Tax Status Verify/Due Diligence

Audrey Kidwell · July 2022

Looking to see what other organizations are doing around due diligence checks on organizations they grant to.

I can see in BBGM there is an option to complete a Tax Status Verify that comes from the IRS database. What other documents are organizations requesting to make sure the organization is fiscally responsible/ low risk (i.e. audit, 990). Do you collect these documents before the application, during application, or after application?

Any help would be appreciated. Our organization is always looking to see what other organizations are doing.

Jane Van Ingen · July 2022

@Audrey Kidwell, we use the IRS form and we ask for it during the application process.

As a former grant writer, I can attest it's a fairly common thing to ask an organization for the tax form.

Hope this helps,

Jane

Kelley Ellinger · July 2022

@Audrey Kidwell During the application process, our Foundation asks for the following during the application process:

IRS 501c3 Determination letter
Current, signed W-9
990 Form(s)
Most recent audited financials
List of Board of Directors
Program budget for grant requested
Current annual report, if available

We also complete the tax status verify step, as well as GuideStar, and Checklists review to ensure everything is current. I hope this is helpful.

Kelley

Carrie Watkins · July 2022

@Audrey Kidwell In addition to the great suggestions already provided, we had a CPA who does audits for foundations provide some suggestions on due diligence in the grantmaking process. Here are a few resources that might be helpful:

Due Diligence Best Practices for Grantmakers (blog post)

15 Questions Foundations Should Ask as Part of Their Grantee Due Diligence (downloadable tip sheet)

Tax Status Verify/Due Diligence

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