Giving Smartly and Safely
December 15, 2016
An Interview with Jamesha Shackerford, Foundation Associate
What does “Due Diligence mean?” Prior to making a grant, the Foundation researches the nonprofit to establish that they qualify to receive the grant. We recently asked Jamesha Shackerford, who completes the due diligence process for the Foundation, to tell us more about the steps she takes to review a nonprofit
Why is due diligence for nonprofits important?
Due diligence is an important step in the giving process to ensure that the generous gift the donor is making is sent to a nonprofit that is legitimate and that the nonprofit will be able to use the donation as the donor intended.
What information do you look for when conducting due diligence for the Community Foundation?
When I am conducting the due diligence I first look to see if the organization is a tax-exempt organization, government agency and/or church. The second thing I look at is if the organization’s most recent 990 or 990N form (a nonprofit’s tax return) is submitted to the IRS. I check this document to see the organization’s financials and share with our Fundholders if I find a red flag, for example if an organization is in debt. I also use this form to verify the address of the organization to ensure that the donation check is mailed to the organization’s official address. Lastly, I verify the primary contact of the organization so that we can address the donation letter to the correct individual.
What resources do you recommend people use to conduct their own due diligence before giving?
The recommended resources I suggest are Guidestar.org, IRS.gov and the South Carolina Secretary of State website (for nonprofits that are located in South Carolina). All three websites have databases that you can search to find the 501(c)3 status or other tax-exempt statuses of an organization.
What are your tips for giving smartly and safely during the holiday season?
My number one tip is to do your research before you make a gift to an organization. I love that the holiday season brings people together and puts people in the spirit of giving, but I also want people to be smart givers. This doesn’t mean you shouldn’t give to organization(s) you are not familiar with. I actually encourage people to give to those organizations. This simply means no matter which organization(s) you choose to give to, make sure that they will be good stewards of your gift. The first step in ensuring this is by doing your research. The resources that are listed above are good places to start and if you have further questions after your initial research never be afraid to pick up the phone and make a call to the organization.