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This resource list compiles articles and reports on nonprofit sourcing and diligence for philanthropy audiences published over the past 20 years. Published research and advice on these topics has evolved quite a bit over that time.
This is not meant to be an exhaustive bibliography. For one thing, although sourcing and diligence is inherently linked to all other parts of grantmaking, this resource list does not include reports covering grantmaking as a whole (e.g., Participatory Philanthropy for Individual Donors or Journey Towards Intersectional Grant-Making). However, it does include articles that touch on creating equitable sourcing and diligence processes (e.g., Grantmaking with a Racial Justice Lens).
Below, we start with pointing out a few takeaways, then offer an annotated guide to 26 resources on philanthropic sourcing and diligence.
Most due diligence resources focus on tactical tools
We found a wealth of tactical tools on how to effectively conduct due diligence on nonprofits; for the most part, the mechanisms described in these tools have not changed over the past two decades. By tactical, we mean answering “how to,” as opposed to more strategic questions around “why.” The tools include checklists of considerations to look for and what to do if certain criteria aren’t met during the process. There appears to be a consensus on the major categories of criteria that are crucial to the diligence process. Although the labels differ between articles, generally they include:
- Problem or opportunity
- Credible, high-impact solution
- Leadership and capabilities to achieve desired impact
- Sustainable funding model or catalytic role for philanthropic funding
- Strong commitment to diversity, equity, and inclusion
Some articles focus on how to evaluate financial health or legal compliance, especially in articles on global grantmaking. However, most presume a donor has already identified specific areas for focus and impact, then guide the donor to consider how a potential grantee’s work aligns with the donor’s desired impact.
Equity is increasingly important and central
Articles published in 2019 and later focus more on equity in sourcing and diligence processes. Especially prominent are discussions of mitigating implicit biases and addressing procedural bias in the diligence process. As an example, some resources suggest ways to interpret an organization’s financial data in the context of systemic issues like racial disparities in access to philanthropic funding. While there are some promising examples, there is no existing consensus on a precise definition of equity or what it looks like in practice (e.g., an unbiased process).
There has been a general trend away from putting the funder in the role of “investigator” (i.e., seeking out flaws in an organization as a way to decide if the work deserves the donor’s support)—a role that magnifies inequities in power between a funder and a potential grantee. However, risk remains a central focus in discussions of sourcing and diligence, especially in discussions of what constitutes a “deal breaker” that would prevent a donor from making a grant. Many articles focus on how to identify “red flags,” but few provide solutions to collaborate with grantees on addressing and improving the red flags. One notable exception is S.D. Bechtel Jr. Foundation’s Resiliency Guide. More recent articles tend to discuss risk in terms of what the donor hopes to achieve through the due diligence process.
Read the full resource list by Tiffany Yang and Lyell Sakaue The Bridgespan Group.