Financial advisors · Family offices · Philanthropic advisors
Charity due diligence for financial advisors.
A useful charity research file explains what the evidence establishes, what remains uncertain and why that matters for this client's proposed gift. A rating or overhead percentage cannot do that work alone.
1. Confirm the legal entity receiving the gift
Start with the legal name, EIN, location and relationship to the program the client intends to support. A national brand, local affiliate, fundraising entity and operating charity can be different recipients. Do not attach a filing or adverse development based on a similar name alone.
The IRS Tax Exempt Organization Search provides tax-status records, Form 990-series returns, determination letters and automatic-revocation information. Record which dataset you checked and when. An old revocation entry needs a reinstatement check; it does not establish current status by itself.
Keep: the exact recipient, EIN, intended program, source link, lookup date and any unresolved entity mismatch. Obtain qualified tax advice for the particular gift when needed.
2. Reconcile financial stewardship across comparable periods
Review revenue, expenses, assets, liabilities, liquidity and restrictions. Compare several periods when available. Check whether the audited statements cover a consolidated group while the tax return covers one entity, and whether reported totals include donated goods or other noncash activity.
A high program expense share is not proof of impact. Low overhead is not proof of efficient delivery. Large reserves can support commitments or resilience; they can also leave the value of another unrestricted gift unclear. Explain the operating model and differences in scope before interpreting a ratio.
Keep: the reporting period, entity scope, original filing or audit, reconciled figures and the questions the available records cannot answer. See our guides to reconciling charity numbers and understanding reserves.
3. Review governance, compensation and related-party disclosures
Look for board independence, leadership changes, conflicts disclosures, related-party transactions, compensation components and the relationship between the board and management. A disclosure is a starting point for a question, not an automatic finding of misconduct.
Separate a reported policy from evidence that the policy operates effectively. If a transaction or compensation change needs context, record the question and seek the supporting documents rather than treating an unexplained number as a conclusion.
Keep: the relevant disclosure, its date, the entity involved and what additional context would change the interpretation.
4. Distinguish activity from evidence of outcomes
People served, grants awarded and meals distributed describe activity or scale. Ask what changed for participants, how it was measured, whether the evaluation was independent and whether other explanations were considered. Historical research also needs a check that it applies to the current program.
When no strong independent evaluation is available, describe that limitation explicitly. Missing evidence does not establish that a program failed, and a polished annual report does not establish that it worked.
Keep: the outcome claim, evaluation method, evaluator, evidence date and limits on current applicability. Read how to assess impact evidence.
5. Check developments after the latest financial period
A filing can be accurate and still lag a leadership transition, financial disruption, regulator action or corrective response. Review current primary records and credible reporting, match the correct entity and preserve the procedural status.
An allegation, filed case, finding, settlement, dismissal and correction are different things. Keep later outcomes with the original story. Monitoring can help surface published developments, but silence in a feed is not a clearance or a guarantee that nothing changed.
Keep: the event date, publication date, source, current status, organization response where available and the date you last checked. No Halo's public development records show sourced events and their limitations.
6. Ask what this gift can accomplish now
Connect the client's intended amount, timing and restrictions with the charity's current capacity and documented needs. Ask whether the binding constraint is funding, staffing, facilities, delivery capacity or something else. Financial strength and a compelling incremental use for capital are separate questions.
Where public records cannot establish flexible liquidity, commitments or the use of a restricted gift, identify what must be confirmed directly. Avoid presenting an unsupported precision estimate or ranking unlike charities as a universal winner.
Keep: the proposed gift context, documented need, key constraints and the unanswered questions that matter to the decision.
Build a dated file your team can revisit
A practical file contains the recipient and gift context; a source list with dates and reporting periods; findings separated from interpretations; unresolved questions and follow-up tasks; the rationale for the decision; and a review date. Keep client context and private notes accessible only to the appropriate people.
Free public records are useful for orientation. A consequential decision may require current research, direct contact or a separately scoped professional review. This checklist supports research organization; it does not certify a charity or replace legal, tax, accounting or investment advice.