Due diligence research is a part of best-practice major gift fundraising, ensuring donations align with your organisation’s values and protecting its reputation. With the right policies and processes, you can simplify due diligence research while maintaining strong donor relationships.
Due diligence for major gift fundraising is the process of researching, assessing and verifying potential major donors before accepting a donation. It means you’re saying “yes” to the right gifts and protecting your organisation’s reputation.
While due diligence checks are part of best-practice major gift fundraising, they can be time-consuming if you don’t have the resources in-house for research. These steps will help simplify the process of carrying out due diligence on major donors
Create a gift acceptance, refusal and return policy
Due diligence checks are almost impossible without a gift acceptance policy in place. This helps your researchers understand what gifts comply with your organisation’s ethical standards. Your gift acceptance policy should contain:
- Rationale on why the policy exists
- Who the policy should be used by
- Guiding principles – laws and regulations the policy adheres to
- The types of donations accepted by your organisation
- The types of gifts that need to be risk-assessed
- Due diligence and risk assessment steps
- The decision-making process
- A timeline for policy reviews and updates
- Contact information for questions or concerns related to the policy
Define the level of due diligence required
Before starting any research, determine what factors will trigger the due diligence process and what level of screening they’ll unlock.
Include factors like the size of the gift, the source of the donation, and whether the donation was anonymous. You might decide to assign each factor a risk score from 1 – 5. If a donation is low-risk, it might just require a basic due diligence screening, while a higher-risk donation may require an intensive screening or for the screening to be outsourced.
Document your findings so you can justify decisions
Summarise your due diligence research findings in a risk assessment report. Your gift acceptance policy and due diligence process should have clear delegations so you know when a decision needs to be escalated to senior management or the trustees. No matter what the delegation, in the end, responsibility for accepting or refusing a donation sits with trustees.
As trustees, decisions about whether to accept, refuse or return a donation are yours to take, in line with this guidance. Your decision must be in the best interests of your charity, and you cannot use a power to refuse or return a donation unless you are satisfied of this.
Documenting your findings and rationale for refusing or accepting a gift brings transparency to the process that your donors will respect. Fundraising is all about relationship building and having clear policies in place means you can undertake due diligence research without alienating donors or making them feel overly scrutinised.
Ready to learn more about getting gift acceptance and due diligence right for major gifts? Join our free webinar on Tuesday 29th April, covering:
- The role of due diligence in fundraising
- The fundamentals of gift acceptance and due diligence
- Regulations and codes
- Due Diligence research frameworks
- Research resources for Due Diligence research
- Tips and tools for conducting due diligence research