Funding non-government organisations using grants

The Treasury Guidelines for Contracting with Non-Government Organisations provide a clear explanation of when a grant is the best way to fund an non-government organisation.

A grant is an arrangement that is legally less demanding than a contract. It may be legally enforceable to the extent that the recipient has to fulfil certain conditions to receive or retain the grant. Because a contract provides a more reliable basis for securing the delivery of a service, a contract is often preferred by some funders.

A conditional grant may be appropriate where:

• a grant is required by law (eg, the Education Act 1989 describes the subsidy received by early childhood centres as a grant)
• the legal framework makes it difficult to establish contractual intention. This might be the case, for example, if the government agency has no discretion as to whether to enter into an arrangement
• the non-government organisation is entitled to payment once it satisfies the eligibility criteria
• the non-government organisation lacks contracting capacity (ie, it is not a legal entity). In these circumstances, it will usually be preferable to contract with one or more of the members of the non-government organisation that do have contracting capability
• the payment represents a subsidy for the work of an organisation.

The Local Government and Community Branch of the Department of Internal Affairs administers a range of grants and funding schemes that support local initiatives and community services. These include Lottery Grants and the Community Organisation Grants Scheme (COGS).

Community and voluntary groups expect government agencies to be operating in the digital world.

There are possible savings and little cost involved in having online application forms, rather than providing only paper copies for applicants. A phone and email contact point should be provided to handle queries from applicants - an 0800 number reduces costs for groups.

The ability to apply online, to check the progress of an application and to reapply by updating a previous application are features of the Grants Online website run by the Department of Internal Affairs for Lottery Grants and the Community Organisation Grants Scheme (COGS). Organisations can still apply using a paper form, and forms can be downloaded from the Grants Online website.