In respect of NGO, Due Diligence is the process followed by the donors to confirm that the NGO they want to donate is a fully compliance organization and having a sound internal control system and policies in place which timely detects and prevents the misutilization of funds. Donors want to be sure that the money they are going to donate should be utilized properly towards the purpose which is mentioned by Donors in the grant agreement. They just want to confirm that choosing your NGO for donation is not a bad decision, as there is no corruption, laws, & and regulations are followed properly, NGO is having enough capabilities to implement the project, accounts are properly maintained and audited by an Independent Statutory Auditor, etc.

The funding process is important for both NGOs and donors. Companies that come under the ambit of Section 135 of the Companies Act, 2013 i.e. Corporate Social Responsibility (CSR) should constitute a CSR committee consisting of 3 or more board members. Companies also need to track the expenditures incurred by NGO out of the donated amount and should make sure the compliance of their CSR policy.

The main aim of the Due Diligence process is to verify that the information provided by NGO is correct and discover any hidden facts. For executing this process donors hire a team of professionals to get the information verified properly.

Some of the documents and areas reviewed under due diligence process are: