Part 4: Managing and monitoring grants and their administration

4.1
In this Part, we discuss those aspects of managing and monitoring that the Department has done well:

• Monitoring of grant recipients is appropriate.
• Monitoring of the Department's own performance is a good start.
• Monitoring of grant outcomes is beginning.

4.2
We also discuss what the Department could do better:

• Arrangements for holding grant recipients to account could be improved.
• Monitoring and management of workloads could be improved.

Summary of our findings

4.3
The Department's monitoring arrangements are largely adequate for holding grant recipients and the Department to account for their use of public money. The efforts to obtain more information about the effects of grants need to continue.

4.4
The accountability requirements for certain recipients of relatively large grants could be strengthened. The Department could improve the accuracy of its information about staff workloads.

Monitoring of grant recipients is appropriate

4.5
We expected the Department to have monitoring arrangements in place to ensure that grant recipients are held accountable for using grant funds for the agreed purpose.

4.6
The Department's main mechanism for monitoring grants is through accountability reports and, for larger grants, by milestone reports. The accountability report form is three pages long and expandable, which makes it flexible enough for grant recipients to provide an amount of detail appropriate to the size of the grant or project. In our view, the three-page report form is appropriate to the size and nature of COGS grants, which are not usually large.¹⁰

4.7
Our review of reports from advisors to committees (about applications to the Lottery Grants scheme) showed that grants conditions were relevant to the purposes of the Fund and the eligibility criteria. Payment schedules reflected the purpose of the grant. For longer-term construction or research projects, payments were made when milestones were reached, subject to the recipient supplying satisfactory progress reports.

Monitoring of the Department's performance is a good start

4.8
The Department has four performance measures in its Statement of Service Performance for the Lottery Grants scheme and COGS.¹¹ These rely on satisfaction surveys of committee members and grant applicants, and statistical information on the timeliness with which applications are processed and grant payments made. Figure 3 shows the measures and performance against them. In our view, the measures are sensible.

Figure 3
Grant-related performance measures

* Source: New Zealand Treasury (2010), "Māori, Other Populations and Cultural Sector" in Information Supporting the Estimates of Appropriations for the Government of New Zealand for the year ending 30 June 2011, pages 51-52.
** Source: New Zealand Treasury (2009), "Māori, Other Populations and Cultural Sector" in Information Supporting the Estimates of Appropriations for the Government of New Zealand for the year ending 30 June 2010, pages 52-54.
*** Source: New Zealand Treasury (2010), "Māori, Other Populations and Cultural Sector", Information Supporting the Estimates of Appropriations for the Government of New Zealand for the year ending 30 June 2011, pages 51-52.
† Source: Department of Internal Affairs, Annual Report 2010-11.
‡ Source: Department of Internal Affairs, communication to the Office of the Auditor-General.

4.9
In our view, the Department has followed a sensible process to prepare these measures and to set targets for them informed by its previous performance.

4.10
The feedback we received from committee members confirmed strong satisfaction with the Department's role as administrator for both schemes, consistent with the Department's reported performance.

4.11
The Department monitors team activity at a national level through regular monthly reports. It monitors grant application processing on a weekly basis during funding rounds using Grants Online submission data, and reports are sent back to the regions. Team leaders monitor staff activity through weekly meetings, because capacity is limited in Grants Online for tracking staff activity or for recording completion checks of quality control processes. Some staff activity (mainly community development work) can be tracked through the Department's Community and Advisory Services intranet portal. Managers we spoke with felt they had a fair estimation of workload, and were mostly able to allocate resources accordingly.

4.12
There was effective oversight of the tasks and timelines for the administration of funding rounds. However, staff in regional offices came under pressure at times, particularly when COGS applications were due and when COGS funding was allocated. Allocating COGS funding coincided with the arrival of applications for the Lottery Grants scheme. In some instances, this meant that applications were not processed until well after they were submitted because staff were busy with the previous funding round.

Monitoring of grant outcomes is beginning

4.13
The Lottery Grants Board is not required to include a Statement of Service Performance in its annual report, and has not identified specific performance targets. However, the Lottery Grants Board and the Department are in the first stages of implementing a new outcomes framework to allow the Lottery Grants Board to measure and report on the success and impact of its grants and the difference the Lottery Grants scheme is making to the community.

4.14
We expect the Department to ensure that Lottery Grants scheme committees comply with the framework and report regularly on outcomes to the Lottery Grants Board.

4.15
The Department's annual report does not report on community outcomes from COGS grants. However, the Department's statement of intent for 2010-13 does include a new performance measure:

Percentage of grant recipients receiving over $10,000 who have achieved the funding objective in their accountability report.¹²

4.16
We acknowledge that the Department has included a more outcome-focused performance measure to assess the effectiveness of grant funding in building strong, sustainable communities, hapū, and iwi. However, we note that this measure does not cover most COGS grants because they are under $10,000 in value.

4.17
We encourage the Department to consider how to include smaller-value grants in its assessment of, and reporting on the achievement of funding objectives by grant recipients.

Arrangements for holding grant recipients to account could be improved

4.18
We are satisfied that the Department's accountability requirements are adequate and appropriate for the different Lottery Grants scheme Funds, except for certain grants made through the Lottery Outdoor Safety Committee. The nature of the regular, large (more than several hundred thousand dollars a year) annual grants to five national water and outdoor safety organisations closely resembles a contract arrangement, because the expectation is that these organisations will receive annual funding, and they rely on this funding. Payment is made in three stages, but accountability reporting is not required until the third payment.

4.19
In our view, the accountability level is too low for these large annual grants. If one of the organisations were to encounter problems and not deliver the expected services, the Department risks losing a large amount of money before identifying such problems. The Department needs to ensure that these grant recipients meet performance measures and receive payments only after providing appropriate progress reports.

Monitoring and management of workload could be improved

4.20
In our view, the Department's pragmatic response to varying workloads and deadlines generally works well, and is benefited by the generic skills and work variety of advisory staff. However, better allocation of workload, and therefore smoother workflow, could be achieved by more accurately monitoring and managing those workloads. Also, the Department could consider other ways to improve workflow. For example, in regional offices, staff could process applications as applications arrive instead of waiting until all are received.

4.21
We note that the Department has work under way to obtain more accurate workload information. We encourage the Department to continue with this.

10: Grant values range from a few hundred dollars to around $10,000, with an average value of $3,350.

11: New Zealand Treasury (2010), Information Supporting the Estimates of Appropriations for the Government of New Zealand for the year ending 30 June 2011, Wellington, pages 51-52.

12: Department of Internal Affairs (2010), Statement of Intent 2010-13, Wellington, page 18.