As purpose-led organisations scale, partner due diligence can shift from reassurance to risk.

Purpose-led organisations, such as mission-driven companies and aid organisations, often experience similar pain points across their Partner Due Diligence (PDD) processes. These pain points can be signals that growing scale, complexity, or diversity has reshaped PDD needs – and that it may be time for a review.

PDD is uniquely challenging for purpose-led organisations because partners are not arm’s-length subcontractors. They are allies who share our mission. Poorly designed PDD can unintentionally reinforce power imbalances, undermine trust, and impede local leadership – even when the intent is sound.

The most common pain point is answering the question, “Are we effectively and efficiently managing risk?” when PDD sits at the heart of four other potentially conflicting questions. None of these is unreasonable. The challenge is answering “yes” to all of them, consistently, at scale:

• Does our process tend to foster rather than undermine equitable, fruitful relationships with partners?
• Is our process a good investment of time and resources?
• Are we satisfying our legal, donor, board and ethical obligations?
• Are we minimising operational burden and friction with project delivery?

Partner due diligence does not need to strain the equity of a partnership or undermine our locally led approach – if it does, it is a fixable design issue.

This is especially hard for our sector, in which diversity makes benchmarking nuanced and sector-wide trust and economic pressures place both cost-effectiveness and reputation in the spotlight.

Years ago, I ran a workshop on partner due diligence for a well-known global organisation. When the assembled leaders were asked what risks each of their (extensive) checks were helping to control, nobody could answer. In the end, more than half could have been removed – redundant controls that had accumulated over time, divorced from purpose. Proportionality had not been designed; it had eroded.

In this context, regularly reviewing PDD is a matter of good governance. Far from being a remote, operational process, performing due diligence is a mutual safeguard at the point just before the accountability of our board becomes connected to that of another entity. Reviewing PDD processes is therefore a governance act.

It is how we assure ourselves of proportionality – avoiding bureaucracy on the one hand and vulnerability on the other – gain confidence that we are meeting our obligations in all directions, ensure we are cost-effective, and confirm that our relationships are as equitable as they should be.

Due diligence is a mutual safeguard at the point just before the accountability of our board becomes connected to that of another entity.

There are some common signals that can help determine whether it may be time to trigger a review. Since the current PDD process was designed, has the organisation scaled substantially, or is it planning to? Has it grown in complexity, embraced a more diverse range of partners, or moved into new geographies with different risks? Has it accumulated processes that colleagues sense need rationalising?

These signals are not failings. They are indicators that the context in which the PDD process was originally designed has shifted. Similarly, the need for a review does not imply mistrust or failure; it reflects a commitment to proportionality in changing circumstances.

Colleagues on executive teams and around board tables ask these questions regularly. Often, however, the most enlightening perspectives come from those managing partner relationships and projects, and from those participating in PDD processes themselves. If these questions are surfacing regularly among them, it may be an indicator that a review is both timely and responsible governance.

Oli May is the founder of Koala International Development, an Australian boutique consultancy helping for-purpose organisations to rethink risk, strategy and governance. He is formerly a ‘Big 4’ professional services Partner and held leadership roles at Oxfam GB and the Fred Hollows Foundation.