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Stage 5

Due Diligence and Assessment

How funders assess organisations can have a big impact on who gets access to funding. This section explores how due diligence and assessment processes can move beyond compliance and risk checks to support fairer, more inclusive grantmaking

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  • Setting the scene

    Due diligence and assessment are key parts of the grantmaking process. They shape who is considered eligible for funding and how decisions are made. Traditionally, these processes have focused heavily on financial checks, compliance, and risk management, often placing the greatest burden on organisations with the least power. This can disadvantage smaller, grassroots, and historically underfunded organisations, particularly those led by Black and minoritised communities.

    More equitable approaches aim to balance accountability with trust, proportionality, and an understanding of context. Instead of using due diligence mainly to avoid risk or exclude applicants, funders can use it to assess readiness, strengthen organisational sustainability, and support fairer decision-making.

  • What the evidence tells us

    The literature on due diligence spans philanthropic advisory guidance, trust-based philanthropy, participatory grantmaking, and organisational assessment. Across these sources, there is a clear shift away from purely extractive or compliance-heavy models toward more relational approaches that emphasise mutual trust, transparency, and context. 

    Definitions of due diligence in the literature generally cover three core functions: confirming eligibility against fund criteria, meeting legal and regulatory requirements, and understanding organisational and financial health to manage risk. However, many authors argue that traditional interpretations of these functions embed bias, as they often rely on indicators such as reserves, turnover, or formal governance structures that reflect historical inequities rather than actual capability or community trust. 

    The literature also highlights the importance of recognising that financial information is inherently contextual. Numbers alone rarely tell the full story of an organisation’s resilience, impact, or leadership, particularly in communities that have faced long-term disinvestment.

  • Key issues and challenges

    A recurring challenge in the literature is the use of risk frameworks that disadvantage under-resourced organisations. Financial due diligence processes often focus on indicators of stability that favour larger or more established organisations, reinforcing existing funding inequalities.

    Another key issue is the imbalance of power. Due diligence is usually designed and controlled by funders, with little opportunity for applicants to explain their circumstances or engage in dialogue. This can discourage openness, especially when organisations fear that being honest about challenges may lead to rejection.

    The literature also highlights a lack of clarity around minimum requirements. Funders may request large amounts of documentation without clearly explaining why it is needed, creating unnecessary burden and making it harder to identify what information is truly essential for decision-making.

    Finally, internal constraints within funding organisations, such as governance processes and trustee oversight, can limit flexibility in how due diligence is applied, even when staff want to take a more equitable approach.

  • Existing approaches

    Despite these challenges, the literature highlights a range of practices that aim to make due diligence fairer. These include tailoring due diligence to the size and risk of the grant, clearly explaining minimum requirements, and using conversations alongside financial information to better understand an organisation’s context.

    Some funders are also exploring shared or reusable due diligence processes, where information provided once can be used again for future funding rounds or shared between funders (with permission). This helps reduce duplication and administrative burden. Others focus more on an organisation’s skills, experience, and relationships with the community, rather than relying on measures such as salary levels or the wealth of board members.

    There is also increasing recognition that funders need to understand the communities and organisations they support, rather than relying only on paperwork. When used well, this more contextual approach can lead to fairer decisions while still maintaining accountability.

  • Benefits and disadvantages

    More equitable approaches to due diligence and assessment can lead to better funding decisions, reduce the exclusion of capable organisations, and help funding reach the communities that need it most. They can also encourage honesty, build trust, and help funders identify when support, rather than rejection, is the right response.

    However, these approaches can also be challenging to put into practice. They may require more staff time, changes to internal risk processes, and a greater willingness to work with uncertainty. Without clear guidance, there is also a risk of inconsistent decisions or perceptions of unfairness. Funders therefore need to balance flexibility with their legal and regulatory responsibilities through careful design and transparency.

  • Something to consider

    Due diligence and assessment practices are not neutral safeguards; they are powerful mechanisms that shape equity, access, and trust in grantmaking. The literature makes clear that more just outcomes are possible when funders move away from rigid, deficit-focused scrutiny toward proportional, contextual, and relational approaches. While this requires institutional reflection and adaptation, reimagining due diligence as a tool for understanding and support rather than exclusion is essential for advancing equity and justice in grantmaking. 

Recommendations

  • Be clear and proportionate about due diligence requirements

    Funders should clearly explain what documents are needed, why they are required, how they will be assessed, and when they are needed. Due diligence should be proportionate to the size, length, and risk of the grant. Where possible, it should be phased, collecting only essential information at the start and further documentation only once funding is likely to be awarded.

  • Rethink risk through a trust based lens

    Ideas about “risk” reinforce existing inequalities and disadvantage under-resourced and Black-led organisations. Funders should think carefully about how they define risk, who is expected to manage it, and whether the standards being used work fairly for different types of organisations. Instead of always trying to avoid risk, funders can take a more balanced approach by building trust, understanding organisations’ circumstances, and offering the right support so that smaller or less established groups are not excluded.

  • Assess organisational viability beyond financial proxies

    Move beyond indicators such as turnover and reserves, which often reflect historical inequities in funding access. Viability should consider skills, experience, community trust, governance practices, learning capacity, and how organisations respond to challenges or unexpected costs. Board contributions should be recognised in diverse forms, including expertise, lived experience, and community connections.

  • Align grant size with the value of the work, not historic income

    Base grant size and funding decisions on the value, relevance, and potential impact of the work proposed, rather than on current organisational revenue or past funding levels. Using income as a proxy for capacity risks reinforcing structural disadvantage. Funders should be open to fully funding strong proposals rather than reducing budgets or spreading small amounts of funding thinly across many organisations.

  • Broaden how information is shared and assessed

    Funders should give organisations different ways to provide due diligence information, especially where there are barriers to written or online applications. This could include phone calls, video or audio submissions, or support from funders to turn spoken information into written forms. These options can be particularly important for rural, remote, or digitally excluded communities, and should be treated as equally valid as written applications.

  • Make assessment criteria and decision-making transparent

    Funders should share assessment criteria with applicants in advance and explain how different elements will be weighted in decision-making. Transparency helps reduce uncertainty, supports fairer assessment, and enables organisations to engage honestly. Where assessment committees are used, funders should consider whether these include people with lived experience or contextual knowledge of the communities the fund aims to support.

  • Adapt due diligence for early-stage and grassroots organisations

    Early-stage, community-led, or informal organisations may not yet have formal policies, audited accounts, or reserves. Funders should adapt due diligence approaches accordingly, focusing on intent, governance in practice, community accountability, and support needs. Where gaps are identified, funders should consider offering infrastructure or capacity support alongside funding rather than treating these gaps as automatic grounds for exclusion.

  • Share and streamline due diligence

    To reduce duplication and burden, funders should explore opportunities to share or recognise due diligence undertaken by trusted partners or local funders, where appropriate and with consent. Shared approaches can reduce repetitive demands on organisations and support more joined-up, place-based funding ecosystems.

  • Use assessment to learn, not just filter

    Due diligence and assessment should be more than just a way to decide who is accepted or rejected for funding. Funders can use this stage to better understand organisations’ circumstances, identify barriers they may face, and think about what changes or support are needed to fund more fairly. What funders learn through this process should also help improve future funding programmes and practices.

Due diligence and assesment

Read our full research paper on this section

Due Diligence and Assessment Full Report

Case studies

Stages of grant making