Home Blog & Media Due diligence passporting – a possible solution to a locally-identified challenge 

Due diligence passporting – a possible solution to a locally-identified challenge 

September 26, 2023

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Michael Solis

Global Director – Partnership & Localization

While many in the global development sector share the goal of shifting power, localization is a concept that is easier discussed than done. Finding collective, sector-wide solutions that will move the dial in relation to how decisions are made and resources are allocated requires agencies to level up their coordination. This is especially true when it comes to partnerships with local actors.

When Goals and processes don’t add up 

It’s worth acknowledging two facts that don’t add up. On one hand we know that local and national actors are often the first respondents in humanitarian crises, and they play a vital role in recovery and long-term development.  

On the other hand, as highlighted in the 2023 Grand Bargain Annual Independent Report, the percentage of funding that reaches local and national actors as directly as possible is well below the 25% target.  

How do those two contrary facts exist, and how can we change the second to support more fully funded local development? 

Due diligence challenge #1: too many templates! 

Currently, local, and national actors work with intermediary agencies such as international non-governmental organizations (INGOs) and United Nations (UN) agencies. Those actors receive funding from donors and channel these to local organizations. Traditionally, the intermediary model has been seen as a way of mitigating financial and compliance risks, in addition to allowing donors to provide funding to local and national actors through a smaller (and therefore more manageable) quantity of grants. 

Increasingly, donors and international agencies are refining their Grand Bargain localization commitments and putting these into practice (with varying success) to get more funding to local and national actors. The intermediary model is no longer the only one, and it’s often not the best one. However, even with new models of more direct funding, one challenge expressed by local and national actors through networks such as the Charter for Change and Network for Empowered Aid Response, is the due diligence process.  

The issue isn’t the due diligence itself; it’s that everyone is doing it! And that’s a major burden for local actors. Imagine having to answer the same question on dozens of different templates, each one phrased slightly differently and showing up in different places.  

In 2016, we underwent twelve separate due diligence assessments, and every year since we have had four to five assessments annually, all of which asked very similar questions. This absorbed time from our teams that could have been better spent on humanitarian and development work.

Ahmed Ibrahim CEO of Arid Lands Development Focus, Kenya 

Due diligence challenge #2: complexity

Another challenging aspect of due diligence approaches is that they’re almost a “one-size-fits-all” tool – and that size is large! Traditional due diligence is designed for larger international agencies with correspondingly large staff. It’s overbuilt for smaller national or local organizations. And the risk-adverse, compliance-focused, and top-down approach to due diligence can stifle funding opportunities for grassroots actors from the very start. There are incredible community-based organizations and local movements who might not be formally registered or have all the policies or systems in place that are assessed in traditional due diligence. If they can’t tick all the boxes on a template that wasn’t designed for them in the first place, then their chances of receiving funding can be compromised.

Breaking Down Barriers: Agility, Simplicity, and Trust

With the hope of finding a collective solution to due diligence that could promote greater effectiveness and efficiency across the sector, a group of seven INGO signatories of the Charter for Change (CAFOD, Christian Aid, CRS, Kerk in Actie, SCIAF, Trócaire, and Tearfund) agreed to work together to develop a harmonized due diligence tool. We call this a “passporting tool,” meaning it’s documentation that different agencies agree to honor.

This new effort took into account prior work around improved due diligence, including CHS Alliance’s and HQAI’s efforts to promote discussions about due diligence passporting and the Start Network’s experiments in tiered approaches to due diligence.

Working in collaboration with Humentum, this group of INGOs engaged in a year-long process to develop the tool. To ensure success, all agencies had to get the buy-in from staff across areas such as finance, audits, and programs.

Once this was done, Humentum, using compliance expertise gained by working with all three groups of actors (NNGOs, INGOs, and funders), conducted a thorough review of the seven agencies’ approaches to due diligence. Humentum also interviewed agencies as well as local and national partners to the INGOs to understand their needs, frustrations, and hopes for improved ways of working.

Building on all that feedback and data, the team developed a tool that met the needs of various agencies while still being agile and simple to use. Humentum then worked with the INGOs to develop guidance for completing the tool, as well as recommendations for the piloting phase.

How does the passporting tool work?


due diligence

The due diligence passporting process

In essence, by completing a due diligence passporting assessment, that agency can then partner more quickly with other agencies who agree to use the findings of the assessment as the basis of their own due diligence processes.

One tool replaces multiple tools, saving each organization time and duplication of effort.

The finalized tool covers these seven areas through 27 questions:

  • general information
  • governance
  • strategy
  • accountability
  • HR, safeguarding and security
  • financial and asset management
  • data and IT

The tool is reviewed and signed off at director-level by the local or national organization, as well as the agency that conducts the passporting. Then the assessment can be shared with other “receiving” agencies, with the approval of the local and national organization involved.

Simplification isn’t the only answer, though. Participating agencies and their donors must understand that accepting the due diligence assessment conducted by another agency involves a degree of trust. Even though the tool is built with flexibility in mind (agencies can add further criteria), the goal is to keep changes to a minimum. Otherwise we run the risk of adding to the workload we’re trying to lighten.

The due diligence passporting tool is for partnerships with local and national actors. It’s not designed to take the place of organizational capacity assessments or technical programmatic assessments to promote capacity strengthening.

The pilot: test and learn

Rather than beginning with a full launch, we’re piloting the tool to see what works or doesn’t, as well as to develop a process for rolling out the product in the future. We know that the process will vary from context to context, based on agreed approaches through existing coordination mechanisms such as country-level Charter for Change networks or localization working groups. We also know that strong coordination in the locations where the due diligence takes place is necessary for success. The agencies involved will need to agree on things like who conducts the assessments and how long an assessment remains valid to avoid differing interpretations and possible frustrations.

A vision for the future

After the team incorporates the learnings from the pilot, we plan to roll it out at a larger scale across multiple locations and within specific sectors or funding mechanisms. Several INGOs have already expressed interest in using the passporting tool, with the possibility of this tool replacing their own due diligence mechanisms.

Due diligence passporting is one example of an initiative that can promote progress in locally-led development in a practical way. It calls for more intentional and effective coordination among agencies, as well as a commitment to transparency and risk-sharing for the sake of localization.

We hope the benefits for local and national organizations in terms of time and resource-savings will outweigh any potential concerns. The passporting model, if successful, can serve as a case study for future collaborative efforts that take localization from theory to action.


Join the Pilot Launch of the Passporting Tool!

The partner organizations are inviting NGOs to participate in a pilot to test a new passporting due diligence tool. Our tools and instructions are free to download here.