Donor due diligence – part 4
Rethinking due diligence
How existing tools and practices are insufficient in the digital age. We need to rethink what due diligence means and how we conduct it.
We’ve now covered why due diligence is needed, frameworks to simplify it, and what to look for in order to grow. This has all been set within the context of the move towards hyper-transparency that the digital age has brought with it. We now have more access to more information than ever before. Whilst access to information is to be celebrated, it also hosts a multitude of challenges for any institution.
Broadly put, we have set out that reputation is paramount when anyone – investigative journalist, prospective student, lecturer, researcher, funder – can find information about your institution and the people you work with. This makes due diligence on those individuals essential to protect and grow your institution sustainably.
And yet with the overwhelming quantity of information available, it must be systematic, comprehensive and truly rigorous.
At the same time, to be truly effective and to contribute to your organisation’s growth, it must also be quick and accurate.
But how can you really meet all of these needs?
It is no secret that there is a lack of standardisation in the due diligence industry. Each organisation has its own method, with differing levels of sophistication often depending on the individual conducting the research and their level of experience. But there are some themes across practices.
Traditional tools and methods are heavily reliant on manual, time-intensive processes. Most organisations attempt to set out a structure and approach that defines the information that you need to find – like these standard question models.
A list of tools and search methodologies is the next step. Most processes start on Google. Some organisations will have defined search terms of ‘risks’ to look out for. Others will have a set number of pages of Google to go to when checking for risks (usually anywhere from two to 10).
There are also specific sites and databases against which individuals should be checked. These are typically sanctions and PEP screening tools, and court and criminal records databases.
The challenge of today’s changing information space, where new resources and information is appearing every millisecond, is that internal lists will never keep up. Whilst an essential part of the process, they represent a fraction of the varied sources that any external party – malicious or otherwise – might go to when looking for information about you and your counterparties.
Even if an organisation had a full-time team finding new outlets and risks terms, each of these individuals would have to be trained to look for and report on risks and opportunities in a standardised manner. They would then have to communicate this methodology and their findings to new starters, regulators and senior prospecting and acceptance decision-makers alike.
An organisation might have a policy to process up to page 10 of a search engine, but what about page 11? With estimates that there are some 56.5 billion web pages on Google alone it is clearly impossible for any human team to find and analyse every relevant result.
A high-profile individual or corporation might have hundreds of news stories about them which might or might not pose a risk to your institution. Any researcher must either read them all, or simply carry the risk of having missed something.
Traditional due diligence processes set thresholds enabling them to develop sustainable practices across organisations with limited human resources, not to meet the real business need.
A September 2021 survey found that 35% of non-profits take five to eight hours to complete a single due diligence report. This is far too long when looking to get ahead of the game by finding the best donors and partners before even speaking to them.
A new generation of due diligence
The world needs a new approach, built for the new hyper-transparent, digital marketplace.
Xapien is the first provider of fully-automated, comprehensive background research. Our simple-to-use online platform is designed not just to identify risks, but also to spot opportunities associated with any partner or donor, in minutes.
Unlike any traditional processes, Xapien is not limited by the number of searches it should run, pages it should go to or search terms it checks, making it truly rigorous.
Xapien is greedy. When it starts looking into your target, it will gather up all possible information from across the internet that may or may not be relevant to what you are looking to find. When it finds a new piece of relevant information, it reruns its searches, to fully probe all avenues.
It then methodically reads and analyses this data to pull out only the key insights that you need to know about.
Designed by experienced investigations professionals, Xapien knows what to look for, where to go, and how to report it. Using the same techniques used by professional analysts, but at scale, Xapien checks all relevant publicly-available information sources looking for the information you need to make a decision.
It implements a truly systematic approach to due diligence.
Xapien enables full-spectrum reporting, drawing out information that not only satisfies due diligence requirements, but provides development officers with the information they need to build meaningful, long-lasting relationships. Alongside risks, personal networks, and affiliations, Xapien finds assets, interests and values which build the full personal story of any prospective donor or partner.
It separates your target, and the information connected to them from the rest of the clutter including the mass of false positives that traditional tools bring up. Its greedy nature means that it hoovers up enough information to know when a risk is associated with your Joseph Smith vs someone else’s. This brings an accuracy not yet seen in tech solutions.
Xapien does all of this in minutes. All you have to do is enter the name of your subject, some brief context and press Go. In a few minutes, Xapien will deliver a concise, meaningful report that summarises and categorises risks, associates, assets, affiliations and more.
A transformative approach to due diligence has arrived.
Xapien goes beyond compliance requirements enabling you to truly Know Your Donor.
By running Xapien reports prior to actively engaging with prospects, our clients have transformed the way in which they form partnerships and raise funds. Not only are development officers armed with the information they need to drive revenues, but Xapien’s speed and depth enables development teams to run due diligence reports upfront, eliminating onboarding delays.