Public sector purchases, grants, and gifts: Managing funding arrangements with external parties.

Contract or agreement refers to the legally enforceable obligations, and any associated conditions, that two or more parties have agreed they owe to each other. The terms of a contract will often be recorded in writing but do not have to be. There will always be a contract in a purchasing relationship, and there may often be a contract underpinning a grant arrangement.

External party refers to any individual or organisation that has a funding arrangement with a public entity, such as a contract to provide goods or services or a grant to support an activity or the organisation of the external party. External parties may include commercial organisations, individuals, non-government organisations, or other private sector bodies.

Funding arrangement refers to the relationship between a public entity and an external party that is being paid by, or receiving funding from, the public entity. Seven types of funding arrangements are discussed in this guide, ranging from conventional purchasing to relational purchasing, grants, and gifts.

Non-government organisation refers to a not-for-profit organisation that is organised, is independent of government and self-governing, and does not have compulsory membership. The definition of non-government organisation is discussed in more detail in our good practice guide, Principles to underpin management by public entities of funding to non-government organisations.

Procurement refers to all the business processes associated with purchasing, spanning the whole cycle from identifying needs to the end of a service contract or the end of the useful life and subsequent disposal of an asset.

Public entity refers to a person or organisation subject to audit by the Auditor- General, as defined in the Public Audit Act 2001. It includes, for example, government departments, State-owned enterprises, local authorities, state and integrated schools, tertiary education institutions, other Crown entities, and various other entities that are controlled by public entities (such as subsidiaries or council-controlled organisations). A public entity can take different forms. It might be part of the Crown, a body created by statute, a company, a board, a trust, an incorporated society, or a single office-holder.

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