Summary

It is important that public entities administering grant programmes award grants in keeping with the Government’s intentions, and that recipients spend the funding as planned.

Our performance audit of Te Puni Kōkiri is the third in a series examining how public entities administer grant programmes.

Te Puni Kōkiri administers grant and funding programmes as part of its approach to enabling Māori to succeed as Māori. The programmes support Māori communities, strategies, structures, projects, and enterprises in several ways.

We examined a sample of grants and projects in five programmes, which covered a range of funding support that Te Puni Kōkiri provided between 1 July 2004 and 30 June 2006.

Te Puni Kōkiri administered two of the programmes with funding from its departmental appropriations:

• Kaitātaki-a-Rohe, which funds Māori community development workers; and
• the Māori Business Facilitation Service, which funds business mentors to provide free support and advice to new Māori businesses.¹

Up until June 2006, the other three programmes we examined were administered using funding from non-departmental appropriations:

• Capacity Building, which provided individual grants that supported Māori organisations to assess their own capacity and encouraged development;
• Local Level Solutions, which funded projects to reduce inequality and improve Māori communities; and
• Whānau Development – Action and Research, which provided funds to carry out research to inform future policy decisions.

These three programmes no longer exist in the same form as when we conducted our audit. However, because we examined Te Puni Kōkiri’s administration systems, the recommendations in Part 3 of our report can be applied to the administration of any of Te Puni Kōkiri grant and funding programmes.

Our findings

Figure 1 summarises our conclusions for each programme that we examined. Te Puni Kōkiri has in place some good systems for administering its programmes. In our view, however, several areas could be improved.

We assessed the systems of administration as:

• good – systems were in place which would benefit from some small improvements;
• adequate – several improvements could be made to systems; and
• needs improvement – we found areas where significant improvement was required.

Figure 1
Summary of findings for the programmes we examined

	Kaitātaki-a-Rohe	Māori Business Facilitation Service	Capacity Building	Local Level Solutions	Whānau Development – Action and Research
Compliance with Ministerial criteria	Good	Adequate	Good	Adequate	Good
Approval	Needs improvement	Adequate	Needs improvement	Needs improvement	Adequate
Documentation	Good	Adequate	Good	Adequate	Adequate
Monitoring	Needs improvement	Needs improvement	Needs improvement	Needs improvement	Needs improvement
Evaluation	Not applicable*	Adequate	Good	Not applicable*	Adequate

* Most of the projects were due to be completed in 2007, so it was too early for formal evaluation.

Compliance with Ministerial criteria

For each programme, Cabinet set out the broad criteria for the programme and Te Puni Kōkiri defined the detailed criteria.

For three of the programmes we reviewed (Kaitātaki-a-Rohe, Capacity Building, and Whānau Development – Action and Research), it was clear that the programmes were designed to meet the Ministerial criteria. All the individual grants that we examined met those criteria.

For the Māori Business Facilitation Service, the process used to appoint business mentors was not clearly aligned to the programme’s objectives, but was focused on the skills and experience required to deliver a mentoring service.

For the Local Level Solutions programme, it was unclear to us from the documentation how some of the projects met all the criteria set by Cabinet. All of the projects we examined were approved by the relevant Ministers.

Approval process

All the programmes we examined had a clear approval process.

The approval process for the Kaitātaki-a-Rohe, Capacity Building, and Local Level Solutions programmes required Te Puni Kōkiri to assess the applicant’s legal status, financial viability, governance and management capability, previous funding history, and the potential for any conflicts of interest.

The assessment process for these three programmes was very detailed, regardless of the value of the grant. Grants ranging from $1,400 to $620,000 were assessed the same way. In some of the files, there was not enough documentation to establish how staff had assessed each of these areas, or the assessment was incomplete. We noted in particular that there was not always evidence in the files that Te Puni Kōkiri had assessed either the financial viability of applicants, or the potential for any conflicts of interest.

For the Whānau Development – Action and Research programme, there were clear checklists to confirm that all areas for assessment had been appropriately reviewed. The assessment required much less detail and supporting information than the three programmes above, even though the contracts involved significantly more money.

Te Puni Kōkiri needs to set up a system to assess funding applications that reflects the value and complexity of individual projects. Te Puni Kōkiri’s Operations Manual, introduced in November 2005, is a useful start. It contains detailed guidelines and requirements for staff assessing applications. However, we were told that regional office staff do not routinely consult the Operations Manual because of its detail and length. Creating assessment templates based on requirements in the Operations Manual would be a practical way to help regional office staff to adequately assess applications.

Te Puni Kōkiri’s Executive Committee discussed all applications for funding. However, the documentation of these discussions was limited.

The Māori Business Facilitation Service had a clear process for assessing applications for funding (received as tender submissions). However, the process needs to focus more clearly on the programme objectives and how contractors will deliver them.

Documentation

We found enough documentation for the grants we examined to understand what the funding was for, and how the grant objective was to be met. Te Puni Kōkiri had a database that held information for the Capacity Building programme and Māori Business Facilitation Service. The database contained information on the progress of individual projects, was easy to use, and could be accessed by staff throughout the organisation. Te Puni Kōkiri told us that it was planning to use this database for all its funding programmes in 2007. We support this plan.

Our work identified some administrative problems – for example, instances of contracts that were signed before they were checked by Te Puni Kōkiri’s legal team, and where record-keeping and contract administration needed to be improved.

Monitoring

We identified several areas where Te Puni Kōkiri’s monitoring systems or practices could be improved.

Te Puni Kōkiri required regional office staff to regularly monitor the progress of funded projects with face-to-face contact and site visits. However, because of the lack of documented evidence (either written or electronic), it was often unclear whether monitoring visits had occurred.

