Part of a comprehensive grants strategy for any organisation is knowing what to do with a grant when you win. Applications can be a gruelling process, and even after submission, it is often months before you’ll hear an outcome. So, before you start applying for grants en masse, it is critical that your organisation is set up to handle grants agreements; to understand what they are, what you’re committing to and how to curate healthy relationships with your funders!
In this article, we’ll look closely at what funding agreements look like, what’s involved in the execution process, common reporting requirements and how to submit a timely and satisfactory acquittal. First off…
What is a funding agreement?
A funding agreement can be considered similar to any other contract or agreement between two parties; in fact, they are legally binding you and the funder to the intended purpose(s) for the funds you have received. Typically, the details within a funding agreement won’t come as any great surprise and will be consistent with what you said you would accomplish in your grant application as well as the grant guidelines you read before applying.
What do I need to look for in a funding agreement? What are the most important areas for consideration?
When reviewing the funding agreement:
- Double check what the agreement is committing you to. Is this the same as what you applied for? Cross-check with the application.
- Double check the funding amount. This is critical; sometimes a funder will award partial funding and not be super specific about it. Alternatively, they may choose to fund you throughout the project in instalments.
- Double check the timing of activities (e., when the project will start/end and any milestones).
All of this should be set out clearly in the funding agreement and is often referred to as ‘funding schedule’ or similar.
What do I do with a funding agreement?
If successful in your application, you will receive an email, letter, or phone call with the good news. Most of the time this correspondence will include instructions on how and when the funder wants the agreement signed and returned. Sometimes, the agreement will be included within this correspondence.
Once you and the funder have signed the agreement it is considered executed.
If you have a legal department or representation, get them to look over the contract before signing it!
This can slow things down, but it’s very important. Contracts are part of their job and ultimately their responsibility (and they will be annoyed if you’re entering your organisation into agreements without letting them know…rightly so).
Funding agreements must be signed (and often witnessed) by an authorised member or members of your organisation (i.e., CEO or General Manager). Your CEO doesn’t have time to read all of the fine print, so you can all rest assured everything is savvy if your legal team look over it and give it the tick of approval.
If you do not have a legal team or representation, look over this agreement very carefully; make sure the correct delegation of authority is followed. If you are not sure, call the funder to confirm.
If I am successful for a grant and presented with a funding agreement, am I obligated to sign and accept the funding?
No. And it isn’t uncommon to decline funding. Sometimes you will no longer be in a position to commit to what you wrote in your application. This happens and it isn’t a big deal. It can take 3-6 months for applications to be assessed. Things change and funders will understand that.
Don’t be afraid to contact the funder to decline or renegotiate the terms of the funding agreement. While grant award amounts are unlikely to be up for negotiation funders will be understanding of your position and will often will be open to amending the funding agreement so that your project can proceed.
If you are unable to deliver a project at all, or circumstances have changed so drastically from when you applied, the funder won’t mind. They WILL mind if you sign the agreement thinking ‘what the heck, let’s see if we can do it’, and then fail to deliver. That will really damage your relationship with that funder, hurt your reputation, and potentially land you in hot water…
What happens if I can’t deliver what is set out in the funding agreement?
If you can’t do what you are contractually obliged to deliver under a grant agreement, you will likely have to return the grant money. However, this may not always mean the entire amount. Let’s say, hypothetically, that you are halfway through a project and it falls through; depending on the terms of your agreement, you may only have to return the money you haven’t spent (provided the money you have spent thus far has been on eligible activities). This is a conversation you need to have with your funder.
Contact your funder as soon as any problems arise. They are understanding and will try to work out an ideal solution for all parties. Revisions such as extensions to deadlines can be made (it is worth noting that if revisions to funding agreements are made, a new agreement will usually need to be drawn up and executed). If you are having problems that can be resolved with more time, more often than not, the funder would rather have the funds spent on the project they committed money to than worry about having it returned (which causes more headaches for them).
The bottom line here is communicate with your funder and don’t wait until a week before the final report on the project is due (often referred to as an acquittal; we’ll get to those).
Reporting & Acquittals
Almost all grant funders will expect you to report to them on your progress. What did you do with our money? This is known as an ‘acquittal’ of the funding.
A grant that has been awarded, spent, the project delivered and final report delivered is considered to be ‘acquitted’.
The timing of acquittals is usually dependent on the length and scope of the funded project. Typically, if it’s under 12 months or a relatively small amount of grant funding [say, less than $50k], you will only have to report once. This also depends on the funder, type of project, etc. If it is a relatively simple, discrete project, then reporting is often straightforward. If your project spans over several years, then you might need to provide interim reports every 6 or 12 months. It will all be set out plainly in your funding agreement.
You will be asked to provide financial receipts for everything you spent the money on; and I mean everything. Down to the cent. Occasionally, there is a discretionary amount of funding that doesn’t have to be acquitted (say, if you’re roughly $50 under on a $10,000 grant). But don’t count on this, and make sure you understand these terms before you sign the agreement.
Your funder might also request that you include photos of completed activities and/or sign off from the project manager(s) and/or authorised representative from your organisation.
A summary of our key points:
Funding agreements are just like any other contract. These are legal documents and you can put your organisation in difficult situations if you aren’t careful. Take time to review any funding agreement you receive, make sure it passes through all the appropriate channels at your organisation and remember – you don’t have to sign it!
As always with grants, don’t be scared to contact the funder. They won’t mind so long as you allow a reasonable amount time for things to be amended. Any contract can be changed if all parties agree. The funder wants the project you promised to deliver, not the money.
Be meticulous with your receipt and record keeping. Spend every cent the way you said you would. If any difficulties arise, refer to the previous paragraph.
Take photos if appropriate, even if you are not required to. Depending on the funder and your relationship with them, these can be a nice touch to include with a final report and make you a more attractive applicant for future grants.
So long as you were truthful in your application and didn’t tell terrible porky pies, none of this should be intimidating. Do not lie or ‘stretch the truth’. What you write is literally what the funder will ask you to do. Here’s a very silly example:
Stay tuned for our next edition of FUNDED when we take a deeper dive into Grants Administration. ‘What do I do when it starts raining grants?’ ‘How can I keep track of all of my applications and when things are opening up?