DEI and Due Diligence: An Opportunity for Prospect Research to Lead

Apra_814542-22_Jan22_DueDiligenceReviewProcess.png

By: Kristal Enter

Two significant trends have recently emerged, shifting the prospect research field in important ways:

  • The review of prospects and donors for due diligence concerns
  • An increased focus on incorporating the principles of diversity, equity and inclusion (DEI) into prospect research

Prospect research teams are leading the development of due diligence review processes to help protect organizations from risks associated with accepting gifts from problematic donors. Additionally, prospect researchers are beginning to understand how the field’s practices devalue prospects and donors from historically excluded groups, which contributes to a homogenous donor base, and what might be done to shift that.

These two trends also intersect. Due diligence review can be a key component of supporting DEI at an organization. Donors wield power to shape the direction and priorities of an organization and they may also use their philanthropy to “whitewash” a tarnished reputation. Through a vetting process, we can scrutinize prospects and donors who hold values or act in a way that is misaligned with the values of the organization. It gives an organization a forum to decide if these problematic donors and prospects should still have a seat at the table.

The prospect research profession is still trying to define what due diligence review should be and what role prospect researchers should play. As Lindsey Nadeau notes in her Connections article: “Vetting can also become a battleground of scope creep.” Because it is such a new process without established guidelines, the creation and implementation of vetting processes provide ample opportunity to introduce our personal biases. As individuals, we all hold implicit biases related to groups we are not a part of, which influences the way we think and work as prospect researchers. What I might view as a significant due diligence concern may not raise red flags for another prospect researcher because of the bias we each hold.

This may be especially apparent relating to prospects and donors who potentially pose an indirect reputational risk to an organization. These prospects may have broken the law, acted unethically or been involved in a scandal. But once we turn this rock over on prospects and donors, everything can appear as an indirect reputational risk, ranging from drunk driving to attempted coups. Moreover, prospect researchers are asked to distill often very complicated cases into bite-sized chunks to enable review, often with time constraints and lacking resources.

With such a high degree of ambiguity and demand for quick analysis, there is enormous potential to unintentionally insert individual biases. This becomes especially problematic in relation to prospects and donors from historically-excluded communities.

Most of the prospect research profession, including myself, do not represent historically-excluded communities. Because of our implicit biases, the way a prospect or donor identifies likely influences how we research and handle a due diligence concern. This means that we might view a due diligence concern related to a prospect or donor from a historically-excluded community in a different or more critical light. It may represent yet another barrier we are building to engaging these prospects and donors, further contributing to a homogenous donor base.

Billionaire and noted philanthropist Robert Smith’s recent tax evasion case shows how our biases could impact how we view a due diligence concern. In 2020, Smith was charged with failure to pay taxes for the last 15 years and using offshore bank accounts and trusts to hide assets. Based on this, an organization may be inclined to review Smith and vet the potential indirect reputational risk of accepting a gift from him. That said, Joe Jurado of The Root raises an important question regarding whether Smith, as a Black man, was facing a greater degree of scrutiny and punishment than white people, who have been hoarding money and dodging taxes for eons. How would you handle this case as a prospect researcher? And why?

Due diligence review processes can both support and undermine our efforts related to DEI. So how should prospect researchers address this challenge? Prospect researchers cannot hope to create more equitable systems without changing ourselves as individuals. We must acknowledge that we are not objective and identify our own biases and viewpoints that we are applying to the analysis of prospects. We must also continue to increase our understanding that the people we are researching are multidimensional and cannot be neatly summarized in assets, wealth indicators or capacity ratings. Prospect researchers have a heavy responsibility to summarize someone’s life story, both the good and bad parts, and we need to be mindful of that responsibility.

I also believe that by better defining the “what” and measuring the “who,” we can create a more equitable research and vetting process. Defining the “what” means defining the kinds of cases that merit further review, and which ones don’t (and why). This likely means we need to get better at articulating our organizational values. The good news is that developing and implementing a due diligence review process provides us with a great avenue to do just that. But as part of building out the review process, we need to explicitly establish defining values as a goal and deliver on that goal.

Additionally, the successful implementation of DEI principles often relies on the collection and analysis of data. An organization also needs to be able to answer the “who” is being vetted for due diligence concerns from a big picture perspective to identify any patterns. What is the average capacity rating? Are more men than women being vetted? Are the majority of older prospects being vetted than younger, or vice versa? What areas of the organization are these prospects giving to?

As due diligence review processes continue to get off the ground, we have a prime opportunity to build out better systems and do things differently. Unless we take these steps and acknowledge our biases, we may be building up and perpetuating a system where prospects from historically-excluded communities continue to be marginalized as potential donors to our organizations.

 

Recent Stories
Ask the Ethicist: Is a Photo Worth 1,000 Headaches?

How Prospect Research Can Turn ‘No’ Into ‘Yes’

7 Steps for Elevating Prospect Research and Data-Driven Decisions to Achieve Fundraising Goals