Documentation & Due Diligence

Tier 1 — Legal & Regulatory (Mandatory):

• Registration certificate validity and authenticity
• 12A and 80G certificate status and expiry dates
• FCRA registration status (for international donors)
• CSR-1 registration (for corporate CSR funding)
• NGO Darpan profile status and last update date
• Income Tax compliance — ITR-7 filing history for last 3 years
• MCA annual filing compliance (Section 8 companies)

Tier 2 — Financial Health:

• Audited financial statements for last 3 years
• Audit observations and management responses
• Income source diversification (not over-dependent on single donor)
• Administrative cost ratio (should be under 20–25% for most funders)
• Bank solvency and cash reserve adequacy

Tier 3 — Governance Quality:

• Board composition — independence, diversity, expertise
• Board meeting frequency and attendance records
• Conflict-of-interest policy and related party transactions
• Whistleblower policy
• Key personnel qualifications and background

Tier 4 — Track Record:

• Past project outcomes with evidence and beneficiary data
• Donor references from past institutional funders
• Geographic and sector coverage
• Media coverage and public reputation

• Organisation Profile Document (2–4 pages): legal structure, governance, mission, geography, team
• Compliance Certificate Pack: all registration certificates with validity dates clearly highlighted
• 3-Year Financial Summary: audited P&L, balance sheet highlights, key ratios, and audit report
• Compliance History Table: ITR-7, FC-4, MCA filing history — any gaps explained
• Governance Matrix: board composition, qualifications, tenure, and independence assessment
• Project Portfolio: 5–10 completed projects with outcomes, photos, beneficiary data, and donor names
• Staff Profiles: CVs of key project personnel with qualifications and relevant experience
• No-Objection Certificates: NOCs from state/district authorities (for government grant applications)

Q: How often should a due diligence dossier be updated?
MFiling recommends updating the dossier annually — after the completion of the statutory audit and ITR-7 filing. Keep the compliance certificate pack updated every time a certificate is renewed. Most institutional donors expect documents not older than 12 months.

Q: Does MFiling share the dossier directly with donors?
MFiling prepares the dossier and hands it to the NGO leadership. The NGO decides which donors receive it. For specific grant applications, MFiling can customise the dossier to match a particular funder's due diligence format and submit it on the NGO's behalf if authorised.

Modern NGO due diligence is increasingly conducted remotely — donors, auditors, and government inspectors request document scans rather than physical visits. An NGO that can instantly share a complete, organised digital document repository gains a significant advantage in donor confidence and inspection readiness.

Digital Archive Architecture Recommended by MFiling:

• Top-level folders: Legal & Registration / Financials / Regulatory Filings / Governance / Donor Files / Correspondence
• Legal & Registration: Scanned originals of all founding documents, certificates (12A, 80G, FCRA, Darpan, CSR-1, PAN), government approvals — PDF with OCR for searchability
• Financials: Year-wise sub-folders with audited accounts, audit notes, bank statements (monthly), and fixed asset registers
• Regulatory Filings: ITR-7 acknowledgements, Form 10B, FC-4 receipts, AOC-4/MGT-7A receipts — one sub-folder per year per authority
• Governance: Board meeting minutes, AGM minutes, resolutions — indexed by date with a master resolution register
• Donor Files: One sub-folder per donor per project: Grant agreement → KYC → Utilisation certificates → Reports
• Cloud backup: All documents backed up to at least one cloud service (Google Drive / OneDrive) with shared access for trustees and auditors

Security Controls: Access controlled by role — not all staff need access to financial records or donor agreements. Trustee-level access for founding documents; finance team access for financial records; programme team access for donor files.