Guide to operating as a grant-making charity in the UK, including due diligence procedures, risk assessment, and best practice for making grants to other organisations.
Many charities exist primarily to make grants to other charitable organisations or individuals. These grant-making charities have specific responsibilities to ensure funds are used effectively and for legitimate charitable purposes.
Due diligence is essential before making grants to ensure recipient organisations are legitimate, capable of delivering the funded activities, and will use funds appropriately. This protects the grant-making charity's reputation and ensures charitable funds are well-spent.
Good governance of a grant-making charity includes clear grant-making policies, transparent application processes, proper assessment procedures, and ongoing monitoring of funded activities.
Conduct thorough checks on recipient organisations including charity registration verification, financial health review, and assessment of capability to deliver planned activities.
Use formal grant agreements setting out terms and conditions, reporting requirements, payment schedules, and what happens if conditions are not met.
Require regular reports from grant recipients and conduct visits where appropriate. Monitor that funds are being used as agreed and outcomes are being achieved.
Assess and manage risks associated with grant-making including reputational risk, fraud risk, and risk of funds not being used as intended.
We can help you develop policies and procedures for effective grant-making. Contact us today for advice.