Due Diligence: Common Philanthropic Activities
Due diligence includes any preliminary review followed by a more thorough analysis to assess the following: financial solvency and health, organizational capacity, fit with the defined strategy, and perception of the organization by nonprofit peers and community. Based on the findings, the grantmaker decides which applications will be presented to decision-makers for consideration. This phase may include follow-up with groups for clarification and additional information about their proposals, and/or talking with peer funders. It also includes communication with and support for applicants that are not recommended for consideration.
QUESTIONS FOR THE JUSTICE FUNDER:
- How do I account for issues of access and capacity (e.g., language, internet access, writing) when assessing proposals and organizations?
- How can I minimize the impact of the due diligence process on applicants and manage the power dynamics considerately throughout?
- How can I work in solidarity with applicants while navigating delicate conversations about areas that need strengthening?
- How can I ascertain if the group collaborates well with communities and movements?
Accommodating and supporting grantees with low capacity while conducting financial and programmatic due diligence
Viewing the due diligence process as the responsibility of the funder rather than the applicant, and using it as an opportunity to build grantee capacity and inform funder and field strategy