Grantmaking 101: What Exactly Is Due Diligence?

“Money, pardon the expression, is like manure. It's not worth a thing unless it's spread around, encouraging young things to grow.”

Dolly Levi, Hello Dolly

“Again, the kingdom of heaven is like a merchant in search of fine pearls, who, on finding one pearl of great value, went and sold all that he had and bought it.”

Matthew 13:45-46

It’s clear that people have different views on money and how to spend it. Some see it as manure to be spread, other as a pearl to be sought. Hope for New York sees wisdom in aspects of both.

At HFNY, we search for the “pearls of great value” that are often hidden in communities around our city so that we can invest our dollars wisely, soundly, and intentionally. We call this in-depth process of investing our dollars into nonprofits throughout New York City our grant process.

Here’s an outline to give you a glimpse into exactly what our grant process entail:

  1. Throughout the year, thousands of people from the HFNY community donate to and entrust us with funding to allocate to life-transforming programs that holistically serve the poor and marginalized in New York City.
  2. At the same time, our staff is working with stakeholders to partner with our 45+ non-profit partners who are serving the poor and marginalized in an effective and meaningful way.
  3. Each spring, our faith-based non-profit affiliates apply for a financial grant. These grant requests range from covering computers and equipment for workforce readiness programs to covering supplies for after-school programs or covering food for nutrition education workshops at a local food pantry.
  4. With grant applications in hand, the review and evaluation process (which we call due diligence) begins.

So, how does HFNY actually decide which organizations to allocate funding to? Our staff, Board of Directors, and a team of about 40 HFNY stakeholders (our Community Grants Circle) review the grants.

We consider the following aspects in making our grant determinations:

  1. Leadership: Is the leadership highly effective, committed to the mission, and managing the organization well? Is the staff fulfilling the mission and vision effectively? Is the Board diverse, informed, engaged, and committed to the organization and its programs? Is the Board guiding the overall direction and strategy of the organization, in partnership with staff leadership?
  2. Financial position: Is the organization financially responsible, balancing their budget, and raising funds from diverse funding streams? Are they attracting various funders and able to rally support outside of HFNY?
  3. HR/staffing: Is the staff of the organization managed well, cared for, and do they stay committed to their roles for sustained periods of time? Does the organization care for its employees and help to develop them personally and professionally?
  4. Programs: Does the organization have sound programming that is making a significant impact on communities of need? Are the programs addressing compelling needs and meeting the poor and marginalized in their moment of need? Do the programs have a track record (or high potential) to have significant outcomes to benefit the poor and marginalized?
  5. Volunteer engagement: Does the organization have the capacity to and the commitment to engage volunteers in their ongoing work?

The above reflects a process, but throughout each step there is much prayer. Prayer for discernment as we review the grant applications. Prayer for guidance in the areas we see as high potential where we want to invest dollars to catalyze further impact. Prayer for clear minds and hearts in the review and decision-making process so we can steward our funds in a way that pleases and glorifies God.

All of this is ultimately to see money “spread around (like manure) see things grow” and to identify “the pearl of great value” to invest in. We hope you’ll join us in our prayer for that.

Stay tuned as we continue to share articles that give a "behind-the-scenes" look at our grantmaking process in the coming weeks.