Due Diligence is a critical function of grantmaking organizations, yet too often funders seek to know everything. With appropriate due diligence, a grantmaker ensures their funding choices align with their mission. Without it, grantmakers overburden charities and selection committees during the proposal process. While due diligence doesn’t prevent failure, it will improve confidence that the funders investments will have the social impact promised.
But, what exactly is due diligence?
It’s the work before the proposals come in to ensure a streamlined process when it comes to reviewing and selecting the right charitable partners. Due diligence involves qualifying, researching and attracting the right proposals. You must determine in advance how you are going to make decisions because your decision-making criteria informs what your applications look like and even how you frame your questions.
Due diligence is not for the faint of heart.
In Due Diligence Done Well: A Guide for Grantmakers (http://www.geofunders.org/storage/documents/GEO_Due-Diligence-Guide.pdf), created by La Piana Consulting and Grantmakers for Effective Organizations (GEO), they outline a clear path to structuring a streamlined due diligence process. They start with four steps:
- What do you really want to know?
- How will you get the information you need?
- Are there ways to stage your due diligence process?
- What can you reasonably expect to learn and in what amount of time?
They go on to outline a 6-step process:
- Review the materials provided by the grantseeker
- Conduct additional preliminary research
- Engage in dialogue with the organization’s leadership and key staff
- Conduct additional follow-up research as needed
- Analyze and apply your findings
- Synthesize the information and present to others
As someone who works with grantmaking organizations on their due diligence processes, I’m no stranger to how daunting of a task it can feel. But the payoff is worth the strife when you see your foundation’s social impact around the world.
For more information and resources, visit www.geofunders.org
