Five Due Diligence Recommendations
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Corporate partnerships have the potential to deliver significant value, both financially and in-kind for your charity. However, you do not want to partner with companies whose objectives or practices are in conflict with your mission. An effective due diligence process should protect your charity’s reputation, streamline your decision making, and remove any scope for personal opinions.
If your charity doesn’t have a due diligence process in place, or maybe it does but your colleagues are still challenging the process, then seek support from this blog where Remarkable Partnerships share our five due diligence lessons…
Fundraising Code of Practice
The first place to start is always the Fundraising Code of Practice which is the standard that all UK charities should work to. One key thing that the code mentions is that you must carry out due diligence, appropriate for the size and nature of the donation, on both the financial and reputational dealings of possible partners, before accepting their donations.
However, having a due diligence process in place that will take account of the size and nature of the donation doesn’t mean that a process should create unnecessary rules that restrict you from considering accepting a donation. It should be kept in mind that accepting a donation is the right decision when the value (financial/in-kind/awareness) outweighs any potential risk of partnering with that company.
Simple but effective
Over the years, we have worked with charities who have a process in place, but they are so complex that they aren’t used, which means it is pointless. An effective due diligence process should enable your charity to seize the opportunity that corporate-charity partnerships offer. The process should be simple, quick to complete, and provide a clear direction on next steps.
The process needs to be simple, so it enables you to quickly progress prospect conversations, not get tied down by red tape. Our recommendation is that your process has a handful of steps with appropriate levels of sign off. We recommend creating a flow diagram of the steps, which shows the criteria and who needs to approve.
Personal Opinions
One reason for having a due diligence process is to avoid personal opinions, and base all decision making on the process and research. This means that an outdated view of brand or company, will no longer be the reason to veto an opportunity for a long-term strategic partnership.
We recommend you create a standardised research template as part of your process, so that all companies are evaluated in the same way. Based on that research, each company can be given a low, medium or high risk rating, which will determine the next step of the process and the level of approval required.
Minimal restrictions
Gone are the days of whole industries being tarnished with the same brush. In some cases the corporate partner may want little or no external profile for their donation, which means you should be open to considering all industries and to be evaluating the risk by company. Only if a particular industries conflicts with your charities mission should it be on the ‘no go’ list. An example of this would be an anonymous donation from a tobacco company may be acceptable, as long as it doesn’t conflict with your charity’s mission.
We highly recommend having little or no industries that are excluded from being considered, but instead, have a due diligence process which means that all companies are considered on a case by case basis.
Securing internal buy-in
Once you create or amend your due diligence process, you want all your colleagues to understand, support and be invested in the process. The best ways to do this is to share your simple process, by running a short session with colleagues to get them engaged. Getting your press and PR colleagues on board is especially important, also the support of your CEO and trustees is essential
We know that having a due diligence process in place may sound like a daunting task, but in its simplest form a two page will do the job. Simple and effective is the way forward. So don’t hesitate, put it in place today!
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