Streamlining Your Financial Due Diligence

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Here’s a fact that may catch you by surprise: When you make grants to 501(c)(3) public charities, you have no legal obligation to obtain financial information. Yet, most funders believe—arguably so—that they are obligated to exercise due diligence in their grantmaking, and to do so, they require budgets and financial reports.

On the surface, this should be a simple requirement. Nonprofit organizations have budgets and financial reporting processes. They can share their budgets and financial reports with funders just as easily as they share them with managers and board members. However, most funders take their financial due diligence a step further: They ask grantees—prospective and current—to customize their budgets and financial information to fit the funder’s requirements.

Project Streamline, a collaboration of grantmakers and grantseekers working to improve application and reporting practices, recommends a different way.

Full article includes sample documents.

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