Why due diligence is important for NGOs and what to keep in mind?

The constant process of contributing to the society comes with a lot of extra baggage. The aim is to work hard, initiate a change and keep doing that in an incremental manner. This upward and continuous movement is possible through a mix of a lot of important factors among which financial stability is a major one. A regular flow of money comes through efficient fund raising and steady donations. Every NGO which reaches a stage of monetary stability understands that the negotiation part is the half battle, the other major hurdle in the process is due diligence. Due diligence is the make and breakpoint of an effective negotiation.

Due diligence convinces the investor that his/her money will be put to good use. That their desire to help and be socially responsible through you will be met. They need to be sure of the facts you are providing and have an understanding of all that you can do, so that they can be confident about their decision. This assessment is known as due diligence and without it the process of gettings funds is impossible. Every organization has a different way of handing due diligence so the preparation is also different. But usually the basic checklist remains the same. The major due diligence is focused on the annual and quarterly financial information provided by the NGO for the past three years, their financial projections, capital structure, a record of their successful activities, their organizational structure and a check on pending legal matters. Depending from organizations to organizations things are added and subtracted, but moreover, it remains the same.
It seems too much if you see it that way, but don’t fear the process. The idea of submitting your business records, and seeing it openly evaluated is scary but important & progressive. Welcome it as a positive step and as a challenge that will make your NGO efficient. It is a good opportunity to get funds and work more efficiently on your cause. A proper due diligence can pave way for a long lasting bond with a regular flow of money. Due diligence will boost your and the investor’s confidence; re-affirming that you are working on the right path.