering.
The donor, or their advisors, will try and get a basic understanding of your non-profit and their staff, and how it fits into the broader field in which you operate. They will undoubtedly examine your website, and they will likely do this anonymously.
An objective is to understand how your project will advance the donor's philanthropy strategy or theory of change. They might also contact colleagues and experts in the field for their view of your organisation, your leaders, and your work.
Congratulations, you passed the first stage!
If you pass this initial stage, a funder will then get back to you regarding your proposal (or they might get in touch “out of the blue”). They now want to get to know you on a deeper level, and this will involve more detailed due diligence questions.
But what about the non-profits that get reviewed and have their proposals politely rejected, or they don’t receive a call from a donor because they don’t know that they have been examined (and rejected).
Ask yourself, if a donor was to undertake an initial review of your non-profit, would you likely pass?
Your non-profit’s website is akin to your resume or CV. Have you done all that you can to give the best possible first impression?
If it helps you, I can assess your website as a major donor would and give you pointers on how to answer their initial due diligence questions. Follow this link to book your assessment now (or send me a message): www.samhardyphilanthropy.com.au/book-online/proposal-feedback-service
If you want to learn more, here is an excellent article about 'Due Diligence in Philanthropy' from Generosity Magazine: www.generositymag.com.au/what-is-due-diligence-in-philanthropy/