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Grantee due diligence checklist for small foundations

What to check about a grantee before you pay a grant, in the order to do it, with the official tools for each step. The free checklist has a blank tab to copy for each grantee, a filled-in example, and a log across your whole portfolio. No email needed, no macros.

Download the checklist (.xlsx, 31 KB) Works in Excel and Google Sheets

Opens in Protected View? Click Enable Editing so the counts calculate.

Published 2026-10-31 · Last updated 2026-11-02 · Sources checked October 31, 2026

This page and the checklist are not legal or tax advice. Your own policy and advisers come first.

How to verify a nonprofit before giving a grant

  1. Confirm the legal name and EIN on the request match the IRS letter or the grantee's W-9.
  2. Check IRS status in Tax Exempt Organization Search, and save a dated copy.
  3. Note whether it is a public charity. If not, a private foundation's grant may need expenditure responsibility.
  4. Screen for sanctions in OFAC's Sanctions List Search.
  5. Read the latest 990 and, for larger grants, the financial statements and budget.
  6. Check the board list for conflicts with your own board and staff.
  7. Confirm payment details by phone with a contact you already know, and do it again whenever bank details change.

The checklist adds insurance, a W-9, grants outside the US and past reports for repeat grantees, each marked with when it applies.

Check IRS status in Tax Exempt Organization Search

IRS Tax Exempt Organization Search is free. Search by EIN rather than name. It covers:

  • Pub. 78 data: organizations eligible to receive tax-deductible contributions.
  • The automatic revocation list: organizations that lost exemption after not filing for three years in a row (IRS on automatic revocation).
  • Determination letters dated 2014 or later.
  • Copies of Form 990-series returns and Form 990-N filings.

Check the deductibility code as well as the listing: PC means a public charity, PF a private foundation, and SONFI a non-functionally integrated Type III supporting organization (IRS Pub. 78 data dictionary, PDF). Under Rev. Proc. 2018-32 (PDF), grantors can generally rely on the Pub. 78 listing until the IRS publicly announces a change, unless they knew of the problem or helped cause it. That is why the date matters: save a PDF or screenshot of the result with the grant file. A group covered by a parent organization's group exemption is not listed on its own, and Rev. Proc. 2018-32's reliance does not extend to it. Ask the parent organization to confirm it is on its official list of covered subordinates.

Public charity or not: expenditure responsibility

When the grantee is a public charity, this step usually needs nothing more. The exception is a non-functionally integrated Type III supporting organization (code SONFI). When a private foundation makes a grant to one of those, to another private foundation, to a 501(c)(4) social welfare organization, or to a group without IRS charitable status, the grant generally needs expenditure responsibility. In short: a pre-grant inquiry, a written commitment signed by the grantee's officer, director or trustee, full reports from the grantee on how the money was spent, and reporting on your Form 990-PF.

This is a pointer, not a how-to. If a grant needs expenditure responsibility, or goes to an organization outside the US, get advice before you commit.

Sanctions screening with OFAC

The Treasury's Office of Foreign Assets Control says that US persons are generally prohibited from transactions involving blocked persons, who can be located anywhere. Its free Sanctions List Search checks names against the Specially Designated Nationals list and its other sanctions lists. Search the organization and its executive director and board chair, and record the date and result.

The search uses fuzzy matching, so similar names come up. A close match is a reason to look further at the details on the listing, not an automatic no.

Is a W-9 required for a grantee?

Form W-9 is how an organization gives its correct taxpayer identification number to a payer that has to file an information return. Whether you need one for a grant depends on how you report the payment, so ask your accountant. Some funders ask every grantee for a signed, current W-9 anyway, because it is the grantee's own statement of its legal name and EIN.

Documents to ask for

Scale the list to the grant. A $2,500 renewal to a long-time grantee needs less than a first $100,000 grant. Write down what "larger grants" means for you.

Scroll the table sideways to see every column.

Due diligence documents: what each one tells you and when to ask for it
Document What it tells you Ask for it
IRS determination letter Proof of tax-exempt status, in the IRS’s own words Every grant
Latest Form 990 or 990-EZ Size, finances, leaders and pay Every grant
Audited, reviewed or compiled financial statements An outside accountant’s view of the books Larger grants
Current operating budget How big the grant is next to the whole budget Larger grants
Board list Who governs, and any ties to your board or staff Every grant
Certificate of insurance Cover for risky work: events, youth, vehicles, construction If it applies
Form W-9 The grantee’s own signed statement of its name and EIN If your policy calls for it

Very small organizations, with gross receipts normally $50,000 or less, can file the Form 990-N e-Postcard instead of a full return. It has no financial figures, so ask them for a budget or a simple financial statement.

Conflicts of interest

Compare the grantee's board list with your own board and staff. Record any family, business or board tie, and follow your conflict of interest policy. For example, the person with the tie stays out of the decision. Private foundations also face the self-dealing rules, which tax certain transactions between a foundation and its insiders.

Collecting the documents in FundMesa

In FundMesa for funders, you can send a grantee one due diligence request from its award: IRS determination letter, latest Form 990, audited financial statements, current budget, board list and certificate of insurance, with a W-9 one tick away, and anything else you add. Up to 10 documents go out as one request. The grantee uploads them in the grantee portal, with a free login, and gets reminders before the due date, on it, and for up to nine days after. The grantee can stop the reminders from the email.

The Funder plan is $249 a month billed annually, or $299 month to month, with unlimited staff and a 30-day free trial. The IRS, sanctions and conflict checks stay with you.

FundMesa for funders

Free grant tracking spreadsheet for foundations

Free grant agreement template for foundations

Free grantee report template

Frequently asked

What is grantee due diligence?

The checks a funder makes before paying a grant: that the grantee is who it says it is, has the tax status you expect, is not on a sanctions list, is run responsibly, and will get the money. How deep you go should depend on the size and risk of the grant.

How do I verify a nonprofit is a 501(c)(3) before giving a grant?

Search its EIN in the IRS Tax Exempt Organization Search. Check that it appears in the Pub. 78 data, that its deductibility code is the type you expect (PC for a public charity), and that it is not on the automatic revocation list. Save a dated copy. Under Rev. Proc. 2018-32, grantors can generally rely on that listing until the IRS publicly announces a change, unless they knew of the problem or helped cause it.

Is a W-9 required for a grantee?

It depends on how you report the payment, so ask your accountant. Some funders ask every grantee for one anyway, because it is a signed statement of its legal name and EIN.

Do I need to screen US grantees for sanctions?

OFAC says US persons are generally prohibited from transactions involving blocked persons, and that sanctioned people and groups can be anywhere. Searching the organization and its leaders in OFAC’s free Sanctions List Search is a quick check. Save the date and result.

How often should grantee due diligence be repeated?

Set a schedule in your policy. One approach: recheck IRS status before each payment, and repeat the full checklist each year or with each new grant. The template’s Grantee log suggests a review a year after the last IRS check.

Where to go next