Money Business Due Diligence Negotiating Deal Make Results

Before "investing" (putting money or other resources into something, hoping to make more money or see results) money in anything, it is important to "conduct" (do) "due diligence," learning as much as one can about something and making sure it is "legitimate" (real) and "legal" (following the laws). This is true for business "transactions" (buying and selling) and "philanthropy" (giving money to nonprofit organizations).

In a business transaction, due diligence is usually related to a company's "financial situation" (how much money a company has, how it is managed, and how profitable it is), as well as legal and tax "considerations" (concerns; worries). Conducting due diligence requires reading the company's annual reports and "financial statements" (documents with financial information) and "verifying" (making sure something is true) that information by conducting an "audit" (the process of testing many transactions or accounting entries to make sure things are done correctly). Due diligence might also involve making sure the company has all the "requisite" (required; necessary) "licenses" and "permits" (official permission to do something) and checking with the city and state to see if any complaints have been "filed" (submitted) against the company.

In philanthropy, "prospective" (possible; considering doing something) "donors" (people who give money to organizations) conduct due diligence "much as they would" (similarly; in a similar way) for a business transaction. They learn as much as they can about the organization and review its annual reports and financial statements. They review the organization's tax filings and study how the organization spends its money. Donors also want to understand the organization's "impact" (effects; results) on the "beneficiaries" (people who benefit from something) so that they know their money will be used to do good things.