Please note that information on changes to the Capital Agreement will be provided at a later date, in a separate document.
What are the benefits to change for funded organisations?
The new ‘plain English’ suite of funding agreements is simpler to understand and will reduce red tape for funded organisations by providing:
- one, consistent set of T&Cs (now provided to funded organisations in a booklet format for ease of reference)
- a simplified schedule format with clear financial and performance reporting obligations and timelines
- minimal, standardised performance indicators
The new suite of funding agreements
The new suite of funding agreements consists of:
- Letter of Funding
- Minimalist Agreement
- Standard Agreement
- Capital Agreement
The type of funding agreement offered to successful funding applicants will be influenced by the nature of the activity, the assessed activity risk level, the length of the activity and the value of the activity.
As the end of the 2008-09 financial year draws near, in acknowledgement that not all funded organisations can execute their agreement with the department before the activity start date, all funding offers being made to organisations for activities starting on 1 July 2009 are being provided in the form of a Deed of Funding.
By using a Deed of Funding format agreement activities are able to commence on 1 July 2009, pending full execution of the agreement. This gives funded organisations the ability to comprehensively review the funding offer and execute the Deed of Funding in accordance with their constitution and/or other governance arrangements.
Payments will not be made before the Deed of Funding has been properly executed by funded organisations and the department.
What changes have been made to mainstream funding agreements?
- One Standard Funding Agreement (STFA) replaces the former Long Form Funding Agreement (LFFA) and the former Short Form Funding Agreement (SFFA)
- One Minimalist Funding Agreement replaces the former Short Form Agreement
- Letter of Funding replaces the former Minimalist Agreement and Letters of Offer
What changes have been made to whole of government, Indigenous specific funding agreements?
- STFA replaces Program Funding Agreement (PFA)
- One Minimalist Funding Agreement replaces the former Whole of Government Short Form agreement
- Letter of Funding replaces the former Minimalist Agreement and Letters of Offer
Please see Attachments A, B and C - PDF [101kB] for a comparison of the Terms and Conditions used in each of the new and old funding agreements.
What are the major changes to the Letter of Funding?
Letters of Funding remain relatively unaltered; however, content has been altered to ensure that there is no duplication between the Letter of Funding and the new T&Cs.
Currently it is proposed that the Letter of Funding will be used for low risk, one-off relationships where we require minimum accountability and performance reporting.
How is the new standard funding agreement (STFA) different to what has been used in the past?
The STFA is significantly more user friendly for both the department and funded organisations. It consists of a standard set of T&Cs, a standard schedule and a set of supplementary conditions.
Over time, we will have only one formal funding relationship with each funded organisation, or one ‘head agreement’. Multiple schedules will be attached to the head agreement where a funded organisation receives funding from more than one departmental program, thereby streamlining and reducing the administration and resource costs for funded organisations.
The T&Cs have been reviewed by a ‘plain English’ expert to provide for greater clarity in the meaning of clauses. Also the T&Cs will now be provided to all funded organisations in a booklet format for ease of reference (see below for more detail).
All schedules will be produced using the same template, with like information being grouped together for ease of use and management. For example payments due and service provider obligations relating to performance and financial reporting are clearly matched to timelines in an easy to understand table.
As part of reforms to information collection practices, funding agreement reporting requirements have been revised to ensure that we only collect information which is useful and necessary to capture program outcomes. Program areas now have a standard set of 10 performance indicators from which to choose from and performance indicators will be only be included in funding agreements which directly reflect the outcomes of the funded activity. Also, all information collected will be fed back to funded organisations to enable tracking of individual performance.
What are the main changes made to the T&Cs?
The new STFA T&Cs combine the former Long Form Funding Agreement and the Program Funding Agreement clauses into a simplified, more streamlined document which is significantly less prescriptive.
Certain clauses have been removed from the former funding agreements and relocated to the supplementary conditions, to be engaged where necessary to cover special circumstances, for example, the use of a funding controller or to cover activities on native title lands.
Changes to the T&Cs are most obvious in the areas of asset management, insurance, financial reporting, vulnerable persons and the format of the schedule (see below for more information on each).
Assets – historically there has been confusion over the purchase of ‘Assets’. The department does not want to prescribe how funded organisations manage their day to day business and we appreciate that the decision to buy, lease or use corporate assets is one for the funded organisation.
The new T&Cs contain a simplified Asset clause and the schedule provides clear guidance for service providers on the approved procurement, maintenance, use of and disposal of assets purchased with funding.
Vulnerable Persons – working with vulnerable persons was previously included in the supplementary conditions allowing the clause to be added to certain agreements where appropriate.
However, given the nature of FaHCSIA’s social service delivery, it was decided that working with vulnerable persons should be found as a permanent clause in the T&Cs. The proviso to this is that the schedule allows for negation, modification or variance depending on the circumstance.
In addition, persons with a ‘serious record’ may be considered for inclusion in an activity when the funded organisation commits to a comprehensive risk assessment and ensures appropriate mitigation strategies are in place.
Serious Offence – a revision of the definitions around “Serious Offence’ has been undertaken which allows for more latitude for risk assessment by funded organisations. Given the disparity between the states regarding spent convictions, it was necessary to modify the definition to avoid situations where people could not be employed due to a conviction from their youth that was not relevant now.
Insurance – the new T&Cs do not specify the level of insurance required by funded organisations, instead they state only that adequate insurances must be held. Where appropriate, any specific insurance requirements will be outlined in the schedule.
Acquittal – financial reporting requirements have been significantly streamlined and will be based on risk diagnosis of the funding relationship and the requirement for acquittal documents. The T&Cs allow for independently audited or non-audited or statutory declarations or receipts and funded organisations will be advised of which is required in the schedule.
Also Annual Reports will only be requested within the schedule, on an exception basis.
Specified Personnel – in the past this clause has been a source of confusion relating to the funded organisation’s requirements to employ specific persons or persons with certain qualifications to undertake activities. Any specifications on personnel are now clearly outlined in the schedule.
When will the Minimalist Agreement be used?
The Minimalist Agreement (comprising a set of Minimalist T&Cs, a Minimalist schedule and supplementary conditions) will replace the former Short Form Funding Agreement and the former Minimalist Agreement.
Currently it is proposed the revised Minimalist Agreement will be used for low to moderate risk, (generally) lower value funding arrangements.
The Minimalist Agreement schedule will be of a similar format to the STFA, providing service providers with a greater level of consistency in agreements.
There are small differences between the revised Minimalist Agreement T&Cs and the more comprehensive STFA T&Cs. For example, clauses for Intellectual Property, Confidential Information, Specified Personnel and Subcontractors are not included in the revised Minimalist Agreement.
When will the Capital Agreement be used?
The Capital Agreement will be used for the following activities:
- purchase of land for service delivery purposes
- purchase of existing buildings for service delivery purposes
- construction of new buildings (both on organisation’s land or a third party’s land)
- significant renovation of existing infrastructure for service delivery purposes
- construction of other infrastructure for service delivery purposes (e.g. roads)