Demonstrating Donor Due Diligence

As a major donor to a large nonprofit charity or foundation, what due diligence do you perform to ensure the board leadership is making unbiased decisions as disinterested board members? If your answer is none, you are making poor investment judgments. Just as you would examine an investment prospectus, you should perform similar due diligence ensuring the board director's decisions are being made "at arm’s length." 

Especially during an executive search, directors may make decisions based upon their personal bias or connections, not solely on the ability and experience of the candidate who will best bring sustainability and move the organization forward.

As an "investor" in a nonprofit or foundation, ask for search committee and board minutes to examine their hiring policies, process and judgment. If the search committee is limited to too few members, lacks transparency, fails to include major donors, or other directors are told not to refer candidates, I would question the board’s process and lack of policy and transparency. If the evidence indicates any of these issues, at the least I would address these issues with the board - at the most I would immediately remove my investments.

As representatives of the public, 501(c)(3) corporation directors are ethically and morally bound to leave self-interest at the door, seeking only the interest of the organization, donors and those receiving public benefit. Your investments and your community deserve no less.