If 2008 taught us anything, it’s that the due diligence process must be deeper and more refined. The recent volatility in global markets over the past year has lead non-profit organizations and their donors to two conclusions:

1)       They cannot risk further principal depletion, meaning is the donation given today going to be gone tomorrow and 

2)       They need to regain what they have lost, meaning if losses do occur how will the organization recoup them.

Organizational accountability has emerged out of necessity and is no longer something on the back burner. You may be surprised to learn that organizational accountability is a meaningful and profitable means to outpace other organizations when seeking donations. Organizations must move beyond the typical reporting and due diligence of the past to provide donors with the higher level information they now require to entrust you with their money. This information will strengthen trust and ultimately create Legacy Capital for the organization.

In doing so, you will better articulate to donors and organizational constituencies the balance between managing operational cash flows and creating legacy capital to sustain the organization. You will also develop a better understanding of what your organization’s Investment Policy Statement really means to donors and your organization. More importantly, you will comprehend the performance data provided by investment professionals and know the right questions to ask to deepen your due diligence process and truly understand how the money is working for your organization. This means that you will no longer be “led” by presenters and you will know how to get to the “root” of an investment strategy, how to uncover the major and minor risks, and identify the probability that a money manager will live up to its claims.  You might be surprised to learn that Beta, Alpha and Standard Deviation are often meaningless.

Other areas that will be covered include:

a.        Report to constituencies the sources, uses, and management of donated funds in order to preserve and enhance confidence in the organization

b.        Ensure that the intent of gifts is honored so that public trust is established and preserved

c.        Ensure that the solicitation of gifts is conducted in accordance with the regulatory environment in which fundraising activities are conducted

d.        Clarify, implement, and monitor donors’ instructions by ensuring that allocations are appropriate and documented in the organization’s financial records

e.        Comply with all reporting requirements and regulations in order to demonstrate commitment to accountability and transparency