Where visits had been documented, we identified some examples of good practice used by regional offices. These included using standardised monitoring templates to record the project’s progress against intended milestones, and entering information about the contact or visit in the database. These methods ensured that the required monitoring information was regularly collected, and readily available to other Te Puni Kōkiri staff.

All of the five programmes we examined required funding recipients to report on their project’s progress. In some instances, Te Puni Kōkiri required recipients to regularly submit satisfactory progress reports before it would pay the next instalment of the funding. This can be an effective system for both risk management and monitoring the progress of projects.

However, for many of the grants we examined, most of the funding was paid to recipients when contracts were signed. In these instances, Te Puni Kōkiri relied on a relationship-based contracting regime, but often had minimal leverage if there were difficulties with grant recipients meeting contract requirements or submitting progress reports.

We found many instances where recipients did not submit progress reports as the funding contracts required. Te Puni Kōkiri told us that it was moving away from making large initial payments in favour of regular instalments linked to project milestones. In our view, this should improve the effectiveness of Te Puni Kōkiri’s monitoring activities.

For projects funded under the Local Level Solutions and Whānau Development – Action and Research programmes, the contracts we examined were signed late in the financial year. Whānau Development – Action and Research grants also had short contract timeframes. This created problems, as funding recipients struggled to provide progress reports on time to meet contractual deadlines. Reports were submitted late for nearly three-quarters of the grants, usually by about two weeks.

Staff in regional offices were required to assess the progress reports. However, because there was a lack of documented evidence, we were often unable to tell whether the assessment had occurred. In particular, in many instances the reported progress had not been linked to the contract milestones. This included not comparing the project’s actual and budgeted expenditure.

Where we found effective contract monitoring, staff were often using standardised templates or checklists to ensure that they monitored all the required aspects of projects. If funding recipients were provided with standardised forms for progress reporting, Te Puni Kōkiri could ensure that it regularly received and monitored the required information about funded projects. This could also reduce compliance demands on recipients, by targeting their reporting to essential information.

The Local Level Solutions programme covered grants spanning 2-3 years. We found little evidence that the overall progress of projects had been assessed at the end of each year, to see whether the projects were achieving the intended outcomes. We found little evidence of considered decisions about whether projects should be funded into the following year.

Under new funding programmes introduced since the start of 2006/07, Te Puni Kōkiri planned to move away from funding short-term projects toward making more longer-term outcome-driven investments. It is important that Te Puni Kōkiri introduce processes for regularly reviewing multi-year funding contracts.

Evaluation

Te Puni Kōkiri had commissioned reports evaluating its programmes. The findings of these evaluations had been used to inform programme improvements and subsequent funding decisions.

We found little evidence that Te Puni Kōkiri had completed evaluations of individual projects to assess whether or to what extent the community had benefited, given the cost of the projects. In our view, Te Puni Kōkiri should extend its evaluation processes to include the effectiveness of individual projects.

Our recommendations

The Kaitātaki-a-Rohe programme

We recommend that Te Puni Kōkiri:

1. create a template to record all the information required to thoroughly assess an organisation’s capability to administer the funding for Kaitātaki-a-Rohe positions;
2. monitor progress toward the outcomes for Kaitātaki-a-Rohe defined in the contract, document the regular monitoring visits, and clearly describe actual progress against milestones; and
3. set up a system to evaluate the effectiveness of individual Kaitātaki-a-Rohe grants, ensuring that evaluations are appropriate for the size and complexity of projects, and assess whether project objectives have been met.

The Māori Business Facilitation Service

We recommend that Te Puni Kōkiri:

4. ensure that future Requests for Proposals require those who submitted tenders to set out how they will meet the objectives of the Māori Business Facilitation Service;
5. review its administrative arrangements for the Māori Business Facilitation Service, and ensure that staff are aware of their responsibilities for checking that invoices are correct and comply with the requirements of contracts;
6. regularly monitor the performance of Māori Business Facilitation Service contractors, document the monitoring, and identify where contract variation needs to be considered if the demand for mentoring services is greater or less than expected;
7. work more proactively with Māori Business Facilitation Service contractors to ensure that their performance meets the requirements specified in the contract; and
8. set up a system to evaluate the individual projects it funds, ensuring that evaluations are appropriate for the size and complexity of projects and consider:

• the recipient’s performance in meeting contract deliverables;
• how well the recipient managed the project;
• an evaluation of benefits to the community, compared to the cost of the project;
• opportunities for improvement; and
• the potential for future investment.

All grant and funding programmes

We recommend that Te Puni Kōkiri:

9. create proposal templates that will encourage applicants to focus on the key criteria of programmes;
10. prepare assessment templates for recording the information required to thoroughly assess funding applications, based on the requirements set out in the Operations Manual;
11. ensure that the assessment templates are flexible enough for assessments to reflect the value and size of individual projects;
12. document regular monitoring visits using standardised templates to ensure that all the required monitoring information is regularly collected and recorded;
13. provide funding for all its programmes in instalments spread throughout the term of contracts and clearly linked to the delivery of project milestones and reporting requirements;
14. comply with its internal process requirements to ensure that contracts are signed only after legal clearance and before the start of the funded activity;
15. introduce templates to assess and record the progress of funded projects against contract milestones, including a comparison of actual and budgeted expenditure; and
16. review multi-year projects at the end of each year, to assess the extent to which objectives have been achieved, before providing further funding.

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1: Te Puni Kōkiri considers Kaitātaki-a-Rohe and the Māori Business Facilitation Service to be operational services rather than grant programmes. However, we examined them because they are administered similarly to grant programmes and involve significant amounts of funding.

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