There are several ways nonprofits can work risk mitigation into major-gift fundraising programs. Whether it is through diligence of existing major gift programs, due diligence of board members and trustees, or around their entire organization. Nonprofits differ in terms of their resources to support donor due diligence needs and research. This can leave some nonprofits with more gaps than others.
Some organizations may lack personnel resources to support their due diligence needs. While other organizations have many stakeholders with a complex gift approval process. All nonprofits can benefit from practical solutions to ensure their due diligence strategies are seamless and easy to implement.
Fortunately, all nonprofits can improve their risk mitigation for gifts at all levels (principal gift, major gifts etc). Even organizations with small teams or limited resources can achieve a sophisticated approach. That’s because they can leverage partner resources as part of their diligence workflows.
In this article, development and fundraising teams from a variety of nonprofit clients share how they approach and implement diligence measures during the gift acceptance process. Additionally, this article explores how any nonprofit can improve their due diligence efforts with the support of partners.
Diligence differs across the full range of nonprofits
Nonprofits differ greatly in the sophistication of their due diligence research. Some nonprofits have large teams dedicated solely to research on mitigating risk. Others have smaller teams, sometimes a team of 1-2 individuals, who may be working side-of-desk. Most organizations lie somewhere in between.
“Due diligence is an intense, in-depth process,” as the director of prospect development at a renowned healthcare system describes. “Now, we are in a period of intense expansion—there is an increased focus on information about our donor population.”
Institutions like this may employ multiple strategies for mitigating risk. “Our solutions have to be dynamic,” says the director. They often devote larger teams whose members have specialized roles.
Other nonprofits have fewer resources to devote to the diligence process. Some are only “in their infancy” in terms of donor due diligence, as a prospect development leader at a cancer center describes. One of this organization’s biggest challenges is their lack of a committee to weigh in on decisions.
Meanwhile, virtually all nonprofits rely on at least some tedious manual tasks. These tasks can impact the rigor of their due diligence processes. Fundraisers may find they are forced to prioritize other tasks over diligence efforts as a result. Organizations of all sizes are constantly being asked to do more with less.
Today’s fundraisers face evolving diligence challenges
Now, all nonprofits face increased reputation, regulatory, and financial risks from potential donor scandals. These risks have grown as new environmental, social, and governance (ESG) and diversity, equity, and inclusion (DEI) requirements become more common among fundraising teams.
“The university’s focus on due diligence has increased as stakeholders demand more from our efforts,” says the assistant director of due diligence from a leading university. “ESG risks are taking center stage alongside more traditional risk factors as well.”
Geopolitical and ethical considerations have increased due to global conflicts like the war in Ukraine. Local political strife also adds to concerns about accepting some donations.
“We’ve had to be more aware of how state and national politics play into DEI,” says the director of portfolio optimizations at a top U.S. university. “We have to be aware of any potential backlash in that area connected to donors’ political contributions.”
Fundraisers must transform their workflows in response to these new challenges. But this can be difficult for nonprofits lacking resources. “The more our colleagues know about due diligence, the more they want from it,” says the director of due diligence at a technical institute. “That’s a good thing, but it’s becoming time consuming.”
Improving risk mitigation with partner support
All fundraisers recognize the importance of risk mitigation—no matter their nonprofit due diligence strategy. Some nonprofits have well defined, and mature best practices; while other organizations are still in the infancy stages. It’s important that diligence efforts help organizations accept donations from people or companies that align and support their mission. It should compliment the rest of their fundraising goals and integrate, as seamlessly as it can, into their day to day objectives.
With the right partnerships, fundraising teams of all sizes can address these risks and meet their fundraising goals. They can:
- Embed and implement due diligence strategies into existing workflows
- Keep up to date on potential risks factors
- Create parameters for ongoing monitoring of information, such as when an individual makes a naming gift
- Allocate adequate resources and staffing to support the diligence process
Partners can expand on and validate nonprofits’ internal diligence efforts. This validation can resonate internally, which is critical for multiple stakeholders. “We know these prospects and what is going on in their lives, and we keep the board informed,” as one director of prospect development describes.
For other nonprofits, support can help close gaps in their due diligence workflows. For example, with the support of Altrata’s global research team, a nonprofit can:
- Achieve third-party validation where there is internal doubt
- Proactively identify and address donor risk promptly
- Enrich internal research processes and fill gaps especially while engaging with potential international donors
- Qualify potential donors quickly, reducing their workloads
Supporting diligence that drives lasting donor relationships
Modernizing due diligence in the nonprofit world reduces reputational, regulatory, and financial risk. Altrata supports a hands-on diligence process that sets it apart from competing solutions. Its offerings enables teams of all sizes meet their evolving fundraising goals.
Wealth-X, an Altrata company, has been working with nonprofits for over a decade to support their fundraising and development goals, including their diligence strategies. Part of the Altrata global team includes our Due Diligence team that is primarily focused on the production of our custom Due Diligence data offerings. Our Due Diligence reports are typically leveraged to supplement in-house research, to ensure the highest standards, no matter the nonprofit’s internal resources and workflows.
Critically, Altrata helps nonprofits begin and build lasting relationships with trusted, valued donors. “We’re looking for opportunities, not just risk,” says a philanthropic due diligence leader at a prominent research university. “Not just folks we shouldn’t engage with, but people who align with our values.”
Altrata provides a range of due diligence solutions
The process begins with in-depth intelligence on individuals spanning all levels of wealth. Nonprofits can access a more balanced view of donor opportunities, rather than risks alone. Confidential diligence reports provide evidence that holds up to the scrutiny of multiple stakeholders.
Altrata also helps researchers add intelligence without the workload. Nonprofits with fewer internal resources and smaller teams can accelerate due diligence and reallocate assets based on their needs.
These benefits stem from a robust set of offerings Altrata provides, including:
- Wealth-X dossiers, which include only concise and relevant intelligence
- Confidential reports, featuring a personalized summary, risk profile, and bibliography for each
- Special alerts based on legal issues, negative news, criminal exposure, and other factors
- Supplemental intelligence about personal and professional associations for each individual
- Constant compliance so nonprofits meet any regulatory responsibilities, including AML and ABC
Advances in Altrata’s due diligence reporting
Recently, Altrata has enhanced its editorial standards as well. Executive summaries in confidential reports are more consumable and can be shared easily with stakeholders. This includes red flags, brief summaries, and indicators as to where to find details in full reports.
These measures ensure teams of all sizes can understand the range of risks. Fundraisers can quickly identify new opportunities among existing and future donors. In addition to better fundraising, these measures allow for more streamlined workflows during the due diligence process.
Improving due diligence
Due diligence in the nonprofit world can be daunting as new challenges emerge. That’s why Altrata provides a personalized approach, helping nonprofits integrate risk mitigation into their unique workflows.