How to create a simple but effective NDA or confidentiality agreement

Businesses and organisations, especially nonprofits and grantmaking organisations, often have sensitive information that should not be shared with the public. A non-disclosure agreement (NDA) effectively protects this sensitive information by binding parties to confidentiality.

Let’s consider what an NDA is, its importance and how to create one.  

What is a non-disclosure agreement?

A non-disclosure agreement, also known as a confidentiality agreement, is a legally binding contract that establishes a confidentiality relationship between the parties involved. The parties in an NDA agree that certain sensitive information shared will not be disclosed to others. 

NDAs are typically signed at the beginning of a business relationship and can protect a variety of information including manufacturing processes, potential patents, proprietary software, financial information, marketing strategies, sales plans and intellectual property. 

A confidentiality agreement could be unilateral or mutual. It’s unilateral if the obligation only affects one party; if both parties in the contract have the confidentiality obligation, it’s a mutual NDA. 

Some sample scenarios that might require non-disclosure agreements are businesses embarking on a joint venture, companies seeking investments from venture capitalists, arbitration/conciliation proceedings, mergers/acquisitions, working with new contractors, onboarding new employees and engaging grantees and reviewers in a  grant management program. 

Breaching the terms of the confidentiality agreement allows the non-defaulting party to seek redress in the form of monetary damages and an injunction to prevent further disclosure. But it’s noteworthy that some kinds of information can’t be protected by the NDA. If the information is already in the public domain, was known of by the other party before the agreement or can be obtained through independent research, it’s not considered confidential.    

Why use a non-disclosure agreement?

There are many upsides to using a confidential agreement. It protects sensitive details about your business or organisation from falling into the hands of the general public or possible competitors. It can protect sensitive budgetary or partner information. 

It also clearly identifies what’s confidential and what isn’t. This erases any ambiguity of what’s being protected. In the same vein, it communicates the consequences of disclosing protected information.  

An NDA can be created as a hard copy or a soft copy; either way, it’s an effortless and budget-friendly way to protect your precious business secrets. Also, a non-disclosure agreement creates an atmosphere of trust and confidence in the relationship.

Additionally, it’s a mark of professionalism; it informs potential investors, partners or grantees that you prioritise confidentiality. This can foster trust in any new partnership or relationship.      

How to write a non-disclosure agreement

If you’re considering using a confidentiality agreement, you’ll need to know how to craft one. Unless you’re a legal expert, it’s advisable to engage the services of a lawyer to write or at least review the NDA after you write it. 

A well-written confidentiality agreement has certain essential parts, including:

• Identification of the parties: This part of the agreement identifies the entities involved using their names and addresses. It also pinpoints the disclosing party and the party under obligation.
• Definition: The definition section of the agreement spells out what information is considered confidential as well as how all information covered by the agreement is to be handled. 
• The scope and length of the confidential relationship: The scope of the agreement states the specific information the agreement covers in specific terms. This ensures the enforceability of the agreement. By stating the time frame, this section answers the question of how long the non-disclosure agreement lasts. 
• Exclusions from confidentiality: Certain information is exempted from the confidentiality obligation. This part of the agreement states what these details are.      
• Other terms of the agreement: This section covers other details, such as how to handle confidential information when the relationship ends. It also dictates what could happen in the event of a breach of the agreement.  

Writing a non-disclosure agreement from scratch can prove tasking. Using an NDA template makes the work easier. An NDA template is a pre-written confidentiality agreement that serves as a sample that individuals and businesses can use to create their unique confidentiality agreement. 

It lays out the general parts that should be contained in the document along with spaces for specific information that need to be filled to create an agreement applicable to the parties involved.   

Leveraging an NDA template can help you save time and money, especially if you need to create multiple agreements. You won’t have to pay a legal expert every time for each one; just a few necessary adjustments and you’re good to go.

With a confidentiality agreement template in place, you can rest assured knowing that you have a system in place for the protection of your confidential information. This allows you to devote your time and attention to other business concerns. 

You can get a sample non-disclosure agreement template from a variety of sites online, such as Legal Templates and LawDepot. In Good Grants, it’s easy to keep and manage your document templates and use them as needed, adding in merge tags like applicant or grantee name, project name and more variables.

Once all relevant parties have signed, store the agreement where all parties can easily access it.

In both business and non-profit sectors, there’s a need for organisations to protect sensitive information. A confidentiality agreement gives the assurance that such valuable information will not be revealed.