Funding Accountability

Funding Accountability

April-May 2017

DIA Funding – What Are You Signing Up For?

It’s funding season at the Department of Internal Affairs again, meaning COGS and Lottery are open for business, or will be soon.

These grants come with some Terms & Conditions, i.e. some fine print that we are so overwhelmed with in our daily lives, not to mention the legalese inherent in many of them, that we tend to just ignore it. So here are some of the things that you sign up for when accepting one of these grants. Warning: some of this may be surprising.

  • The grant must get separate mention in your annual financial report.
  • You must acknowledge the grant in a suitable way (web site, posters, newsletter etc.)
  • You agree to keep financial records pertaining to the grant for seven years, i.e. your tracking information and presumably all receipts, payroll info etc. You also have to make it available for inspection by DIA staff within 10 working days on request.
  • You must inform DIA if there are any conflicts of interest arising in relation to the grant, if there are significant changes or events potentially affecting the grant, or if grant money has been stolen or misappropriated.
  • For Lottery grants you sign that you have a tracking system that allows you to keep track of several grants and know how much is still to expend in each of them at any given time.
  • You confirm that financial reports are presented regularly at governance board meetings.
  • You confirm that you are compliant with all relevant legislation pertaining to your organisation.
  • The grant must be spent within a year.

March 2017

Track Those Grants!

The new reporting rules for registered charities require that organisations list in their accounts any grant money that has not yet been spent on the purpose it was given for.

In preparation for the new rules, CCA had encouraged all charities we were working with to implement a grant tracking system before the new rules came into effect. This was in order to have an opening balance for unexpended grants at the beginning of the year when reporting became compulsory. We provided help to anyone who asked.

Not all charities did so, however, and this caused large problems for some in 2016. Some charities had to re-do their cashbook for the whole year, assigning expenditure to grants, sometimes finding that some grants had been reported to funders as being fully spent when they were not, or in one case refunding part of a grant that had, in actual fact, been fully spent. Occasionally, organisations come to us to help them work out how much of their bank balance they can actually spend on a given purpose, as they have completely ‘lost track’. This is stressful for everybody involved.

There are also some tracking systems that are quite error-prone. For example, in some systems grant money can be showing as expended before it has even been received, or the GST-portion of expenditure is included when the organisation claims this back. There are sometimes no safeguards against allocating the same expenditure, in full, to more than one grant. Accounting software can also provide an inaccurate picture if you use the wrong reports.

This is difficult stuff, so remember we are here to help.