Impact-first grant-making: our approach to due diligence

At Founders Pledge, we pride ourselves on maximizing impact in everything we do. Our grant-making is no different. We provide members with comprehensive infrastructure for safe, global, flexible giving -- including a Donor Advised Fund (DAF) Program -- so that they can worry less about how and focus more on where to give.

Doing the most good possible

Our research into some of the most pressing yet neglected problems, and evaluation of the charities implementing the most effective solutions to them, often leads us to recommend early-stage, unheard of, complex organizations and initiatives.

For example, our members recently seed funded two new organizations: the Berkeley Risk and Security Lab, researching and mitigating threats from frontier military technologies; and Global Shield, shaping national policies to reduce global catastrophic risks like nuclear war, pandemic and threats from AI. Without our members responding quickly to these time-sensitive recommendations by our Research team, it’s likely these organizations -- and the critical work they’re doing -- wouldn’t exist.

Yet, it’s precisely the kind of characteristics that make these funding opportunities high-impact, like being neglected by mainstream philanthropists, that mean they require more intensive vetting when it comes to due diligence and ensuring our members and our grantees are protected.

Giving where others wouldn't

Our commitment to impact means we have to work creatively and conscientiously to ensure grants make it to our recommended funding opportunities.

Unlike most other grant-making organizations, we don’t shy away from investigating new, unique or complex grantees; we embrace it. We want to do everything in our power to ensure our members can support the highest-impact funding opportunities, even if that means taking an approach which is unparalleled in its time- and resource-intensity.

In other words, we go above and beyond with our due diligence. This is to ensure that:

• Our grantmaking adheres to our Zero Harm Policy
• Our grantees are financially stable and above reproach in their policies and governance
• Every grant is reviewed holistically by our highly trained team

Prioritizing flexibility & security

Our risk-based approach to due diligence means we conduct in-depth assessments when necessary, while striving to complete low-risks grants -- those regulated by external authorities -- as efficiently as possible.

For grants which we deem ‘high-risk’, including all of those to our high-impact funding recommendations, those which fall outside of our jurisdictions, and those to organizations which are not registered non-profits, we conduct extensive due diligence.

We cover nine risk factors:

• Organizational status: The organization or initiative is deemed charitable by the governing body in the appropriate jurisdiction, or their work is deemed charitable according to standards set by the governing law in Founders Pledge jurisdictions (US, UK, Germany)
• Jurisdiction: The organization or initiative is within Founders Pledge jurisdictions
• Zero harm: The organization or initiative does not breech our Zero Harm Policy (see below)
• Abuse of funds: Money isn’t being diverted elsewhere, used ineffectively, used harmfully, not kept track of, or there is a conflict of interest
• Money laundering: Money isn’t being used to fund a criminal entity, or paid to an entity connected to the donor for the purposes of tax evasion
• Fraud or theft: Money isn’t being wrongfully diverted, intercepted or stolen
• Failure of safeguarding: The organization or initiative isn’t failing to protect or respect (the rights of) children and vulnerable adults
• Organization/initiative is non-effective: For example, the organization or initiative has negative impact or is over-funded
• Organization/initiative is non-responsive: The organization or initiative does not confirm receipt of funds or fails to comply with monitoring and reporting so that we cannot confirm fair use of funds

For grantees we deem high-risk, we request to see the following documents at minimum:

• Charity registration documents
• Recent financial reports or accounts
• Recent annual reports or summaries of their activities and objectives
• A list of their key personnel, including board members and executives

We review all grants against our Zero Harm Policy as standard (see below). If the grantee’s work involves children and/or vulnerable adults, we conduct safeguarding checks, namely assessing safeguarding policies and verifying that those working with at-risk individuals have undergone relevant background checks. If the grantee operates in a high-risk country per the Corruption Perception Index (CPI), we may request additional assurances, such as a conflict of interest policy.

We don’t stop when grants are made. We take a holistic approach, following up with careful monitoring to ensure compliance in a way that stays true to our value of maximizing impact and therefore places minimal burden on grantees.

Ensuring zero harm

We’re on a mission to do the most good possible. Ensuring that none of our grants inadvertently causes harm to people, animals or the planet goes without saying.

That’s why we’ve developed -- and like to explain -- our Zero Harm Policy. By doing so we hope to make transparent our definition of ‘harm’ and hold ourselves accountable.

Our Zero Harm Policy covers as standard:

• Discrimination of any kind
• Hate speech
• Harmful gender-related practices and/or stereotyping
• Proselytization
• Disregard for the rights of women and/or children
• Cruelty to animals and/or the environment
• Anything that threatens human rights

Any indication that a grant or grantee may cause harm as defined by our Zero Harm Policy results in further review.

High-impact case study: Vox Media

"Conducting an extensive Expenditure Responsibility assessment"

In 2022, our Global Catastrophic Risks Fund made a grant to Vox Media, a privately held company based in the United States, to facilitate important, awareness-raising reporting on the Ninth Review Conference of the Biological Weapons Convention. Responding to the unique nature of this grant, we conducted an extensive Expenditure Responsibility¹ assessment to ensure the funds would be used for charitable purposes and in compliance with Internal Revenue Service (IRS) regulations. This process involved a thorough examination of Vox Media's project budget, intended expenditures, and a clear understanding of how the funds would be directed.

High-impact case study: EIDU

"Navigating dual registration and cross-border operations"

Dedicated to enhancing pre-school education in Kenya through cost-effective, evidence-based methods like structured pedagogy and digital learning, EIDU is a unique organization that operates as both a registered charity in Kenya and a limited company in Germany. This distinction presented a unique and complex situation of having to navigate dual registration and cross-border operations. We worked closely with both entities to ensure funds were funneled efficiently and in strict compliance with charitable regulations. This innovative and collaborative approach underscores our commitment to building strong partnerships with our recommended funding opportunities, in this case enabling catalytic funding to kick-start a project intended to reach around 600,000 pre-primary children in Kenya.

High-impact case study: the Centre for Long-Term Resilience

"Ensuring funds align with charitable objectives"

The Centre for Long-Term Resilience (CLTR) is a UK-based think tank focused on extreme risks. As a think tank, CLTR is structured like a private company limited by guarantee without share capital, presenting unique challenges when it comes to awarding charitable grants. Our approach to navigating complex charitable regulations involves conducting rigorous due diligence to ensure the funds we allocate align with charitable objectives. We establish comprehensive agreements that instill confidence in both parties. By leveraging our experience and understanding of the intricacies of CLTR's structure, we facilitated the flow of resources to advance their important work addressing extreme risks.

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We’re proud of our comprehensive approach to due diligence. It’s one of the things that makes the Founders Pledge DAF program so unique: members can confidently support innovation and impact with their grant-making, and together lead the way for effective giving to become the norm.

Learn more about our DAF.

Notes

1. Expenditure Responsibility (ER) is a required US procedure when a private foundation or a DAF makes a grant to an organization that is not classified by the Internal Revenue Service as tax-exempt, to ensure that the funds are spent for charitable purposes and to obtain full and complete reports from grantees. It comes into play when we make US grants to non-charities for charitable projects and to international organizations from the US. ↩