A Note on Due Diligence
Venn Foundation conducts its own internal due diligence on every PRI opportunity, and based on its learnings, it negotiates reasonable terms and conditions that will, in its own judgement, advance the success of the PRI.
As a matter of policy, however, Venn does not share its internal due diligence or comment on its findings with prospective donors, except to say that Venn is satisfied that…
- Venn is making the investment primarily to advance its charitable purpose;
- The financial terms of the investment are below-market and that the production of income is not a significant purpose of the investment;
- The recipient is incorporated as represented;
- The recipient has an accounting system in place that Venn believes is adequate for tracking its financial activity and for meeting its financial management and reporting obligations.
Venn appreciates that donors may want more information about a particular PRI and PRI recipient than is provided here before making a donation or distribution recommendation. Venn highly encourages prospective donors to speak directly to the PRI recipient and to conduct any due diligence that they themselves may require before making a donation or distribution recommendation to Venn in support of a particular PRI.
There are three main reasons Venn does not share its own due diligence with prospective donors.
- Different Standards
Venn operates in a unique investment context that is purposefully below-market. In this context, donors can have very different standards for identifying and assessing risk as well as for determining what makes a PRI opportunity attractive to them or not. Furthermore, some aspects of due diligence are quite subjective.
- Sensitive Information
Due diligence often involves reviewing sensitive and protected information. It is more appropriate that the recipient retain control over which parties are seeing what information than for Venn to play this role.
- Role Definition
Venn sees its role as making a wide variety of PRI opportunities available and known to prospective donors. Venn’s role is not to persuade donors to support any one PRI opportunity over another. That role is more appropriately and effectively played by PRI recipients and by other donors who are supporting the PRI.
Venn encourages prospective donors to contact the PRI recipient leadership as well as other anchor donors to learn more.