When facing a major undertaking, such as expansion, a capital commitment or a merger, due diligence is critical. Exemplary practices include:
Form a task force to study issues in depth. Ideally, your task force will include board members with the expertise to make informed recommendations to the full board. Members of the task force must be willing to meet frequently and work on research or analysis between meetings.
Identify, analyze and limit risks. Risks could involve loss of financial resources and loss of reputation with clients, donors and the community. By analyzing the potential for financial loss, a board can create a plan that limits losses to a pre-determined amount. Community response to the project should be assessed with input from potential supporters and from disinterested outsiders.
Augment internal expertise with outside expert advice. If you're considering a capital campaign, talk to capital campaign consultants to understand what the conditions, strategies and tactics for success. Talk to other nonprofits of similar size and capacity that have successfully -- or unsuccessfully -- attempted a similar venture.
Build in several go/no go benchmarks that assess whether you are on track to meet your ultimate goal. These benchmarks are conditions that must be met before moving to the next stage of the project. Examples include the number of clients needed or the amount of funding that must be received and within specific time frame. For new programs, start with a pilot project to gain real experience with limited financial risk.
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