Due diligence

Trustees must act in the charity’s best interests, and cannot do that on the basis of assumptions. Due diligence is the evidence-gathering that makes a decision defensible.

The depth should be proportionate to the risk. A merger needs liabilities, pensions, contracts, property, restricted funds and employment obligations checked. A donation may need only a check on the source of funds. A partnership sits between.

Record what you checked and what you concluded — the record is what protects the decision later. See merger due diligence and gift acceptance.