ITA
Philanthropic Due Diligence
Assessing whether a Civil Society Organization is fit for funding
Before philanthropic capital is deployed, wealth managers have a responsibility to ensure that recommended organizations meet a minimum threshold of institutional credibility, governance quality, and operational capacity. This initial due-diligence phase supports informed decision-making and protects both client and advisor from avoidable risk.
At this stage, due diligence functions as a gatekeeping mechanism: it determines whether an organization is suitable for funding at all.
Key areas of assessment typically include:
  • Governance structure and oversight: clarity of board roles, independence of decision-making, and internal and external accountability mechanisms.
  • Leadership and management quality: stability of senior leadership, internal controls, and succession considerations.
  • Legal and regulatory standing: formal registration, compliance with reporting obligations, and eligibility to receive funds.
  • Financial management: budgeting practices, transparency, internal controls, and availability of audited accounts where applicable.
  • Institutional credibility: track record with peer organizations, participation in recognized networks, and prior institutional funding.
One pre-due diligence process that is useful considering consists in checking whether the CSO has previously received funding from large philanthropic organizations such as The Ford Foundation or Open Society Foundations. These large philanthropic actors do not grant funding unless a thorough due diligence process is undergone first. So, if you CSO of choice receives or has received funding from these types of donors, chances are their governance structure and processes are on place.
This entry-level assessment does not seek to eliminate all risk, but to ensure that philanthropic resources are entrusted to organizations capable of managing them responsibly. Only once this threshold is met should funding decisions be considered.