Funder due diligence
Streamlining Funder Due Diligence: The HQAI Advantage
There is an identified need to effectively manage the tension between funders’ need for compliance/risk management and the resources required from aid providers to answer multiple requirements. The lack of common approaches to collect, analyse, and act on due diligence (DD) requirements amongst DD assessments holders along the delivery chain leads to duplication and inefficiencies.
HQAI has demonstrated how validated CHS audit data can objectively inform identified levels of various donor DD or partner capacity assessments. Using them as primary assurance in funders’ DD and reporting processes represents a way to increase cost-effectiveness. HQAI works with governments, funding bodies, intermediaries, and the CHS Alliance, to leverage efficiencies and achieve sector-wide savings (financial, admin and HR resources) without compromising on the accountability and quality of aid, nor the rigour of the assessments.
We’ve seen the progress and being able to rely on an external body will reduce the burden for all stakeholders, including us. It will be a gradual but exciting phase!
Peter Taylor, Head of the Safeguarding Unit at FCDO, May 2022
The CHS and HQAI CHS audits are increasingly recognised, acknowledged or recommended by funders.
The CHS is a measurable standard that comes with three Verification Options: Self-Assessment, Independent Verification and Certification. The latter two are external audits provided by HQAI. An increasing number of funders endorse the CHS, request verification against it, and recognise CHS Verification in their due diligence requirements.
The table below summarises funder recognition to date (click on image to zoom):
To access the full version of the above table, including references and links, and to gain insight into the entities acknowledging the CHS without formal requirements, encompassing general recognition of the CHS as a standard, its verification options, and overall support, a comprehensive table is available for download here.
Less duplication, now
The humanitarian/development ecosystem sees a proliferation of funder due diligence requirements. The multiplication of these DD mechanisms drains valuable resources away from funders, aid providers, and the communities they are meant to support.
A Practical Solution at Hand: Leveraging HQAI CHS Audits
HQAI has demonstrated how CHS audits can objectively inform identified levels (50-100%) of donor DD or partner capacity assessments. Building on HQAI's accredited quality assurance services maintains the rigour expected from DD systems, and thus provides operational levers and trustworthy mechanisms to enable risk sharing for institutional donors and intermediaries. Among the funders involved in recognising CHS Verification within their DD requirements, most require third-party audits.
Bridging the Gap
It is time to move from seeing CHS certification as a mere compliance tool, to the view that it can be used as guidance to incorporate accountability-related risks and opportunities into organisational strategies and multiple reporting requirements.
At HQAI we aim at seeing CHS audit results used for multiple objectives, including due diligence, learning, capacity and risk-sharing.
Streamlining DG ECHO Ex-Ante Assessments
Streamlining DG ECHO PP assessments using CARE International's CHS audit data.
UN Implementing Partner PSEA Capacity Assessments Fully Covered by HQAI CHS Audits.
An opportunity for efficiencies.
ECHO: a milestone in harmonisation
Streamlining DG ECHO Ex-Ante Assessments: HQAI's Innovative Move
HQAI and CARE have successfully demonstrated a streamlined and cost-effective approach to DG ECHO Programmatic Partnership (PP) ex-ante assessments. By leveraging CARE International's CHS audit data, HQAI completed assessments for four European CARE Members, pre-qualifying them for DG ECHO's PP funding.
This collaboration showcased several advantages, including:
- Reduced Duplication: CHS audits address approximately 80% of DG ECHO assessment requirements, minimising information requests. The remaining 20% required some additional audit activities.
- Enhanced Efficiency: Leveraging existing CHS audit data significantly streamlined the assessment process.
- Time & Cost-Effectiveness: The process spanned 2 to 4 weeks for each CARE member and, by avoiding the expense of a full external audit, brought significant cost savings of around 80%.
Read More here