Due Diligence in Layman’s Terms

When nonprofit organizations consolidate, such as when they enter into partnerships, networks, parent corporations or mergers, it is important for the parties to the agreement to understand fully the condition of their potential partners before the final agreements are signed. This process of testing the “fitness” of the partners is called “due diligence.” Due diligence is designed to ensure that indebtedness and legal entanglements of each party are fully disclosed and that the assets claimed by each party actually exist. This article lays out the key elements of a strong due diligence process.