Pre-Grant Due Diligence of NGOs in the Indian CSR Context

Pre-Grant Due Diligence (PGD) is conducted to assess the compliance status, capability, governance standards, and delivery strength of an Implementing Partner (IP) or NGO before its appointment.

The objective is to identify any operational or reputational risks that may adversely impact the company or disrupt project continuity. PGD is most effective when undertaken prior to the on-boarding the implementation partner.

PGD can be of two types:

Basic Pre-Grant Diligence

A preliminary review focusing on:

• Validity of statutory compliance's (CSR Form-1, Section 12A/80G eligibility, registration related details)

• Minimum 3-year track record as mandated under CSR Rules

• Alignment with the proposed thematic area of intervention

Advanced Pre-Grant Diligence

A comprehensive assessment covering:

1. Compliance status, financial health & litigation review

2. Public domain background check on the NGO, its board and/or leadership.

3. Review of partner/vendor onboarding & contracting processes

4. Assessment of data management and Monitoring & Evaluation (M&E) methodologies

5. Evaluation of employee skill sets and operational resource base

6. Review of past performance in similar thematic areas & geographical presence

7. Governance structures, internal controls & safeguarding mechanisms

8. Verification of past performance through donor reference checks

Companies increasingly prefer advanced PGD, as corporate governance expectations and CSR laws continue to evolve.

Advanced PGD significantly reduces risk exposure and sets the foundation for responsible CSR investments.

Post-Grant Monitoring of Projects

Once the project execution begins, the focus transitions from vetting the implementation partner to continuously tracking project performance.

Monitoring ensures that:

• The project is progressing as per agreed terms & timelines

• Key Performance Indicators (KPIs) and intended outcomes are being delivered

• Program and financial resources are being used responsibly

  
  

Monitoring activities typically include:

Financial Monitoring

• Verification of supporting documentation (invoices, contracts, proof of payments)

• Variance analysis (budget vs. actual expenditure)

• Review of fund utilization and cash-handling practices

• Ensuring compliance with contracting terms and conditions

Programmatic Monitoring

• Assessment of program reports and activity documentation

• Field visits and interviews with beneficiaries & stakeholders

• Verification of outcome indicators and social impact progress

• Identification of implementation gaps, capacity challenges, and risks

As an experienced CSR Consulting firm, we suggest that monitoring is most effective when conducted at-least 6 months into project implementation, with annual reviews recommended for multi-year programs.

For larger projects, companies can also opt for concurrent monitoring.

Hybrid approach  can be considered  (to the make the exercise cost effective in case of large number of projects)—outsourcing financial checks while the corporate team reviews program documentation, though it may require close coordination between the two teams

However, integrated monitoring  by one agency is typically the preferred approach as it ensures stronger triangulation and reduces misinterpretation of findings.

Conclusion

A strong NGO due diligence and monitoring framework is no longer optional—it is a governance safeguard in India’s CSR ecosystem. By conducting advanced PGD and robust, periodic monitoring, companies can:

•  Ensure credible partnerships

•  Protect brand reputation

•  Drive accountability & transparency

• Maximize real, measurable social impact

In today’s regulatory environment, responsible CSR means investing in the right partner and continuously validating outcomes.