ITA
Philanthropic Due Diligence
Assessing whether a Civil Society Organization is suitable for funding
Before philanthropic capital is deployed, wealth managers often 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 does not assess programatic effectiveness or social impact; it focuses on institutional readiness and risk, while supporting informed decision-making and protecting both client and advisor from avoidable risk.
At this stage, due diligence functions as a baseline risk mechanism: it determines whether an organization is suitable for the proposed form of funding.
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, prior institutional funding, and evidence of legitimacy within the communities served.
One pre-due diligence process that is useful to consider is 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, CSOs that receive or have received funding from these types of donors, are likely to meet baseline governance expectations at the time of funding. This should be treated as a first positive signal but never as a substitute for context-specific due diligence.
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. Minimum thresholds should be proportional to the size, duration, and risk profile of the proposed funding. For example, a one time €25,000 project should not trigger the same due-diligence mechanisms as a multiyear core support grant. Only once these thresholds are met should funding decisions be considered.