Giving guides
A practical guide to charitable due diligence.
What to look for, what to ask, and how to build a consistent process for assessing charities, whether you're new to grant-making or refining an established approach.
Why due diligence matters. And why it's often skipped.
The meeting where someone vouches for a charity is the hardest one to navigate. The CEO is well-connected, the annual report looks polished, and nobody wants to be the person who asks an awkward question. Due diligence exists for exactly that moment. Not because trustees are dishonest, but because social pressure is a very effective filter against inconvenient information.
When things go wrong, you rarely find out at a trustee meeting. You find out two years later when a journalist calls, or the Charity Commission publishes a regulatory inquiry. By then your grant has been spent and the connection is public record. The due diligence you didn't do becomes part of the story.
The less obvious argument for consistency: after fifty assessments using the same framework, you start noticing things. Charities with high trustee turnover consistently underperform on programme delivery two years later. That's a finding you can use. It doesn't exist if every assessment starts from scratch.
"Good intentions and strong evidence are not the same thing."
Five areas every assessment should cover.
Most assessors spend the majority of their time on the financials, because the accounts are filed, the ratios are calculable, and a surplus feels like a verdict. Governance gets skimmed. That's the wrong priority. A charity with pristine accounts and a dysfunctional board is a much worse bet than one with tight reserves and trustees who actually hold the executive to account.
Financial health
- Income trends over three years: is the organisation growing, stable, or declining?
- Unrestricted reserves: how many months of operating costs are covered?
- Dependency on a single funder. Over 50% from one source is a concentration risk.
- Staff costs as a proportion of total expenditure, useful for benchmarking operational efficiency.
Governance
- Trustee composition: are there relevant skills, and is the board independent?
- Conflicts of interest: are they declared and managed?
- Trustee turnover. High churn often signals internal instability.
- Charity Commission filing history. Late or missing returns require explanation.
Impact evidence
- Does the charity measure outcomes, or just activity? Outputs (what was delivered) are not the same as outcomes (what changed).
- Is impact evidence independently verified, or self-reported?
- How long has the programme existed? Early-stage organisations may lack longitudinal data.
- Are beneficiary voices present, both qualitative and quantitative?
Leadership & culture
- CEO tenure. Very long or very short tenures both warrant questions.
- Safeguarding policy: is it published, current, and appropriate to the beneficiary group?
- Whistleblowing policy: does it exist and is it accessible to staff?
- Pay ratios: are senior salaries proportionate and transparently reported?
Strategic fit
- Does the charity's stated mission align with your foundation's priorities?
- Geographic reach: does work happen where you want impact to land?
- Cause area: is there genuine overlap, or are you stretching criteria to justify a decision already made?
- Stage of organisation: is this the right moment in their development for your kind of support?
Reading charity accounts: what to look for.
UK charities with income above £25,000 must file annual accounts with the Charity Commission. These are publicly accessible at register-of-charities.charitycommission.gov.uk. For charities incorporated as companies, additional filings appear at Companies House.
The core document is the Statement of Financial Activities (SOFA), the charitable equivalent of a P&L. It shows all income and expenditure across restricted and unrestricted funds, and whether the organisation ended the year with a surplus or deficit.
Reserves policy
Should be stated explicitly. 3–6 months of operating costs is a common benchmark, though the right level depends on income predictability.
Restricted vs. unrestricted income
High levels of restricted income can limit flexibility. A charity with 90% restricted funds may struggle to cover core costs.
Trustee remuneration
UK charity trustees are generally unpaid. Any payments to trustees must be disclosed and require specific authority.
Related party transactions
Payments to individuals or organisations connected to trustees must be disclosed. Not inherently problematic, but worth scrutinising.
Red flags trustees should watch for.
A single red flag almost never disqualifies a charity on its own. A sole trustee running a small, early-stage organisation between board appointments is a different situation from a sole trustee running a £2m charity for the past decade with no change in sight. What the flags do is tell you where to spend your follow-up questions. A charity that can't explain a flag clearly, or gets defensive when asked, is telling you something more useful than the flag itself.
Governance
- Sole trustee or no independent trustees
- Majority of trustees are family members
- No trustee meeting records in annual report
- Unresolved regulatory actions on Charity Commission register
Financial
- Persistent operating deficits without explanation
- Reserves below one month of operating costs
- Unexplained large transactions or transfers
- Audit qualification or accounts filed significantly late
Impact claims
- 'We've helped thousands of people' without any methodology
- Impact metrics that only measure activities, never changes
- No acknowledgement of what didn't work
- Testimonials only, with no systematic outcome measurement
Safeguarding
- No safeguarding policy published for organisations working with vulnerable beneficiaries
- Policy dated more than three years ago with no update
- No designated safeguarding lead named
- Unresolved safeguarding concerns on public record
Building a repeatable process.
The problem with ad hoc reviews shows up in year two. You turn down a charity in your spring round and fund a similar one instead. Eighteen months later the one you funded is struggling, and someone asks why you didn't consider the other. If your only record is a score and a short note, you can't answer. You'll assess them again from scratch, possibly reaching a different conclusion for reasons nobody can trace.
Define your criteria first
Before looking at any charity, write down what you are looking for. Financial sustainability? Geographic reach? Specific beneficiary groups? Impact measurement maturity? Named criteria prevent post-hoc rationalisation.
Gather evidence systematically
Use the Charity Commission register, Companies House (where applicable), the charity's website, published annual reports, and independent reviews. Record where each piece of evidence came from.
Score against criteria consistently
Apply the same scoring approach to every charity in a round. If you weight governance more heavily than impact evidence, make that explicit. Don't adjust weights after you've seen the results.
Seek clarification before deciding
Strong due diligence often surfaces questions rather than answers. Contact the charity directly about anything material. A well-run organisation will welcome the conversation.
Record your rationale
Document why you funded or didn't fund, not just the score. 'Governance risk too high given our portfolio concentration' is a decision record. 'Didn't feel right' is not.
Ready to build a consistent process?
cleargiving.io gives your foundation a structured, repeatable framework for assessing charities, built around your criteria, not ours.