Given the amount of money.... One of the sole-source loopholes is if a contract is less than $25,000. You can see why. It's a small amount of money and some of the safeguards may not need to be in place. Although, again, I think you should just essentially ban and put in place high penalties if contracts are split to try to fit under that $25,000.
Otherwise, yes, due diligence means looking at whether the organization has a good business record. For example, you have to have that if you want to start a bank in Canada. That means looking through their annual reports and verifying things and ensuring that the money is flowing to an organization that actually has a track record, as opposed to a shell organization that is fronting for that other organization. These are simple, basic steps, and I think it was a failing of the public service as well to not do the due diligence in this case, perhaps because of the ties of the key person, Ms. Wernick, with the WE Charity, given that she had worked with them and approved grants for them before.