Deciding who to fund and frameworks to help you choose
Few - if any - grantmakers are experts in the multitude of project areas they are asked to fund. Understanding the strengths and weaknesses of one community group and one project can be difficult enough, let alone comparing one to another to decide which to fund. Fortunately, there are some easy-to-use frameworks available to help you with your task.
The Little Blue Book from New Philanthropy Capital
The Little Blue Book is a 60-page PDF download from New Philanthropy Capital (NPC), a UK-based think tank.
The booklet outlines NPC's approach to analysing charities; its analysis framework can be applied to any community group or project.
The Little Blue Book recommends that a full analysis of a charity should entail:
- researching the issue
- looking at publicly available information
- meeting with key people
- requesting information that is not publicly available
- visiting a project
- talking to other individuals and organisations.
It outlines six areas for analysis (activities, results, leadership, people and resources, finances and ambition) and provides assessment criteria for each area.
Due Diligence Done Well from Grantmakers for Effective Organisations
Due Diligence Done Well is a free resource from Grantmakers for Effective Organisations (GEO), providing you're willing to submit details such as your name, organisation and email address.
The tool has been designed to help you select the right grantees - those who are a good fit, a good investment. As GEO explains, technically, conducting due diligence entails ensuring an organisation's financial and legal compliance, but when done well, it "has the potential to provide insight into such critical attributes as the role of the organisation's board, the position the nonprofit holds in its field and community and the level of alignment between our own mission and the goals of the grantseeker."
Due Diligence Done Well will take you through the steps of designing an effective due diligence process and making a decision, taking into consideration any risks or red flags raised by your due diligence process. It flags eight factors as assessment priorities:
- organisational history and track record
- governance and executive leadership
- organisational vision and strategy
- the proposed planning, outcomes and evaluation
- human resources
- external communications
- relationships and networks
- financial health