The aim of a fundraising negotiation is to convince the investor that the money they are deciding to put in your NGO is safe and will be used to the fullest of its utility. That there is no corruption involved in the process, that the NGO is not struggling financially, that it obeys laws and is not an offender and so on and so forth. The company needs to be sure of the facts you are presenting and be sure that it is not a bad decision on the company’s part. Like any other negotiation deal the final outcome affects both the parties and hence both the parties have to be extra cautious on their part.
The entire process of providing funds is tricky on both the company and NGOs part. The company’s qualifying for the Companies Act 2013 have to mandatorily constitute a committee (CSR Committee) comprising of 3 or more Board of directors. The company creates and recommends policies to the board to indicate their plan of action which is developed according to the plans you and other social working bodies share. Like you, they need to indicate the amount of expenditures that incurred and keep track of the CSR policy in the company. So they have to be sure about your facts. Due diligence is the assessment process which aims to verify the information you have provided and to discover any undisclosed issues.
The kind of documents verified during due diligence varies from organization to organization, but the important one’s usually remain the same; especially the ones required to verify your financial information. To verify these documents companies commonly hire lawyers or accountants or a team of such people. The documents to keep in mind are-
(Annual and quarterly financial information of past 3 years)
- Certificate of registration
- Income-Expenditure statements
- Balance Sheets
- Cash Flow
- Income Tax statements
- Planned versus actual results
- Current Backlogs
- Accounts receivable aging schedule
- List of all stakeholders with shareholdings
- Summary of all debt instruments/ bank lines
- Off balance sheet liabilities
- Summary of current federal, state and foreign tax positions
- Third party extra evaluation reports
- Employee employment contracts
- Organizational Chart
- Succession Plans
- Pending lawsuits against the company/ initiated by the company
This is not an exhaustive list, but it gives an overall idea of the kind of documents you may need. Each organization has its own criteria so there can always be additional documents to take care or if the organization works on a different approach you might not even need these many. Due diligence tends to be an exhaustive process so it is always better to be prepared.