Due diligence and assessment

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.

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.

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.

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.