Tufts University and Xapien: A guide to donor due diligence  

In recent years, U.S. universities have faced significant scrutiny due to lapses in due diligence. This includes several federal investigations into college admission processes, research into donor affiliations, and audits into universities’ gift acceptance policies. These investigations have revealed how inadequately vetting third parties can lead to reputational damage, legal consequences, and a loss of public trust. Such incidents underscore the critical importance of implementing robust due diligence procedures. Here’s how your university can establish an effective due diligence program, drawing on the approach we’ve taken at Tufts University.  

Develop a comprehensive due diligence policy 

Having a due diligence policy is crucial for managing risk. At Tufts, we realized the importance of this when an external review pointed out the need for greater transparency about donations made to our institution. Before the review, our due diligence was done ad hoc. We now have an established policy explaining what due diligence is, why we conduct it, what triggers its completion, and how we handle any identified risks.  

This is becoming the industry standard. Xapien’s international due diligence survey, run in collaboration with BWF & Pyrotalks, revealed that 84% of organizations surveyed have a formal due diligence process. However, wide-ranging variations in program resourcing, procedures, and deliverables remain. 

A good policy should define the scope of your due diligence efforts, specifying which entities require review. Typically, this could include donors, recipients of honors and awards, and high-level volunteers. It should also be flexible enough to handle both current and future situations, especially if new information about a donor arises, which could negatively impact the university’s relationship or reputation. These efforts should also work in partnership with an equally thorough gift acceptance policy.   

Across all the institutions we serve at Xapien, we see the best results with institutions that do their due diligence early in the process – ideally in the in-planning phases of a solicitation or gift conversation. This helps to save time further down the line and avoid investing time with donors who don’t fit your organization’s values. 

Understand your university’s risk tolerance 

Your university needs to understand its risk tolerance and set appropriate thresholds for when to dig deeper to manage risks effectively. Establishing clear guidelines on when more in-depth due diligence is necessary helps manage risks proportionately. This approach ensures that higher risks, such as those associated with high value donations or collaborations, are thoroughly vetted, protecting your institution from potential reputational harm or compliance issues. 

68% of surveyed organizations, including Tufts, incorporate financial thresholds to trigger due diligence. Defining due diligence thresholds that are specifically tailored to your institution, based on previously established giving benchmarks, is crucial to helping your institution become better protected. At Xapien, we have seen that the adoption of the right tooling has also enabled many institutions to lower their thresholds. Adopting solutions powered by our artificial intelligence can give an organization much greater assurance that they are seeing the most comprehensive view of a donor’s potential risks, as well as exposing additional items that would otherwise be overlooked.   

Develop internal risk classifications 

Creating internal risk classifications and identifying specific events that trigger deep due diligence is essential for a streamlined process. These classifications should reflect your university’s risk tolerance and past experiences. By categorizing risks, your institution can prioritize efforts and allocate resources more effectively. For example, certain institutions may categorize associations with fossil fuel producers as “high risk,” whilst others might not, but would see connections to palm oil producers as risky. Xapien enables the user to tailor reports to delve into their specific risk areas. 

Events such as substantial donations (over your thresholds) and high-profile partnerships/affiliations that may attract media attention or otherwise, could impact your university’s reputation and should be flagged for comprehensive due diligence. 

Secure leadership buy-in 

To set up a strong due diligence program, it’s crucial to secure a budget and secure support from senior leadership. Having senior leaders on board is key—it shows the program’s importance and helps ensure everyone follows it. Promoting the program through official channels and having leaders champion creates a culture of responsibility and proactive risk management within your university.  

Get the right tools 

68% respondents believe AI will bring increased efficiency, with about a third strongly considering integrating AI into due diligence. Xapien’s AI-driven platform is a good example of how investing in the right tooling upfront can pay dividends in the long run. Without the right tooling, due diligence is a slow and costly business. Deep dive due diligence requires extensive research across disparate platforms and there’s always a risk that you might miss a crucial piece of information that could prove problematic in the future. This both slows down the gift acceptance process, frustrating fundraisers and donors, and can leave you risk-exposed. With tools that can do this for you, you can work quickly and confidently to get information back to decision-makers so that donor money can be onboarded and put to work quickly. Dartmouth estimates Xapien delivers “8 hours of research in 8 minutes for the donor management team”.  

Introduce a gift acceptance committee 

Tufts external review suggested an internal committee was set up to manage any reputational risks. Over half of the surveyed organizations were found to deploy a gift acceptance committee. A gift committee is a great way to handle more complex cases by bringing together diverse perspectives. Tufts’ current committee includes senior leadership from across the University, including representatives from general counsel, communications & marketing, and the provost’s office. This team supports the Senior Vice President of Advancement in making gift acceptance decisions.  

Whilst committees are helpful, it’s no secret that they can slow down fundraising. Some committees might only meet 4 times a year, potentially leaving you with lists of donors and prospects that won’t be signed off until the next meeting.  Conducting due diligence early on will help streamline this process, ensuring only the high-risk and high-value prospects are presented. 

Final thoughts  

Establishing an effective due diligence program is essential for safeguarding your university’s reputation and ensuring compliance. Putting the right processes in place and leveraging purpose-built tools like Xapien can ensure the efficiency and accuracy of the process. This enables your university to make informed decisions and maintain its integrity.