How to Vet a Nonprofit Organization: Five Steps

Jewish Community Foundation Los Angeles Naomi

How to Vet a Nonprofit Organization in Five Steps

By Naomi Strongin, Vice President, Center for Designed Philanthropy

What does it mean to vet a nonprofit organization? Vetting is the thorough investigation of a nonprofit that a funder conducts before making a decision to support it. Vetting gives a funder insight into an organization’s mission and values, financial health, leadership, and the effectiveness of its programs. Ultimately, it answers the question of whether a funder will feel proud and confident to invest their dollars in the particular entity.

There are many reasons why any individual or family chooses to donate to a nonprofit. Perhaps a good friend or family member recommended it. Perhaps the group is highly recognized as a leader in a particular field like food insecurity, education, Jewish continuity, and more. Perhaps a family has a long history of supporting a given cause. Whatever the reason, vetting an organization is absolutely essential: it empowers a funder with knowledge, facts, context; it helps a funder learn more about what their support can help to accomplish; and it can determine whether this particular organization is the right fit for the funder’s support.

In my over a decade tenure working as part of the Center for Designed Philanthropy team at the Jewish Community Foundation of Los Angeles, my colleagues and I have vetted hundreds of nonprofit organizations both in the Jewish and larger community. Organizations that apply to The Foundation’s competitive institutional grant programs locally and in Israel are vetted through a rigorous multistep process. Donor funds help support these organizations, and our vetting process ensures that community dollars are being used effectively. Our team, our CEO, and our Board have a responsibility to ensure that the organizations receiving these funds have the leadership, procedures, and guidelines in place to ensure sound financial management, strong impact and long-term sustainability. Similarly, our team works with donors and donor families through formalized grant processes and less formal conversations to be sure their applicants and grantees are vetted in a way that feels comfortable and comprehensive to that individual and family and that aligns with their core values.

The steps outlined below demonstrate the most comprehensive approach that the Center for Designed Philanthropy team takes to vet nonprofit organizations. The extent and level of vetting is dependent on a number of factors, including but not limited to the size of the grant award; the length of the grant award; the extent to which our team or a donor is already familiar with the organization, its leadership, and its programs; and the organization’s budget and overall financial health.

Step One: Establish Criteria

Establishing criteria helps a funder ensure that the organizations chosen for support meet desired outcomes and core values. When establishing criteria, a funder may consider specific areas of interest (e.g., poverty, Jewish community, children & youth), geographic regions of interest, type of support (e.g., program or general operating), size and length of the planned grant, and the traits that resonate most, which may include strong leadership, track record for success, community need or sound financial management.

Step Two: Determining the Applicants

It is helpful to consult with funders, experts in the field, and community leaders to gain an understanding of the nonprofit landscape and strong organizations for consideration. Some funders with more formalized processes in place will hold an open application process and post the details on their website.

Step 3: Conduct Due Diligence

Funders can conduct due diligence on an organization in a variety of ways including reviewing financial documents, requesting applications that include questions related to activities, goals, and impact, or conducting a site visit to see the work of the organization and meet the leadership and staff first-hand.

Step 4: Consult with Your Board or Family Member

For funders supporting nonprofits together with their family or through a more formalized Board approval process, it is important to include the various stakeholders in the vetting process and achieve approval from all parties before moving forward with the grant award.

Step 5: Stay in Touch!

When a grant is awarded to an organization, it is often the beginning of a longer-term relationship with that organization. Therefore, it is important to keep updated at intervals throughout the year of the organization’s successes and challenges. Honesty and transparency between the funder and grantee is key to a successful long-term relationship.

Please contact the Center for Designed Philanthropy team to learn more about how we can assist you with your philanthropic pursuits. Click here to meet our team!

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