Due Diligence Policy

Document title

Approved by

Board of Trustees

Approval date

September 2026

Review date

September 2027

Review frequency

Annually

Applies to

Trustees and staff involved in assessing partners, donors, and other stakeholders on behalf of Heart Heroes

Related documents

Donated Goods and Gifts Policy, Conflict of Interest Policy

Purpose

The policy aims to:

Ensure compliance with legal and regulatory requirements.
Safeguard Heart Heroes’ reputation and resources.
Ensure that potential partners, donors, and other stakeholders are trustworthy, responsible, and aligned with our goals.

Definitions

Due Diligence: The process of investigating and evaluating potential partners, donors, and other stakeholders to ensure they meet Heart Heroes’ standards of integrity and compliance.
Charity Commission Compliance: Adherence to the rules and regulations set forth by the Charity Commission to ensure the ethical and lawful operation of charities.

Due Diligence Process

Initial Risk Assessment

Conduct an initial risk assessment before engaging with any potential partner, donor, or stakeholder to determine the scale of risk involved. Consider the following factors:

Sensitivity, importance, complexity, or size of the donation or contract.
Reputation and activities of the organization or donor.
Potential risks and worst-case scenarios.

Basic Checks

Perform the following basic checks:

Website Review: Ensure alignment of the potential partner’s proposals with the information available on their website.
Annual Reports and Accounts: Review their annual reports and financial accounts, if available.
Internet Search: Search the organisation or donor's name along with key terms such as “complaint,” “review,” “rating,” “bullying,” or “scandal.”
Regulator Records: Check records with relevant regulators such as Companies House and the Charity Commission.
References: Obtain references by speaking to individuals who have worked with the potential partner or know their sector well.

In-Depth Checks

For detailed due diligence, consider the following:

Charity & Fundraising Ethics

Ensure activities are legal and align with Heart Heroes’ values.
Check for involvement in corruption, bribery, criminal activities, discrimination, exploitation, or associations with radical groups.

Regulatory Compliance

Check for significant breaches of regulatory frameworks, investigations by government agencies, court cases, debt defaults, or disqualifications.
Confirm registration with relevant trade/professional bodies and the validity of licenses, qualifications, or insurances.

Financial Health

Assess financial stability by reviewing Companies House records and obtaining financial assessments or risk reports.
Identify risks such as sustained annual operating losses, high debt levels, liquidity issues, adverse auditor comments, and significant debt restructuring.

Ability to Deliver

Verify the capacity to deliver promised services/products.
Assess security around key staff, supply chain issues, and the organization’s track record in delivery.

Reputational Risk

Identify potential negative media attention or concerns from other funders/partners.
Assess the risk of being associated with the potential partner or donor.

Contract Due Diligence

Ensure contract terms are fair and balanced, without onerous or unreasonable obligations.
Identify hidden costs and ensure all fees and penalties are transparent.

4 Conflicts of Interest

Comply with Heart Heroes’ conflict of interest policy.
Ensure due diligence findings are reviewed and approved by an experienced and senior individual who is sufficiently distant from the issue.

Special Considerations

Anonymous Donations & Scams

Accept anonymous donations only if the risk to the charity is assessed to be less than the benefit of the funds.
Follow the guidelines in the Charity Commission Compliance Toolkit for managing anonymous donations and detecting scams.

Sanctions

Consult OFSI guidance and comply with their advice if involvement with a sanctioned individual, organization, or country is suspected.

Incident Reporting

Report significant problems uncovered during due diligence to the Charity Commission and, if appropriate, other relevant regulators. This includes any major incidents that could affect Heart Heroes’ reputation or operations.