Developing and Piloting a Country-Level Due Diligence Module for Humanitarian and Development Organizations in Bangladesh

LightCastle Analytics Wing
February 25, 2024
Developing and Piloting a Country-Level Due Diligence Module for Humanitarian and Development Organizations in Bangladesh

The Opportunity:

Start Network is a global network that brings together more than 90 humanitarian agencies from 5 continents and focuses on improving the effectiveness and efficiency of humanitarian aid delivery by promoting locally-led action, rapid financing, and collective innovation.

Through collaboration with international, national, and local non-government organizations, Start Network aspires to transform the humanitarian system by empowering the local actors to respond to crises based on the needs and priorities of the affected communities.

By joining Start Network, organizations can benefit from rapid and flexible funding mechanisms that allow them to act early to mitigate the impact of humanitarian crises. As local actors become more empowered to tackle the crises at ground zero, it also helps in minimizing the cost of response.

Start Network envisions transitioning from a centralized governance structure to a hub model that supports localization efforts by equipping the actors closest to the crises to define the support needs and channel resources for adequate crisis response. The hub model brings together international, national, and local development organizations operating in the same country or region under one platform by creating opportunities for dialogue, partnership, learning, and collective action. 

As part of the transformation, Start Network has focused on onboarding more national and local organizations as its members where due diligence plays a crucial role in determining potential risks and capacity-strengthening opportunities. Hence, one of the most important first steps for the Network was to revisit its existing tiered due diligence framework and contextualize the framework in a way that ensures it does not put smaller organizations at a disadvantage while keeping the robustness and integrity of the core framework intact. 

To achieve this goal, LightCastle Partners collaborated with Start Network to provide technical expertise as its due diligence service provider for Bangladesh. Under this assignment, LightCastle developed a country-level due diligence module tailored to the regulatory and cultural context of the country. The team also conducted a pilot implementation of the module by completing a due diligence assessment of 10 local development organizations in Bangladesh.

The Approach:

To co-create a country-level due diligence module for Bangladesh, the LightCastle team conducted a desk review of relevant laws and regulations of the country and arranged stakeholder consultations with international and national experts as well as representatives from existing member organizations of Start Fund Bangladesh (SFB) to get insights into the global best practices and the local context. The initial exercise informed the potential scope of adapting the core international due diligence framework in accordance with the regulatory and cultural landscape of the country.

LightCastle team with the officials of a participating NGO from Cox's Bazar
Figure 1: LightCastle team with the officials of a participating NGO from Cox’s Bazar

Based on the findings of expert consultations and regulatory review, the LightCastle team made necessary adjustments to the due diligence assessment framework in collaboration with Start Network. This process was centered around a balanced approach, ensuring a harmonization between the effectiveness of the international compliance standards and their relevance to all organizations, particularly national and local organizations with limited resources. Consequently, the due diligence assessment questionnaire was revised and translated based on country-specific considerations.

During the pilot implementation stage of this newly co-created country-level due diligence module, LightCastle onboarded 10 local development organizations from Chattogram and Cox’s Bazar with support from SFB. These organizations primarily focus on humanitarian response in Rohingya communities as well as disaster risk reduction and response in coastal communities.

To kick off the assessment process, LightCastle organized an orientation session for these organizations and provided them with necessary information, including questionnaire submission guidelines and supporting document requirements. Upon receiving all the submissions, the LightCastle team thoroughly reviewed the information, policy documents, and evidence shared by the organizations and conducted due diligence field visits to verify their policies, processes, and practices.

Representatives and members of a women-led organization attending the due diligence process
Figure 2: Representatives and members of a women-led organization attending the due diligence process

Upon completion of the assessment process, LightCastle provided a tier placement based on a detailed account of the organization’s current strengths and potential growth opportunities in the areas of organizational governance, financial management, operational capabilities, risk management, and safeguarding among others. The assessment report for each organization included a tiered ranking with accompanying rationale and recommendations on organizational capacity strengthening where applicable.

Overview of the Due Diligence Assessment Approach for Humanitarian Organizations in Bangladesh
Figure: Overview of the Due Diligence Assessment Approach for Humanitarian Organizations in Bangladesh

As a final step, LightCastle documented the lessons learned from the pilot and shared a comprehensive learning report with Start Network. Combining the feedback of the participating organizations and the reflections from the core due diligence team, the report provided insights and suggestions for Start Network regarding the adapted due diligence assessment module and related processes for organizations operating in Bangladesh.

The Future:

The due diligence assessments would guide Start Network and Start Fund Bangladesh to determine the membership status of these organizations and to facilitate the planning of the subsequent steps regarding partnership opportunities and resource requirements to continue their support in the form of organizational capacity-strengthening initiatives.

Moreover, it would also enable the participating organizations to review their organizational development approach and outcomes so far and devise effective strategies to attain further development. This would ultimately help the organizations mitigate their risks and leverage their robust policies and practices to demonstrate their ability to develop and implement humanitarian assistance projects with donor funds. 

A tailored due diligence module for Bangladesh could open up new possibilities in the country’s humanitarian action landscape through potential collaboration among Start Network, donor communities, and other humanitarian platforms to empower the national and local organizations with easier access to funds, partnerships, and support by certifying their due diligence track record. It would also contribute to reducing the burden on the smaller organizations to undergo multiple assessments from different agencies if common standards could be adopted according to the local context of Bangladesh. 

The pilot implementation of the country-level module set out the path for rolling out a refined due diligence framework and a streamlined assessment process that would create opportunities for other humanitarian organizations to evaluate their risks and capacities, improve upon their foundations, and work with Start Network in the near future to bring more agility and localized expertise to humanitarian efforts in Bangladesh.

WRITTEN BY: LightCastle Analytics Wing

At LightCastle, we take a data-driven approach to create opportunities for growth and impact. We consult and collaborate with development partners, the public sector, and private organizations to promote inclusive economic growth that positively changes the lives of people at scale. Being a data-driven and transparent organization, we believe in democratizing knowledge and information among the stakeholders of the economy to drive inclusive growth.

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