Memorandum of Understanding

Introduction

A Memorandum of Understanding (MoU) is a document that is used as an agreement between two parties, usually when one party is the service provider and the other one the beneficiary of the service. A MoU is less formal than a written contract, but more formal than a handshake. It is an important document when you work as a partner in any way, for example if you run your programme at another organisation, use a company's space to host a fundraising event or support another organisation using your curriculum or technology .

Why

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This toolkit is useful when your organisation wants to:

• establish a partnership for service provision or joint implementation of a project.
• have a document that clearly outlines the terms and conditions in a partnership.
• offer your programme or services to another entity.
• collaborate with a partner for the implementation of a programme.

What you can expect

In six steps this toolkit assists you to understand and develop MoUs with partner organisations and other parties. Here you’ll find a step-by-step guide, tools, examples and other resources for developing a Memorandum of Understanding (MoU).

Step 1: Identification of need

• When an civil society organisation is offering its programme or services to another organisation, or collaborates for the implementation of a programme, it can be useful to draft a Memorandum of Understanding (MoU).
• An MoU makes sure each party’s role is clear and can avoid possible misunderstandings.
• Discuss the importance of having a MoU and the desired contents of it with your leadership and the relevant team members who will be involved in the implementation.
• Watch this short video below to understand what drafting a MoU entails.

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Step 2: Discuss and clarify terms

• Meet with your partner organisation to discuss expectations and find mutual agreements.
• Clarify the following in this discussion :
  • Who is the first and who is the second party?
  • What is the purpose of the arrangement?
  • What is the service/product that the first party will provide?
  • Is there any financial compensation to be paid by the second party?
  • When will the collaboration start? When and how will it end?
  • Etc.

Step 3: Informal agreement

• Discuss each point in detail. Ensure that nothing is left to chance: do not assume, and bring any question or concern to the table.
• Make an informal mutual agreement, when both parties come to an understanding. This can be done through verbal assent or handshake, before a formal MoU is drafted.

Step 4: Draft the MoU

• Draft a formal MoU. The structure usually follows a standard format:
  • State that the document is a MoU.
  • Identification: list all parties involved by full legal name and address.
  • Intention: outline the purpose of the agreement.
  • Terms of collaboration: detailed description of duties and expectations. This is the core of the MoU.
  • Consideration: details of any financial obligations.
  • Acceptance: a section where parties can sign the agreement.

You can use this template in Word to formulate your MoU.

Step 5: Acceptance

• Discuss with the other party if there are amendments to clauses that a party wants to make, until both parties agree and are willing to sign the MoU.
• You can include a clause in which you describe how amendments can be made to the MoU in future and who will be responsible for it. This is optional.
• Let all of the parties review, sign and authorise the MoU.

Step 6: Sign, document and share

• Sign a new MoU with updated dates etc. after the initial duration ends and both parties want to renew or extend the collaboration.
• Be sure to save a copy for future use and adaptation if you begin another similar partnership.
• The signing of a MoU can be a good moment to communicate about your joint project or programme. 
• Watch this news item below to see how signing a memorandum of understanding between NGOs can be used to attract free publicity.

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Key To Success

• The more that can be included into the MoU the better; do not let anything to chance.
• Be detailed; vagueness or open-endedness can cause confusion down the line.
• Determine a clear timeline on when the partnership begins and when it ends
• Keep the option for either party to end the partnership earlier if desired, or extend if appropriate.

Challenges

• To not miss out on any relevant point when drafting the written document.