>>Arts and development advisory    >>Due diligence process
 
 

DUE DILIGENCE PROCESS


AIF Approach

To identify some of the most outstanding arts organisations across the world, AIF’s due diligence process takes into account their huge diversity, which is determined by the vastly differing national and regional legal, fiscal and cultural laws, norms and circumstances under which they are operating, and by the differences in their scope, aims and approaches to a great variety of issues. To this, AIF brings an understanding of arts-sector specific infrastructural constraints and of international and regional cultural policy contexts and developments, which also reflect the complex linkages between the arts sector and other sectors such as for instance education, health, diplomacy, economy and development.

 

All of the arts organisations that have passed our due diligence demonstrate excellence and impact in serving their constituency and all have a clear understanding of their own needs and challenges. These might be mature organisations that have along track record of effectiveness based on measurable outcomes but also include those who are young and dynamic and who find themselves at a point of critical growth or change, where investments will lead to increased impact and scale.

Part of a globalising, rapidly changing and highly competitive sector, arts organisations must be strong and effective in order to make a decisive impact. AIF therefore places great value on organisations’ capacity, which we define as their ability to "...identify a clear need and target group and provide managerial and financial infrastructure that allows for an efficient, effective and sustainable approach to making a measurable impact". Our due diligence thus focuses on assessing 1) NEED; 2) OPERATIONS; and 3) IMPACT.

 

Focus of AIF Due Diligence Process

NEED: determining relevance

Here we for instance look at whether organisations have clearly identified a target group; whether they have an understanding of the main issues affecting the environment in which they are operating and, against this background, how and whether they have identified and clearly articulated a current and relevant need, or a set of issues or problems. We also look at what exactly their main aims, inputs and concrete activities are in order to determine whether the rationale for their approach is logical, realistic and up to date, or, in other words, whether their vision, mission and objectives fit the identified need and are clear and consistent. Other questions researched under this heading are whether strategic planning is being carried out regularly, and whether duplication is actively avoided and collaborations or partnerships are sought where beneficial.

OPERATIONS: determining efficiency

To see whether operations are carried out in a timely and cost-effective manner we for example look at how varied the funding base of an organisation is; whether a sound financial management and reporting system as well as a financial development plan exists; whether the cost and time of fundraising is relative to other activities and costs; or whether staff qualifications are appropriate and clear job descriptions exist. We also look at operational efficiency by analysing accounts and relating expenses, and we assess the adequacy of documentation and reporting procedures as well as staff and Board meetings and consultations. Another set of questions relates to an organisation’s communication and outreach strategy.

 

IMPACT: determining effectiveness

Here we assess to what extent an organisation’s inputs and activities most effectively advance its mission; whether flexibility and responsiveness to changing needs is evident; how challenges and obstacles are identified and addressed; whether there is an evident demand and popularity of the organisation among recipients, target groups and peers; and whether its programs are being replicated elsewhere. We also assess an organisation’s own monitoring, measuring and evaluation methods and procedures, for instance by looking at annual reports, narrative grant reports, and strategy plans.

 

AIF Evaluation Methodology

In assessing these 3 categories, AIF takes a 3-step approach that consists of 1) a questionnaire, internet research and interviews; 2) an analysis of supporting documentation and a follow-up; and 3) phone interviews with staff and constituents, and site-visits, where possible. Once all necessary information has been assembled and collated, it is analysed using a comparative scaling technique that helps quantify qualitative data, which is then used to come up with a final evaluation and recommendation as part of the respective organisation’s profile.

 

 
 
© Arts Investment Forum. All Rights Reserved. Disclaimer