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 suite of funding agreements consists of:
- Letter of Offer
- 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.
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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)
- Revised Letter of Offer replaces the former Minimalist Agreement and former Letters of Offer
What changes have been made to whole of government, Indigenous specific funding agreements?
- STFA replaces Program Funding Agreement (PFA)
- Revised Letter of Offer replaces the former Minimalist Agreement and former Letters of Offer
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.
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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.
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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.
Removal of the Minimalist Agreement
The Minimalist Agreement will be removed from the suite of Funding Agreements. This will be effective from March 1 2010. Minimalist Agreements executed prior to this date will continue to be effective until the end date of the agreement.
Capital Agreement
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)