Due diligence
We will undertake reasonable due diligence of donors, to ensure they don’t hold views or are involved in activities that might be incompatible with our role and damage our reputation. In terms of donations, we will ensure that any gift is safe to accept and, doing so, would be in the best interests of our Charity.
We will also consider issues, such as suspicious donations, or managing large anonymous gifts, or those from vulnerable individuals. If there may be any risk in terms of our working with individuals who have been placed on the UK designated persons or sanctions lists, we will check these.
Where there are concerns or for technical, legal or financial issues, this may involve seeking appropriate professional opinion and guidance.
THE SCALE OF RISK
When assessing the suitability of a funder, we consider:
- Is the amount of money involved substantial?
- Is the project/contract particularly sensitive, important, complex or large scale?
- Is the organisation/individual well known and respected, or might they hold views, undertake activities or work in an area that may potentially be problematic?
- How much potential is there for things to go wrong and what’s the worst that could happen?
CONDUCTING DUE DILIGENCE
Where there is a degree of risk, we carry out such checks as are necessary to ensure that we are able to adequately mitigate this.
We do this whilst recognising people’s right to privacy, and therefore only carry out investigation where there is a legitimate business purpose in doing so. We ensure that our findings are kept securely, only disclosed to those who need to know this information, and not retained any longer than necessary.
BASIC CHECKS – ORGANISATION
If they have a website, we check that what they’re proposing fits with what’s on there. If available, we review what it says about key members of their team and, download and review, their annual report/accounts.
We carry out an internet search on the company, if applicable, and key individuals, to see if there is anything of concern.
We speak to someone who has worked with them or knows their sector well, if appropriate.
We take up references, if appropriate.
ADDITIONAL CHECKS
Depending on the nature, location of a project and the degree of risk, applicable additional checks may be carried out, using the framework below.
Ethics – activities that are illegal or incompatible with our values. Issues such as corruption/bribery, criminal activities, discrimination, exploitation of people, or the environment, or involvement with radical groups, or companies, regimes, products or services that conflict with our aims/values.
- Confirmation that there are adequate safeguarding procedures in place and being consistently applied to ensure vulnerable people are kept safe from harm.
- For large UK organisations, compliance with the Modern Slavery Act UK, including their supply chain management.
- If appropriate, designated people and proscribed organisations checks.
Donations – we consider issues, such as suspicious donations, or managing large anonymous gifts, or those from vulnerable individuals.
Compliance – significant breaches of regulatory or other frameworks, investigations by government agencies/police, court cases, debt default, or disqualifications.
- We check with any relevant regulator for reports or other information that might be available.
- We confirm registration with any relevant UK or other trade/professional bodies and that any licenses, qualifications or insurances are held and in-date.
- For UK individuals, we check for disqualified director, insolvency/bankruptcy or Charity Commission automatic disqualification.
- For donors – we check potentially tainted donations (tax avoidance schemes).
Finance – this includes risk of takeover, sustained annual operating losses, level of leverage (debt) too high for their sector, bad credit risk, liquidity (cash flow) issues, weak asset base, unusual, related party or intercompany transactions, or significant amounts of capital being taken out of company, adverse comments by auditors, court judgements, significant recent debt restructuring/profit warnings or redundancies.
Ability to Deliver – capacity to deliver services/products, track record in delivery, security around key staff (e.g., a small company relying on a single individual), any supply chain issues (e.g., reliance on shipments from overseas), or an organisation that has operated in only a single area delivering in an entirely new one.
Reputational Risk – any potential negative media attention, or concerns from other funders/partners from being associated with this company/individual.
Contracts – check that the balance between the costs, benefits and liabilities is fair, and there are no onerous or unreasonable obligations.
Conflicts of Interest – ensure our conflict-of-interest policy is complied with.
Contracts/Agreements – deliverables wholly charitable in nature, clearly specified (quantity/quality/timescale), clear monitoring and reporting throughout and at end of project, with provision to cancel/claw back funding, if necessary.
INDIVIDUALS
There may be circumstances where we may consider it appropriate to check individuals. There are a variety of checks that we may carry out, including if someone:
- is currently declared bankrupt (or is subject to bankruptcy restrictions or an interim order) or has an individual voluntary agreement (IVA) with creditors.
- is disqualified from being a company director.
- has previously been removed as a trustee by either the commission or the High Court due to misconduct or mismanagement. Charity Commission automatic disqualification rules.
- Is listed on any UK registers of court and other judgements.
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