Density functional calculations have been performed on a dinuclear {Gd III-GdIII} complex [{Gd(OAc)3(H 2O)2}2]·4H2O (1) which has recently been reported to have a very large MCE [M. Evangelisti, O. Roubeau, E. Palacios, A. Camon, T.N. Hooper, E.K. Brechin, J.J. Alonso, Angew. Chem., Int. Ed. 50 (2011) 6606]. The focus here is (i) to asses a suitable functional within DFT framework to compute good numerical estimate of J values (ii) to probe the mechanism of coupling between the two GdIII ions via computational means (iii) to develop magneto-structural correlations to relate the sign and strength of J to specific structural parameter and (iv) to conceive the origin of large magneto-caloric effect (MCE) observed. Testing a series of functionals and a set of basis sets, it is evident that the hybrid B3LYP functional behaves marginally well over others with a combination of SARC basis set incorporating ZORA (zeroth-order regular approximation) relativistic effect for the Gd III ions. The MO and NBO tools have been utilized to probe the mechanism of coupling and this reveals that there are two contributions. The first is charge transfer in nature leading to a ferromagnetic contribution due to the involvement of empty 6s/5d/6p orbitals of GdIII ions and the second contribution is due to 4f-4f orbital overlap and this adds to both ferro and antiferromagnetic part of the exchange. In 1, the ferromagnetic contribution prevails over the other leading to a net ferromagnetic J. The developed magneto-structural correlations reveal that the Gd-O-Gd angle is an important parameter as it switches the coupling from ferro to antiferro at lower angles. A weak intermolecular ferromagnetic interaction mediating via H-bonding interaction results in a ferromagnetic interaction at low temperatures and hence a large MCE.