By Jason Briggs
Topics:
Prospect Research & Management, Technology & Operations

Last year, BWF teamed up with PyroTalks CIC to launch a sector-first Due Diligence Survey.

The focus was to gather insight into the due diligence process along with the ethics and reputational risk in philanthropy, with an initial focus on the UK & Europe. This was later extended to include Australia thanks to a partnership with Apra Australia. The differences in findings have been summarized below to provide a useful perspective on international approaches to due diligence.

Key Similarities
  • The majority (75%-80%) of UK & Europe and Australia respondents cite ‘1 or less’ FTE staff dedicated to due diligence.
  • Around 50% of both UK & Europe and Australia respondents have a formal Gift/Donation Acceptance Committee.
  • On whether philanthropy departments take due diligence seriously or are able to handle a ‘PR crisis’, all respondents answered similarly, with around 50% feeling Confident or Very Confident.
  • Lead signatories for different donation levels largely remained the same, as did the volume of reports completed per year, the time they took to complete, and the risks they touched on.
  • UK & Europe and Australia respondents answered similarly when asked to define whether or not they had a dedicated budget for due diligence, i.e. a large portion had no specific budget and where they did, it was the same amount, cited at 0-999 (£/$).
  • Consequently, the majority of respondents felt that due diligence was underfunded by their department.
Key Differences
  • Most UK & Europe teams start their major gift definition at £25,000+/AUD $47,500, whereas Australia starts at £5,000/AUD $10,000.
  • When it came to confidence that due diligence processes are sufficient to protect their organization’s reputation, 65% of UK & Europe teams felt Confident or Very Confident, whereas only 33% of Australia respondents felt the same.
  • UK & Europe respondents were able to offer a clear view on where their lowest or highest due diligence activation levels started, whereas almost half of Australia respondents could not.
  • UK & Europe respondents were significantly more likely to count cumulative donation totals as part of their due diligence activation levels than respondents from Australia.
  • When it came to the official ‘makeup’ of Gift/Donation Acceptance Committees, UK & Europe saw a more nuanced board composition. They had a much higher representation of specialist perspectives, i.e. Media Relations and Neutral Members.

In summary, UK & Europe and Australia responses are similar in a number of key, practical areas, yet respondents all shared a general lack of confidence in their departments’ ability to handle due diligence issues and believe the process is underfunded.

Generally, it could be said that these results show that the UK & Europe is ‘slightly ahead’ in deploying their due diligence process. For example, UK & Europe respondents were able to conclusively provide formal due diligence activation levels, count cumulative donations, and show a more nuanced composition of staff assigned to Gift/Donation Acceptance Committees.

UK & Europe Australia
Respondents by sector–Top 3

 Respondents by sector–Top 3
How many FTE staff are dedicated to due diligence? Top Answer

  • 1 or less–81%
 How many FTE staff are dedicated to due diligence? Top Answer

  • 1 or less–73%
What level is considered a major gift in your fundraising department? Top Answer

  • £25,000+–29%
 What level is considered a major gift in your fundraising department? Top Answer

  • $10,000+–32%
How serious do you think due diligence is taken at your organization? Top Answer

  • Seriously or Very Seriously–58%
 How serious do you think due diligence is taken at your organization? Top Answer

  • Seriously or Very Seriously–49%
If a PR crisis were to occur, are you confident your department would know what steps to take? Top Answer

  • Confident or Very Confident–49%
 If a PR crisis were to occur, are you confident your department would know what steps to take? Top Answer

  • Confident or Very Confident–44%
How confident are you that your due diligence process is sufficient to protect your organisation’s reputation? Top Answer

  • Confident or Very Confident–65%
 How confident are you that your due diligence process is sufficient to protect your organisation’s reputation? Top Answer

  • Confident or Very Confident–33%
In your standard process, what is the gift/solicitation amount at which your lowest due diligence process is activated? Top Answer

  • £5,000–25%
 In your standard process, what is the gift/solicitation amount at which your lowest due diligence process is activated? Top Answer

  • Other–42%

Note: ‘Other’ included a mixture of ‘it depends’ comments, citing lower levels than the survey options provided, or the absence of a lower threshold altogether.

