Are you taking due care to use grant funding your organisation receives for the original purpose specified on application? If not: beware!
Featured in the March 2012 issue of Fundraising NZ magazine
As auditors we are increasingly being requested to independently report on whether organisations have used funds granted to them for the purposes that they were granted for. Generally this independent reporting is specifically for the benefit of the third party grant funder. Sadly this upward trend appears to be the result of organisations abusing grant funding and channelling it to areas it was not provided for. In the most extreme cases the funds appear to have been used for private gain rather than for the not-for-profit organisation they were granted to. In other cases grants that were applied for and provided for a specific project, but have then been used by the organisation for other purposes.
From a simplistic legal and accounting standpoint; if a grant is provided to an organisation for a specific purpose and it is not used for that purpose, then the organisation is liable to repay the grant to the funding body.
There can be exceptions to this general rule but this will usually involve specific liaison with the grant funding body and clear written agreement to vary the terms of the grant funding.
Successfully obtaining grant funding is hard enough in the current economic environment. Your organisation therefore needs to protect its good name and reputation to ensure that grant funders continue to support your worthwhile causes. Hence we suggest great care be taken to understand and clearly meet the terms of any grant funding.
Should you have any queries about this type of situation or require assistance with grant funding contact the helpful team at Hayes Knight.
Can you please advise how I can get more information about the above for my boss?
Hi Tiria. Thanks for your comment. Wayne Tukiri is scheduled to meet with TWT within the next week and has added this to the agenda. This will tackle all your questions.