Before a foundation, a CSR team or an international donor funds an NGO, it runs due diligence. Most of what it checks can be prepared in advance. Organisations that keep a ready due-diligence pack answer in days, look more credible, and keep the conversation on their programme rather than on missing papers.
This checklist is written from the NGO’s side: what funders typically ask for, and what good looks like.
This article is for educational and governance purposes only. Each funder has its own process; use their list where they give one.
The checklist
| Area | What funders usually ask for | What good looks like |
|---|---|---|
| 1. Legal standing | Registration certificate, trust deed or MoA, PAN, 12A and 80G, CSR-1 for CSR funding, FCRA registration for foreign funding | All current, in one folder, with expiry dates tracked |
| 2. Financial statements | Audited accounts for three years, auditor’s report, management letter | Unqualified opinions; management-letter points closed and shown as closed |
| 3. Board and governance | Board list, meeting minutes, conflict-of-interest declarations, committee charters | Independent members, regular meetings, minutes that show decisions and challenge |
| 4. Policies | Finance, procurement, HR, POSH, safeguarding, whistleblower, anti-fraud, data protection | Approved by the Board, dated, and actually used |
| 5. Financial controls | Delegation of authority, bank signatories, budget monitoring, cost allocation | Segregation of duties; budget-versus-actual reviewed monthly |
| 6. Regulatory compliance | Income-tax filings, FCRA returns (FC-4), CSR reporting where relevant | Filed on time; FC-4 agrees with the accounts |
| 7. Track record | Past grants, outcomes, references, evaluation reports | Results with evidence, not only activities |
| 8. Funding health | Income by donor, reserves, related-party transactions | No single donor dominant; reserves policy in place |
| 9. Risk and integrity | Risk register, litigation, sanctions and adverse-media screening | A live risk register the Board reviews |
| 10. Data and safeguarding | How beneficiary and donor data is protected; safeguarding incidents | DPDP readiness; incidents logged and handled |
What raises red flags
- Accounts that are late, qualified, or don’t match what was reported to the funder
- A Board that meets rarely, or whose minutes record no decisions
- Policies that exist on paper but no one can explain
- Heavy dependence on one donor with no reserves
- FCRA or tax filings missing or late (see what FCRA non-compliance really costs)
Build the pack once, keep it current
Keep a single due-diligence folder with the documents above, an owner for each, and a date to refresh it after every audit. Add a one-page governance summary for the Board to approve each year. Funders notice the difference between an organisation that can send everything the same day and one that needs three weeks.
The deeper point is that due diligence tests governance, not paperwork. Funders want evidence that the organisation runs on systems rather than on one or two individuals. The 68 questions CEOs should ask are a good way for leadership to test that before a funder does.
Questions people ask
What documents do funders ask for in NGO due diligence?
Typically registration documents (trust deed or MoA, PAN, 12A, 80G, CSR-1 for CSR funding, FCRA for foreign funding), three years of audited accounts, Board details and minutes, key policies, compliance filings and evidence of past results.
What is CSR-1 registration?
CSR-1 is the registration that implementing agencies must file with the Ministry of Corporate Affairs to receive CSR funds from companies.
How can an NGO prepare for donor due diligence?
Keep one current due-diligence folder with an owner for each document, close audit management-letter points, keep Board minutes that record decisions, and review a one-page governance summary at the Board every year.
What do funders see as red flags?
Late or qualified accounts, an inactive Board, policies nobody uses, heavy dependence on one donor without reserves, and missing tax or FCRA filings.