Once upon a time, there were 3 Bears, all of whom were funders and all of whom were going through the process of making decisions where to give their money. [Since this is a 21st Century tale, propriety does not allow us to identify the age, gender, or marital status of any of the Bears in question.]

Bear #1 gives generously, motivated by noblesse oblige. This bear’s focus is on his/her commitment to support local communal institutions, and to support projects of those in the Bear social group. As one of the wealthy in Bearland, this bear knows the role: make the money, and let others, who might know better, figure out how to spend it on worthy causes.

Since most of what Bear #1 funds are local, known, and already established, due diligence is, by some standards, quite passive. Too little, too unstructured, too little back-up, too few evaluations, too few outcomes. The results are ok but rarely exciting. As Bear #1 has been discovering, this process is much, much too cold, and often not so satisfying.

Bear #2 came along who didn’t like such cold due diligence. This bear wants “hot.” Outcomes, accountability, metrics, evidence based – now that’s hot. In fact, there could not be too much due diligence. This bear is so into due diligence that s/he thought that everything related to grant decision-making should be hot: small grants, big grants, operating grants, project grants, one time grants, multi-year grants, partnership grants, innovation grants – every applicant and every grantee needs to produce documentation, 990’s, assessments, analytics. There is no information that one could think of that isn’t worth collecting. Whew! Eventually the heat from this due diligence burns the grantees and began singeing Bear #2 as well. After a while Bear #2 discovered that such excessive data gathering is much, much too hot and also, sadly, not so satisfying.

Bear #3 watched the first bear become increasingly dissatisfied with the flavors of too tepid projects. And watched the second bear become increasingly burned out by the scald of too scorching data gathering. What to do? How to do it right? How does one get just the right amount of information necessary to make a decision, without driving yourself crazy or the potential grantee even crazier? Ah, there is the challenge, not too cold and not too hot, but just right.

Bear #3 began to realize that there needs to be an alignment between due diligence and the size and type of grant or philanthropic involvement or even the age of the organization. It required some practice, but eventually this bear realized that proportionality of expectation and investment is a useful guideline for all involved, and more useful and equitable than demanding the same from everyone and about everyone. And when this bear began to use this method, well, the grants began to be so satisfying and it felt just right.

Well, as it happens, I recently experienced someone who did get it just right. The story is simple: I received an inquiry about doing a philanthropy education series. The caller had never met me, but clearly had done her homework. This was a case of “no unsolicited proposals accepted” [of course, that was easy since none of us whom she was exploring had a clue that she was looking at or for any of us.] She had already narrowed down her list to a purposely small group of carefully selected finalists, all quite appropriate, and was contacting us to see if we might be interested, if we though that we could deliver, what was our cost, and were we available. Not such an unusual list of questions.

What was unusual, and incredibly impressive, was what she asked for at the end. She wanted a very short list of references. Not just any references, but certain quite specific categories: A couple of past students of a few years ago to see what they retained, a client who had used me on multiple occasions to see what I was like to work with, etc. She knew exactly what information she needed to make her decision – no reason to clutter up her time, or ours, with more than that, and not useful to gather information which would yield too little or insufficient relevant “data” to inform her decision.

Now, I have no idea if I will get this contract. But I can say that anyone who is that thoughtful about her due diligence is someone who is committed to success. And anyone who gets a contract after that is pretty likely to be able to deliver in a mutually satisfying way. Impressive.

Not too hot, and not too cold. Seems to me that she got it just right.

Richard Marker teaches and advises funders from around the world through both the NYU Academy for Grantmaking and Funder Education and the Wise Philanthropy Institute, both of which he founded. His blog can be found at Wise Philanthropy.