For charities, fundraising is essential. Major donors, corporate partners, trusts and foundations can fund programmes, expand reach and make ambitious work possible. But every new source of funding also creates a relationship between the charity and the person or organisation providing it; a relationship that can create risk.
A donor may have a controversial business history. A corporate partner may operate in ways that conflict with the charity's mission. A foundation may be connected to individuals the organisation would not want to publicly associate with. A potential sponsor may have faced regulatory action, litigation or serious allegations.
This means charities have to determine whether they can accept money and whether they should. For many charities, answering that question has become an important part of fundraising, partnerships and governance.
Prospect research starts before due diligence
Not every piece of donor research is about risk. Fundraising teams first need to understand who they might want to approach.
Prospect researchers may look at an individual's career, business interests, previous donations, charitable affiliations and personal interests. For trusts and foundations, they may look at previous grants, trustees, priorities and funding patterns. The objective is to understand whether there is a realistic fundraising opportunity.
This is the opportunity side of the process. The risk side comes next.
Donor due diligence
Once a potential donor or partner becomes more serious, the questions change. A charity may want to understand:
- Where did the donor's wealth come from?
- What businesses are they associated with?
- Have they faced significant litigation or regulatory action?
- Are there serious allegations or controversies connected to them?
- Are they subject to sanctions or other restrictions?
- Who else are they closely associated with?
- Could accepting their money damage the charity's reputation?
- Would the relationship conflict with the organisation's purpose or values?
These questions are not always easy to answer through conventional compliance checks. A person may not appear on a sanctions list. Their company may be legally operating. There may be no criminal conviction or regulatory ban. Yet the relationship could still be problematic. For a charity, reputational and ethical considerations can matter just as much as legal ones.
Mission alignment changes the question
A bank conducting customer screening may primarily want to know whether a person presents a financial-crime or regulatory risk. A charity often has to ask something broader: Would taking money from this person or organisation undermine what we exist to do?
For an environmental charity, that could mean examining a company's environmental record, ownership or supply chain. Meanwhile, for an animal-welfare organisation, it might mean understanding links to animal testing, intensive farming or industries that conflict with its mission.
The question is not whether a company is legally permitted to donate but whether the relationship can be defended against the standards the charity applies to the organisations it scrutinises.
Corporate partnerships can create more exposure than a donation
This issue becomes even more important when the relationship is public. A major donor may remain relatively invisible but a corporate partnership is often designed to be visible.
The charity and company may appear together in press releases, campaigns, events and marketing. Logos may sit alongside one another and staff may work together. The partnership itself may become part of the charity's public identity. That means the reputational consequences of choosing the wrong partner can be significant.
This makes corporate-partner research partly a reputational question: What would we want to have known before our name appeared next to theirs?
The people behind an organisation matter too
Checking a company name alone rarely tells the whole story. A charity may also need to understand:
- Who owns the business?
- Who are its directors?
- What other companies are they associated with?
- Are there parent companies or subsidiaries?
- Who ultimately benefits from or controls the organisation?
- Are key individuals connected to other controversial businesses or organisations?
This becomes particularly important when corporate structures are complicated or international. A company may look relatively unremarkable in isolation while having owners, directors or connected entities that materially change the risk. That is why deeper due diligence often moves beyond screening an organisation as a single entity and starts looking at the network around it.
Ethical fundraising needs evidence
Another important point is that due diligence rarely produces a simple yes-or-no answer. An adverse news article does not automatically mean a donation should be rejected. An old allegation may have been disproved. Litigation may be commercially routine. A controversial association may be indirect or no longer relevant.
Equally, something that looks relatively minor in isolation may become much more important when combined with other information. The role of research is therefore to provide decision-makers with enough context to make a proportionate judgement.
The researcher is not necessarily deciding whether the donation should be accepted but making sure the people who do make that decision have the evidence they need.
Due diligence does not stop with donors
Fundraising may be the most obvious use case, but charities have many other external relationships. They work with suppliers, consultants, local organisations, governments, NGOs and commercial organisations in different jurisdictions. Each creates another version of the same problem. The same organisation might be a potential donor, supplier and commercial partner.
Different teams may be involved
Depending on the organisation, donor and partner due diligence can involve several functions:
- Prospect research may identify and profile potential major donors.
- Major gifts and philanthropy teams may use that research to prepare for engagement.
- Corporate partnerships teams may investigate potential sponsors and commercial partners.
- Fundraising ethics or ethical standards teams may determine whether a relationship is consistent with organisational policies and values.
- Trusts and foundations teams may research institutional funders and the people behind them.
- Legal and compliance teams may assess sanctions, litigation, corruption or regulatory concerns.
- Procurement teams may need similar information about suppliers.
- International programme teams may need to understand partner organisations operating in other countries.
The precise structure will vary, but the underlying need is similar. Someone inside the charity has to understand who the organisation is getting into a relationship with.
The challenge has traditionally been time
Thorough research can require searching corporate records, sanctions information, news archives, court material, regulatory databases, websites and other public sources. Doing that manually takes time and creates practical limits.
A charity may conduct detailed research only on its largest donors. Corporate partners may receive more scrutiny than smaller foundations. International relationships may trigger deeper checks than domestic ones. The result is often a risk-based approach in which only some relationships receive detailed investigation.
Technology is starting to change that calculation. Research that once required hours of searching can increasingly be gathered, structured and reviewed much faster. This means more relationships can be checked before they progress.
That can allow charities to identify problems earlier, avoid investing time in inappropriate relationships and apply their ethical standards more consistently.
Knowing who you take money from
Charities depend on trust. Supporters trust them to use funds responsibly. Beneficiaries trust them to act in their interests. Staff and volunteers expect the organisation to live by the values it promotes publicly.
That means funding cannot always be considered separately from the person or organisation providing it. The biggest reputational risks often come from information that could have been found but was never looked for. For charities, due diligence is about understanding significant relationships before they are allowed to develop. Charities need to know who money is coming from, what would the relationship with them mean, and are they comfortable being associated with them.