Charity-friendly credit checks on the way

Finance | Tania Mason | 28 May 2008

Guidestar is working with Experian to develop a charity-friendly credit-scoring process that credit agencies can use when carrying out due diligence on voluntary and private sector organisations bidding for government contracts.

Les Hems, the director of Guidestar’s third sector data and analysis division, said the existing credit-checking process that agencies like Experian, Dun & Bradstreet and Equifax use to assess contract applicants on behalf of statutory funders, are unfair to charities because they are designed for business accounts.

Charities always come out looking terribly high-risk, said Hems (pictured). “We are trying to come up with an appropriate way of treating charities and private sector organisations equally, because currently their standard processes are designed for companies only and are systematically excluding charities.

“Things like growth in profits before interest and tax are not relevant to charities but maybe reserves are,” he said.

Often a pre-qualification questionnaire (PQQ) will require an organisation to have a turnover that is three times the value of the contract. PQQs also systematically exclude those third sector bidders that provide one service in one location, and favour national or regional providers, he added.

Guidestar offers a ‘local intelligence service’ whereby for a subscription fee, local statutory funders can access various due diligence documents that tendering charities have uploaded onto the Guidestar website.

Who's Who: Tania Mason

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