Governance & Assurance
Due diligence and vetting
Start Network Member Due Diligence
All organisations admitted to the Start Network membership go through a robust due diligence process. This process ensures that our members have in place suitable policies, procedures and controls based on internationally agreed standards that meet the requirements of Start Network membership and donor policies. This includes assessment of potential risks across key areas of organisational management, such as governance and financial stability, safeguarding approach to the needs of staff and communities, our member organisations work for, as well as the ability to prevent all forms of fraud, bribery, corruption and terrorism financing. This process is repeated every three years, to ensure that organisations still meet the required standards.
Global Tiered Due Diligence: Breaking down the barriers to funding
Start Network has developed a tiered due diligence framework to enable the network to bring in more local organisations as members. Members gain access to varying portfolios of Start Network products and services depending on their tier. This enables Start Network to bring in new members across a diverse spectrum of humanitarian actors while appropriately managing our risk.
How it works
Co-developed with our technical partner, TechSoup, the tiered due diligence framework checks across nine ‘streams’:
- Financial controls
- Legal compliance
- Ability to deliver
- Risk management
- Humanitarian best practices
- Data security
- Downstream partner management
The vetting is currently undertaken by TechSoup, which assess the evidence and information submitted in these streams. An assessment report is submitted for review by the Start Network that places organisations into one of four tiers.
- Tier 1: Organisations that meet minimum compliance requirements for membership into Start Network but do not have access to funding. Tier 1 members still enjoy all other membership privileges such as voting rights, participation in Start Network activities, and access to other resources.
- Tier 2: Organisations that have internal procedures to mitigate risks across the nine streams, and meet the requirements to access restricted amounts of funding. This is where we believe many smaller organisations will fall under.
- Tier 3: Organisations that meet prevailing international compliance requirements and have full access to all funding.
- Tier 4: Organisations that exemplify compliance best practices in the sector across the nine streams.
Start Network commissioned an Independent Review by an international auditing firm, which established that the tiered framework is ‘fit for purpose’ in removing barriers that enable smaller organisations to join the network and providing assurances that risk is managed according to prevailing UK standards.
Piloting the tiered due diligence framework across our programmes
In late 2019, Start Network started the piloting of the tiered due diligence framework through a local membership intake process in the Democratic Republic of Congo, India and Pakistan. By the 2nd quarter of 2020, this first phase of the tiered due diligence pilot successfully brought in 12 new local and national organisations into Start Network. The 2nd phase of the pilot involves building the infrastructure to deliver due diligence assessments at scale that match the pace of hub development in the future.
In 2020, Start Network is also piloting the operationalisation of the tiered due diligence framework across our programmes, starting with the Start Fund, to understand the risks of allocating funding to organisations with different capabilities and how we might mitigate against these risks.
The pilot involves releasing limited funds, via Start Fund and Start Fund COVID-19, to organisations that have passed due diligence at Tier 2 and gathering data on risk exposure. Three existing Start Network donors – the Dutch Ministry of Foreign Affairs, Irish Aid, and Jersey Overseas Aid - have agreed to support this pilot.
Start Network has allocated £300,000 of funding within Start Fund, and £270,000 within Start Fund COVID-19 for the pilot. Organisations will be able to access a grant of £30,000 maximum as a starting cap during the pilot to limit financial risk. The pilot funding allocation will begin once Start Network has completed the onboarding process for members in the Tier 2 band across India, Pakistan and DRC.
The pilot seeks to answer the following questions:
- What is the risk profile and level of risk exposure at Tier 2? How can we mitigate these risks?
- What should the grant threshold be for Tier 2?
- What are the challenges faced by organisations that meet Tier 2 in accessing funding through the Start Fund and how can these be mitigated? Is Start Fund’s operational infrastructure ‘fit for purpose’ for those organisations?
- What adjustments need to be made to the tiered due diligence framework?
It should be noted that organisations participating in the pilot that fall into Tier 3 or 4 will have access to the regular Start Fund disbursement pot without restrictions, but as these organisations are among the first to be placed in tiers, they will also be closely monitored as part of collecting learning to further inform the development and implementation of the tiered due diligence framework.
The COVID19 pilot allocation started mid-June 2020 and will run for 45-60 days, and immediately after the Start Fund Tier 2 pilot will commence and will run for one year.
The hope is that by the end of the pilot we can grant access to the main Start Fund disbursement pot, possibly with a cap on the size of grant (either at £30,000, the amount tested, or a different threshold depending on data that comes out of the pilot).
Pilot allocation: Start Fund
Funding disbursements would follow the same Start Fund alert process, and release of funds would be dependent on successful project selection. The Start Fund will need to adopt some operational adjustments to enable the release of funding through this allocation. Training support will be provided to organisations that fall within Tier 2 to enable them to raise alerts and develop response proposals.
Pilot allocation: Start Fund COVID-19
The Start Fund COVID-19 works in a slightly different way to the Start Fund. There will be no ‘Call for Alerts’ stage. Instead, a ‘Call for Proposals’ will be issued, communicated directly with the hubs. Communication will go out to all members informing them about this pilot, but the call for proposals will only go to the hubs to minimise confusion around all the funding instruments active right now. The Project Selection Committee will also be composed of members in the relevant country.
Supporting organisations to move up the tiers
In addition to these pilots, an ‘organisational development framework’ is being created to help organisations to move up the tiers. The tiered due diligence framework identifies key areas that an organisation is required to put in place to meet the next tier level. The organisational development framework will use this information to design bespoke pathways for each member, should they wish to embark on this journey. This approach will be piloted with the new members of Start Network, focusing on providing this as a support service for those that have been assessed at Tier 1 and Tier 2.
Developing the framework as a digital platform
In 2020, we will also begin the process of consulting key stakeholders on the design of our global due diligence digital platform. The online platform aims to make the due diligence process faster, cheaper and efficient, encouraging ‘passporting’ of due diligence to reduce undergoing duplicative processes in the future.
If you are keen to be part of the consultation process or if you are interested to support the development of the global due diligence platform through funding or other means, or if you just have queries regarding the project, you can get in touch with Vincent Henson to find out more.