Grants are a means by which government can engage with the private sector, community groups, individuals and other public sector institutions to advance shared policy objectives however, where there is discretion to allocate government funding, there is risk that the allocation of grants will be open to influence, improper process and distribution bias.
An increase in focus on grants administration in the last 18 months is largely as a result of the increase in stimulus spend as well as Audit Office and Senate Enquiries into grants. This increased focus is causing agencies to consider increased probity and governance over grant award and administration.
So, where can it go wrong and how do you prevent it?
In recent years, OCM has looked at over 75 grants processes in multiple jurisdictions. Whilst the key risks faced by organisations are often similar, each risk still requires robust and well considered mitigation strategies such as:
- Issue clear guidelines for the funding program: the Guidelines for a funding program should be clear on the operational objectives for the funding program and directly link to the outcomes set by Government. There should be an uninterrupted line of sight to the original policy goal.
- Advertisement should be sufficient to attract all potential applicants: limited advertisement of grant opportunities or select notification of a public program can undermine the fairness of the funding process.
- There should be one set of criteria for assessment: agencies should not seek to introduce new or additional criteria for the assessment of applications or prioritisation of applications unless these have been clearly communicated to potential applicants. Transparency is maximised where potential applicants are aware of how their application will be assessed and the key matters an agency will take into consideration when determining the allocation of grants and funding of projects (see also Distribution Bias risk below).
- Be clear on eligibility and apply this consistently: where an agency looks to exercise a discretion during the assessment process, such as assessing an application that does not clearly meet the identified eligibility criteria, all applications with the same or similar characteristics should be treated in the same away. Agencies should avoid being inconsistent in exercising a discretion otherwise there is an increased risk of the fairness of the process being called into question.
- Establish a panel of experts to assess applications: the composition of the panel appointed to assess the applications should have sufficient skills and experience to complete the assessment.
- Clear framework for conflicts of interest: there should be a clear and documented framework for the identification and management of conflicts of interest for all parties who are involved in the application assessment process. This should include a requirement to sign a conflict of interest declaration, maintaining a conflict register and clear briefings on probity obligations regarding conflicts of interest.
- Avoid distribution bias: Ensure there are mitigations in place for distribution bias where priority is given to applicants in areas that are seen as marginal or targeted. Where there is a need to deviate from the assessment process including applying discretions, the reasons for this should be clearly documented and align back with the overall program objectives.
- Reasons for decisions should be documented and defendable: there should be a clear audit trail of the assessment process including the reasons for applications to be either recommended or not recommended for funding. Where the delegated authority makes a decision to award a grant outside of the Panel’s recommendations then the reasons for this should be clearly documented and align to the program objectives.
If you would like further information in relation to probity risks over grant funding programs, including assistance with the development of tailored online probity training, please contact OCM Probity Partner, Sarah Mullins via firstname.lastname@example.org.
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