Due Diligence

01. Introduction

In 2018, photographer and activist Nan Goldin led demonstrations against museums in the US and UK that had accepted donations from the Sackler family. They were protesting against the Sackler family because of actions by their company, Purdue Pharma, which makes the prescription painkiller OxyContin. Nan had been prescribed OxyContin whilst recovering from surgery in 2014 and reported she became addicted to the powerful painkillers overnight and when her prescriptions ran out, she turned to street dealers and subsequently suffered a near-fatal overdose. In March 2018, outside the Metropolitan Museum in New York, Nan and fellow protestors (many of them family members of overdose victims) threw pill bottles into the moat surrounding an ancient Egyptian temple, which sits in the Sackler Wing that the Sackler family paid US$3.4 million to name in 1974. 

The Sackler name is familiar on both sides of the Atlantic as it is also found in a significant number of large cultural organisations in the UK. There is the Sackler Biodiversity Imaging Laboratory at the National History Museum, Kew’s Sackler Crossing at the Royal Botanic Gardens, the Sackler Studio at Shakespeare’s Globe, the Sackler Library at Oxford University, the Sackler Courtyard at Victoria and Albert Museum… the list goes on. Suddenly, these organisations were under scrutiny and pressure to return donations, which eventually resulted in the family halting philanthropic support, including a 2019 mutual decision between the National Portrait Gallery and the Sackler Trust to cancel a £1 million existing commitment.

The scrutiny around donations from the Sackler Trust continues at the time of writing, with reviews still taking place. The case is not, however, an isolated instance. In 2019, the Massachusetts Institute of Technology (MIT) were embroiled in controversy over financier and convicted sex offender Jeffrey Epstein’s contributions to MIT’s Media Lab. In 2011 the Woolf Inquiry reviewed the relationship between the London School of Economics (LSE) and the family of the former Libyan President, Muammar Qaddafi (notably the son, Saif), concluding that failures in process had led to accepting support which should have been rejected.

Ongoing discussions at the time of writing includes the Science Museum’s partnership with Shell, BP, Equinor, and more recently, Adani Group, which recently led to the resignation of an advisory board member.

In an interconnected, information-rich, and globalised world, concerns about donations and partnerships are easily raised and can rapidly spread across borders and specialisms. A hundred years ago it was common for someone working in merchant banking who went bankrupt in London to move to Hong Kong to start over, knowing that their reputation was unlikely to follow them, but that is no longer the case. Organisations are increasingly held to account over the donations they accept, and prospect researchers often play an important role in these processes, employing a risk-based approach to prevent reputational harm and developing tools to address these challenges.

The decision to accept or reject a donation ultimately rests with those at the head of the organisation, such as a charity’s trustees, who must make the call based on what is in the best interests of the organisation. For charities in the UK donations can legally only be refused in exceptional circumstances and therefore these organisations must be equipped to know where to draw the line. For non-charities accepting donations, the legal imperative may not be there but the internal motivation for due diligence is equally strong.

Prospect research professionals are involved in mitigating risks to their organisation through the process of due diligence. The aim of this chapter is to increase awareness of good practice in due diligence research and the prospect researcher’s role within their organisation’s fundraising and risk management frameworks. As part of your work in this area, it is important to understand your organisation’s data protection process and the legal basis it has chosen for processing due diligence information (please see the GDPR and Data Protection chapter for further details).

This chapter will also mention related areas including the vendor and procurement due diligence processes.

By reading this chapter you will:

  • Develop awareness of the scope and remit of prospect researchers in ethical risk assessment, particularly due diligence
  • Increase confidence in planning, conducting, and resourcing due diligence research
  • Enhance understanding of the chain of accountability and where responsibility lies within the organisation

This chapter starts by defining the scope of due diligence and the terminologies surrounding the process, before moving to discuss who is involved in due diligence processes and what their role is, and finally explaining when and how due diligence, and the auditing and reporting surrounding it, should be completed.

This chapter is designed for prospect researchers in all career stages, including managers and supervisors of prospect researchers as well as other wider stakeholders involved in various aspects of the due diligence process.

Purchase the Handbook or Log in to read the rest of this content.
© Copyright Chartered Institute of Fundraising, all rights reserved