DFID has contracted KPMG to conduct pre-grant due diligence on all Civil Society Organisations (CSOs) selected to receive funding through the Global Poverty Action Fund, Civil Society Challenge Fund and Programme Partnership Arrangements.
Due diligence is important to enable DFID to make an informed decision on whether to award funding.
These pre-grant due diligence procedures aim to ensure value-for-money by identifying potential risks and capacity building opportunities around governance, management and capacity within the partner CSOs. Pre-grant due diligence helps to reduce the risk of diverted funding and establishes an environment of accountability and transparency.
The pre-grant due diligence assesses capacity to manage the proposed level of DFID support. Guidance outlining the process will be provided by KPMG in advance of site visits.
The focus on governance considers how the CSO is administered, its risk management processes and its ability to comply with key legislation such as the Bribery Act 2010. Key policies and procedures are also assessed, including those covering child protection, environmental risk management and conflict of interests.
The financial focus includes assessing the financial position and stability of the organisation and its ability to effectively and efficiently manage the proposed level of DFID support.
The operational capacity considers whether the organisation has the resources and systems in place to deliver the proposed outcomes.
In addition, the due diligence process assesses the organisation’s approach to value for money and its ability to measure and report the results of DFID’s grant.
Due diligence is required before any money can be disbursed and so organisations would need to be prepared to facilitate the process within a month of being told that their application was successful. The due diligence site visit typically takes approximately 2 days.
In 2011, the Department for International Development (DFID) contracted KPMG to conduct pre-grant due diligence on its centrally funded new grants to Civil Society Organisations (CSOs). Due diligence is an important part of DFID’s commitment to demonstrating accountability and transparency in the development sector, and ensuring the effective use of public funds. DFID uses the findings from these due diligence processes primarily to assess the capacity of CSOs to effectively manage provisionally awarded grants. The reports also help to identify areas of good practice and potential risks that may require specific provisions to be built into DFID’s grant agreements or Memorandums of Understanding with an organisation.
KPMG conducted over 80 pre-grant due diligence assessments on DFID’s behalf between February and July 2011, providing an important opportunity to learn from good practice and look at ways organisations are addressing the challenges they face. DFID’s assessment is that this process is generating some important lessons for individual organisations, as well as for DFID’s work with CSOs.
Key lessons learnt from the completed due diligence assessments so far.
If you require any further information, please contact Colin Anderson.
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