Lead authorising signature for whether the gift is accepted at lowest gift level is:

  • 42%–Director
 Lead authorising signature for whether the gift is accepted at lowest gift level is:

  • 50%–Director
In your standard process, what is the highest gift/solicitation amount at which your due diligence level is activated? Top Answer

  • £500,000+–41%
 In your standard process, what is the highest gift/solicitation amount at which your due diligence level is activated? Top Answer

  • Other–44%

Note: ‘Other’ included a mixture of ‘it depends’ comments, citing higher levels than the survey options provided, or the absence of a higher threshold altogether.

Who is the lead (or principal) authorising signature for whether the gift is accepted at the highest gift level? This signatory can also be the chair of a due diligence/gift acceptance committee. Top Answer

  • CEO/VC–37%
 Who is the lead (or principal) authorising signature for whether the gift is accepted at the highest gift level? This signatory can also be the chair of a due diligence/gift acceptance committee. Top Answer

  • CEO/VC–56%
Do your thresholds take into account cumulative totals?

 Do your thresholds take into account cumulative totals?
In general, at what stage in the relationship is your due diligence triggered? Top 3

  • 40%–Just before an ask
  • 20%–At time prospect is first researched
  • 20%–Other
 In general, at what stage in the relationship is your due diligence triggered? Top 3

  • 32%–‘Other’ or ‘case-by-case basis’
  • 28%–Just before ask
  • 24%–At time prospect is first researched
Do you conduct due diligence on non-prospects/donors?

  • Leadership volunteers–66%
  • Speakers–17%
  • Hon doc–34%
  • Prospective corporate partners–79%
 Do you conduct due diligence on non-prospects/donors?

  • Leadership volunteers–50%
  • Speakers–23%
  • Hon doc–77%
  • Prospective corporate partners–61%
Do you have a due diligence gift acceptance committee?

  • 58%–Yes
 Do you have a due diligence gift acceptance committee?

  • 46%–Yes
Who is on the due diligence/gift acceptance committee? (Of those who said ‘Yes’ to having a gift acceptance committee.)

  • Director of Fundraising–73%
  • Other (Trustee, Academic, etc.)–68%
  • Most Senior Organisational Leader (CEO, VC)–68%
  • Neutral Member–48%
  • Head of Fundraising–28%
  • Prospect Researcher–27%
  • Media Relations–20%
  • Gift Affected Party–17%
 Who is on the due diligence/gift acceptance committee? (Of those who said ‘Yes’ to having a gift acceptance committee.)

  • Director of fundraising–83%
  • Other (Trustee, Academic, etc.) –58%
  • Most Senior Organisational Leader (CEO, VC) –50%
  • Head of Fundraising–41%
  • Gift Affected Party–25%
  • Neutral Member–16%
  • Prospect Researcher–16%
  • Media Relations–0%
Please rank by level of importance the top 3 main risk factors you are looking for.

  1. Financial crime, corruption, bribery
  2. Misalignment of org values
  3. Pending major prominent allegations
  4. Negative news
 Please rank by level of importance the top 3 main risk factors you are looking for.

  1. Financial crime, corruption, bribery
  2. Pending major prominent allegations
  3. Misalignment of org values
  4. Negative news
Number of due diligence reports completed per year–Top 3

 Number of due diligence reports completed per year–Top 3
How long does a report take?

  • 1 hour or less–7%
  • 2 to 4 hours–48%
  • 5 to 8 hours–35%
  • 9 or more–10%
 How long does a report take?

  • 1 hour or less–4%
  • 2 to 4 hours–39%
  • 5 to 8 hours–39%
  • 9 or more–10%
What is your (non-staff) budget for due diligence specifically?

  1. 53%–we do not have a specific budget
  2. 20%–£0-£999
  3. 9%–£10,000+
 What is your (non-staff) budget for due diligence specifically?

  1. 44%–$0-$999
  2. 40%–we don’t have a specific budget
  3. 8%–$5,000-$9,999
How well do you feel the due diligence team is funded compared to other teams in your fundraising department? Top Answer.

  • Underfunded or Very Underfunded–58%
 How well do you feel the due diligence team is funded compared to other teams in your fundraising department? Top Answer.

  • Underfunded or Very Underfunded–54%
Have you or any member of your team ever received training on due diligence, ethics, and/or reputational risk? Top Answer.

  • 57%–Yes
 Have you or any member of your team ever received training on due diligence, ethics, and/or reputational risk? Top Answer.

  • 64%–No