Eva Nolle is the Director of Operations for Ceravoid (Pty) Ltd, a corporate intelligence firm based in Cape Town, South Africa. Amongst others, the company provides due diligence enquiries, background screenings and fraud investigations. Drawing on the directors’ own practical experience through project work in many African countries, the company assists corporate entities and NGOs in conducting business with confidence on the continent. Board-certified in security management, Ms. Nolle further is the Managing Director of Claymore Risk Management, enabling businesses to gain a better understanding of the potential risks when operating in South Africa.
Effective partnerships between international non-governmental organisations (NGOs) and local NGOs are important for the successful delivery of humanitarian aid. In light of the localisation agenda, these partnerships are set to play an increasing role in the humanitarian sector. Often, these partnerships are based on personal relationships and trust, however, just like any professional relationship, international and local NGOs both need to safeguard their assets, including their staff, programmes and reputation. This blog highlights seven key aspects for an INGO to consider with regards to partnerships with an international or local NGO. It is also relevant for other partnerships between local NGOs and organisations engaging contracted services. This topic is particularly relevant for security managers as they share responsibility for due diligence and have a significant role to play in the safeguarding of their NGO’s assets.
Two of the most important assets for any NGO are its people and its reputation. If your partner has a limited security capacity, your staff may be exposed to an unacceptable level of risk. The security of an NGO’s staff and its reputation can be compromised if its partners sustain high-profile reputational damage, are engaged in fraudulent activity or are allied too closely with a controversial government or another political actor. It is also important to remember that NGOs based in countries such as the United States of America or the United Kingdom may also be legally accountable for their partner’s actions under the Foreign Corrupt Practices Act (FCPA) or the Bribery Act 2010 and more broadly through global counter-terrorism legislation. Therefore, whether your organisation is an international or a local NGO, it is important to conduct due diligence before committing to a new partnership.
As a general rule of thumb, due diligence enquiries should be conducted when an initial decision is made to partner with another organisation. Additionally, enquiries should be considered at certain milestones of the partnership or when conditions change. Whilst it is important to trust your partners in order to build a good working relationship, all information they provide should be independently verified and an effort should be made to identify any relevant information they leave out. More often than not, if your partner wants a deal to go through, they will attempt to provide the most favourable information possible. So even if they are striving to provide accurate data, some information might be omitted or unintentionally skewed. Whilst an enquiry does not guarantee the success of a partnership and it is not always possible to obtain all the necessary details, the absence of information can also provide valuable insights.
As circumstances are different for each organisation, there is no single “checklist” for due diligence enquiries, however, here are some general areas that should be considered.
Independently source the registration documents of the potential partner organisation which identify it as an NGO or charitable trust. If the potential partner is an international NGO, ensure that they have a permit to operate in the country of operations and monitor this status as it may be subject to change. This information can usually be confirmed by checking the Registrar of Companies or a similar register in an NGOs home country.
- Organisational Documents
Request copies of key organisational documents such as the founding document, charter or bylaws. These documents provide you with insights regarding the management of the organisation, board members’ expectations and provisions for distribution of remaining assets should the organisation dissolve. Mission and vision statements are also useful to understand if a potential partner shares the same values and goals as your own organisation. As a security manager, it is particularly important to view their code of conduct, security policy and the country security plan. Based on such a review, security managers can make a more informed decision regarding which responsibilities lie with which partner. Not only will different contexts need to be considered and what measures are in place to mitigate staff exposure to risk, but also clear responsibilities defined for seconded staff, visitors or shared compounds.
Financial statements, income-expenditure statements, balance sheets, cash flow or tax records not only give insight into the organisation’s financial health but how the entity manages its funds. These records should also highlight the financial limits of the potential partner and their capacity to employ adequate risk mitigation measures. If the mitigation measures in place are insufficient, these costs may have to be covered by your NGO if the partnership goes ahead. Reviewing financial data may also highlight any fraudulent activity, which could pose a risk to your staff and your organisation. Whilst you can source some financial information in certain jurisdictions, having an independent auditor review the documents supplied by the organisation itself, can provide you with some good initial insights. However, the auditor should be familiar with the legal and tax framework in the country the organisation is operating in.
- Human Resources
An organisational chart and list of all staff and board members provides you with information of stakeholders involved as well as leads for further investigations. Establishing the background of key personnel can be vital to protect you from reputational damages. An open source search can be a good start to identify any red flags. Furthermore, it may be a legal requirement, as certain jurisdictions, like the U.S., prohibit you from entering into partnerships with individuals (and organisations) that appear on the Specially Designated Nationals and Blocked Persons List administered by the Treasury Department. Additionally, international sanction lists can also be consulted. When in doubt regarding certain individuals, you should conduct a full background screening.
Check the local court rolls to establish whether there are any past or pending lawsuits against the organisation or initiated by them. Depending on the nature of the case, associating with an organisation currently involved in legal proceedings could have a negative impact on your reputation and draw additional scrutiny from both your home or host governments.
- Regulatory Compliance
Ensure that the organisation is compliant with all local and international requirements applicable to its specific field. Should the organisation have to be registered with regulatory authorities, boards or agencies, they can be contacted to obtain information regarding licensing status, complaints, judgments, specialties, training, and other issues.
In some cases, insurances might be mandatory for an organisation and should be verified. Even if not a legal requirement, it is good practice to ascertain what insurances the organisation has. It is also important to consult your own insurance provider to check that your staff will still be covered if the potential partner organisation accepts responsibility for their safety and security. Remember that as the employing agency, your organisation will always retain its legal duty of care responsibilities.
Often, NGOs only contact the references provided by the potential partner organisation. Whilst (social) media searches can give good initial insights, it can also be used to determine further leads to determine the reputation of the organisation. Previous partners, local providers or the communities the organisation has or is operating in, can provide you with a broader perspective. It is recommended to use a multitude of sources that have dealt with the organisation on different levels to get a more complete picture of the organisation’s reputation.
Whilst the seven areas discussed here represent an ideal, in reality, it can be very difficult to acquire detailed information on all of these areas. In some cases, records and official documentation may not exist and a potential partner might believe that a due diligence enquiry demonstrates a lack of trust, impacting their willingness to cooperate. However, by using soft skills before a due diligence enquiry to explain its purpose and adopting a streamlined process to ensure all aspects are checked, a partner should not feel that they have been discriminated against.
Despite the challenges that due diligence enquiries can encounter, they should be as comprehensive as possible. Therefore, it is vital that security managers are involved in this process so that any increased exposure to risk resulting from a new partnership is considered in the decision making process.
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