Nonprofit Due Diligence: Donor Decision Tool

04/01/2012 |

Conducting nonprofit due diligence on a potential grantee is a unique process for each situation. Your process for deciding whether to invest in a nonprofit will likely depend on your answers to these questions:

  • How large and/or critical to your strategy would this grant be?
  • Do you believe that your potential support is very important for this nonprofit?
  • Is this grant potentially controversial in any way?
  • How familiar are you with the organization?

Deciding the level of nonprofit research your grant warrants will help you focus on the most important questions and be efficient with your time (and the potential grantee’s). Below are a list of documents that focus on varying degrees of research. Choose the "Light-Touch Approach" for grants that are smaller or less critical, then move to a more intensive approach as your grant warrants.

At a Glance: Worksheet and Tracking

As you embark on getting to know your potential grantees, download this helpful set of questions to keep in mind:

Key Questions and Worksheet to Track Your Progress

Building Racial Equity into Due Diligence

When it comes to philanthropic funding—the racial disparity is clear. In their 2020 article “Racial Equity and Philanthropy: Disparities in Funding for Leaders of Color Leave Impact on the Table,” Cheryl Dorsey, Jeff Bradach, and Peter Kim give some advice to philanthropists who are interested in making their due diligence process more equitable:
  • Get proximate: Actively build knowledge of, connection to, and mutual trust with communities most impacted by the social change issues you seek to address, through intentional learning and investment.
  • Get reflective: Collect, analyze, and reflect on data disaggregated by race for your portfolio in order to unearth and assess assumptions and biases that are limiting your philanthropy. Then make necessary shifts to your organizational culture, process, and investment norms.
  • Get accountable: Set racial equity goals to build power among community members and leaders proximate to the problems you seek to address. Share these goals with others who can hold you accountable.

Due Diligence for Systems Change

In our article “How Philanthropy Can Support Systems-Change Leaders,” we explore how traditional due diligence, typically designed to assess direct service programs, is a poor fit for actors that serve as nerve centers of systems‑change efforts. Our companion guide shares a due-diligence approach tailored to evolving and adaptive work. It is anchored in four critcal assets, or "superpowers": deep understanding of the problem and ecosystem, a vision for equitable and durable population-level change, an organizer’s mindset, and trusting relationships and credibility with the actors required to achieve change.

General Research into a Potential Grantee

Closer Looks into a Nonprofit's Strategy and Results

Closer Looks into a Nonprofit's Leadership

Closer Looks into a Nonprofit's Financials

A Closer Look into a Nonprofit's Organization and Operations

How to Research a Nonprofit's Organization and Operations
Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.
Permissions beyond the scope of this license are available in our Terms and Conditions.

Show Comments

More Articles To Read

Pay What It Takes 

Strategy Development 

Pay What It Takes