What due diligence should we carry out on prospective partner organisations?

Before you enter any form of collaboration, it is sensible to undertake some due diligence, taking it further if you are considering a deeper form of joint working. You should undertake some due diligence even if you are a sub-contracting partner, as there is still risk that you will lose money or reputation if things go wrong. For collaboration to work, you need to know your partner, and so it is useful if trustees and staff at all levels build up contacts and relationships across both charities.

The information you should gather about new partners includes:

  • Background information usually available from their website such as history, services they provide and who they work with
  • Trustees and how the charity is governed – some information available from Charity Commission website, such as filing record
  • Financial position, looking back through several years’ accounts, but also by discussion. Questions you might ask include:
    • Do actual figures reflect budgets or are there large variances?
    • Do they recover their overheads on funded work?
    • Do they have financial KPI’s (key performance indicators)
    • Do they own property, lease it, have mortgages?
    • Are there any liabilities that are not on the balance sheet?
  • Organisation chart and people – how are they structured, who is responsible for management decisions
  • Experience of similar service delivery

Want to discuss further?

Helen Elliott

Partner

Ross Palmer

Senior Tax Manager

Gillian McKay

Senior Tax Manager

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