Part 4: Funding arrangement scenarios
4.1
We have created 4 scenarios to show how the principles might be applied, and how they interact, in funding arrangements with NGOs. The scenarios cover:
- a new “capacity-building” grant programme;
- a grant programme;
- a health sector contractual “chain” – from district health board to primary health organisation to NGO; and
- a local government arrangement for funding many low-value grants.
4.2
The scenarios are drawn from our experience of typical funding arrangements. The details are “true to life”, but do not represent particular or actual public entities or NGOs. We use the life cycle described in Figure 1, but focus on parts of that process that are particularly important for each scenario.
4.3
The application of the principles by each public entity for each of its funding arrangements with NGOs should be, to a large extent, determined by the public entity’s own systems and processes. The scenarios are not intended to be a prescription of how public entities should go about organising themselves.
4.4
The scenarios deal with a variety of funding arrangements. Even where the funding arrangement is contractual in nature, it is not always necessary to have a traditional output-delivery contract to achieve the principles set out in this good practice guide. Two of the scenarios focus on grant arrangements, one looks at an arrangement to deliver results rather than outputs, and one deals with many low-value grants.
4.5
Scenario 1 focuses on the planning phase of an initiative that provides new funding in the form of capacity-building grants. It demonstrates in particular how the principles of public benefit, accountability, and fairness are considered, and the risk-based approach that underpins the decisions taken.
4.6
Scenario 2 deals with the risk management involved in making grants to NGOs for an overseas aid programme. It focuses in particular on managing the programme in a way that is responsive to the risks posed by each particular NGO provider, in order to make most efficient use of the resources used in selection and monitoring.
4.7
Scenario 3 acknowledges the links from a government department to a Crown entity to the NGO that provides the service – in this instance, also involving a primary health organisation – and how this affects accountability. It focuses, too, on the trade-offs that are often required to ensure that public resources are applied for the best possible public benefit.
4.8
Scenario 4 looks at how the principles apply in a typical local government situation where many low-value grants are made.