Know your partner: what the Charity Commission expects of grant-makers

The Charity Commission expects trustees to carry out due diligence checks on donors, beneficiaries and partners, and to monitor how charitable funds are used. Its compliance toolkit sets out "know your partner" checks and five core principles of due diligence. Its guidance on internal financial controls, CC8, asks grant-makers to check the suitability of applicants before funding them.

If you sit on a grants committee, you already do most of this. The gap is usually the paperwork. Trustees want to know that the checks the team runs match what the regulator describes, and that someone could show the evidence if asked. This article walks through the Commission's own guidance in plain words, using its terms and nothing else.

Which Charity Commission guidance covers due diligence for grant-makers?

Two documents do most of the work. The first is chapter 2 of the Commission's compliance toolkit, "Protecting charities from harm". Its full title is "Charities: due diligence, monitoring and verifying the end use of charitable funds". GOV.UK shows it as published on 3 January 2011, with no later update recorded. Age does not weaken it. It remains the Commission's current published guidance.

The second is CC8, "Internal financial controls for charities". The Commission updated it on 27 November 2024. CC8 states that "all charities need financial controls, regardless of size". Section 6.9, "Expenditure on grants", deals directly with grant-making.

Scottish charities answer to OSCR, the Scottish Charity Regulator, and Northern Ireland charities to the Charity Commission for Northern Ireland. Their guidance differs in detail. This article covers England and Wales.

What does "know your partner" mean?

Chapter 2 of the toolkit contains 16 practical tools. Tool 8 is titled "Know your partner: key issues to think about", and Tool 9 is a form template for verifying a proposed partner. The Commission uses "partner" for any organisation you work with or fund to deliver charitable activity. For a grant-maker, that includes the organisations you award grants to.

Tool 8 frames the checks as questions for trustees to answer. Are you satisfied with the partner's status and governance? Who are the key senior personnel? Have you worked with them before, and do your aims align? Are the partner's financial controls adequate and reliable? Are there arrangements in place for you to monitor the charitable services provided? What special risk factors apply where the partner operates?

Under status and governance, the Commission asks you to look at the partner's governing document. It also asks you to check that the organisation and its people do not appear on proscribed organisation or sanctions lists. Under financial controls, it points to accounting systems, audit arrangements and banking practice. None of this requires an investigator. It requires a record that you asked the questions and what you found.

What are the five core principles of due diligence?

Tool 16 sets out the core principles. In the Commission's words, they are:

• Identify. "Know who you are dealing with."
• Verify. "Where reasonable, and the risks are high, verify identities."
• Know what the organisation's or individual's business is, and be assured that it is appropriate for the charity to be involved with.
• Know what their specific business is with your charity, and have confidence they will deliver what you want them to.
• Watch out for unusual or suspicious activities, conduct or requests.

The second principle carries the proportionality that runs through the whole toolkit. You verify "where reasonable, and the risks are high". A £2,000 repeat grant to a village hall calls for a lighter touch. A first £250,000 award to a new organisation calls for more. The Commission expects you to decide the level and to be able to explain it.

The toolkit's summary describes the trustee duty in one line. Trustees "must carry out due diligence checks on donors, beneficiaries and local partners" and should monitor the end use of funds. That "must" is the reason grant-makers are revisiting their procedures in 2026.

What does CC8 say about making grants?

CC8 is the Commission's guidance on protecting a charity from fraud and loss through internal financial controls. Section 6.9, "Expenditure on grants", says suitable controls make sure you make grants in line with your purposes and that the grant is used correctly. It expects a grant-making policy that covers four things.

First, procedures for the review and approval of grant applications. Second, how you will check the suitability of applicants. Third, the conditions and restrictions attached to any grant. Fourth, how you will make sure grants have been used correctly. The policy can also set priorities for the activities your charity wants to fund.

The phrase "check the suitability of applicants" is the hook for register checks. Confirming that an applicant exists, is registered and is up to date with its filings falls under suitability. So does confirming who leads it. CC8 does not prescribe which sources you use. It asks that you decide, write it down and follow it.

How do these expectations connect to monitoring and end use of funds?

The Commission treats due diligence and monitoring as one cycle rather than two tasks. Chapter 2 pairs its "know your partner" tools with Tool 11, a grant monitoring report. Tools 12 to 15 cover monitoring visits and project checks. The message is that checks before the award set up the monitoring after it.

For a grant-maker, that means the same record should carry through. What you learned about the applicant at assessment shapes the conditions in the grant agreement, which in turn shape what you ask for in reports. If a partner's financial controls looked thin at the outset, the Commission would expect closer monitoring, not a standard form.

What should a grant-making charity do with this guidance?

Three actions cover most of it. Write or refresh a grant-making policy that answers CC8's four points, and have the board approve it. Adopt the five core principles as the structure for your pre-award checks, with a note on how depth scales with grant size and risk. And keep evidence for every award, so that a trustee or the Commission can see what was checked and when.

You may also want to read how the wider legal picture has moved. Our piece on the failure to prevent fraud offence explains why larger incorporated charities now have a criminal law reason to hold the same records.

 Key takeaways

• Chapter 2 of the compliance toolkit and CC8 are the Commission's core guidance for grant-maker due diligence.
• Tool 8, "Know your partner", frames the checks as trustee questions on status, people, finances and monitoring.
• Tool 16 gives five core principles: identify, verify, know their business, know their business with you, watch out.
• CC8 section 6.9 expects a grant-making policy that covers how you check the suitability of applicants.
• Depth is proportionate to risk. What matters is a decision you made and a record you kept

Where a register check fits

The AI Due Diligence Checker is built into Flexigrant. It runs one search across Companies House, the Charity Commission for England and Wales and OSCR. You get a fixed-formula score you can read, with links to the source records. It supports your own due diligence process. It does not replace that process, and it does not certify compliance with the Commission's guidance described above. Learn more on the AI Due Diligence Checker feature page.