A new set of Commonwealth Grant Guidelines (CGGs) took effect on 1 June 2013. The new CGGs state the grants administration expectations for all agencies that are subject to the Financial Management and Accountability Act 1997 (Cth) (FMA Act). They have retained the same structure as the previous version, including a split between Part 1, which outlines the mandatory requirements, and Part 2, which explains the seven principles of grants administration.

Although the new CGGs appear very similar to the previous version, existing obligations have been expanded and several new obligations have been added. In addition, some significant changes have been made for not-for-profit organisations.

New mandatory requirements

The most notable change in the new CGGs is the increase in the number of mandatory requirements, indicated by the use of "must" throughout the CGGs. Most of the new mandatory requirements reflect existing agency procedures.

The new additional obligations include:

  • establishing and documenting whether a proposed activity is a grant before applying the Commonwealth grants policy framework (s 2.4)
  • noting the implications of sections 5 and 12 of the FMA Act when considering the involvement of third parties in grants administration (s 3.18)
  • developing grant guidelines for all new granting activities (including grant programs) and developing revised guidelines where significant changes have been made to the current granting activity (s 4.5)
  • considering the seven key principles for grants administration, which are outlined in Part 2 of the new CGGs (s 4.5)
  • advising the relevant Minister on the requirements of the FMA Act, FMA Regulations and the CGGs where a Minister exercises the role of an approver (s 4.5(a))
  • considering the information collected by regulators, such as the Australian Charities and Not-for-profits Commission (ACNC), when determining whether acquittal or reporting requirements are required (s 4.7)
  • if developing or revising guidelines, completing a risk assessment of the granting activities and associated guidelines, in consultation with the Department of Finance and Deregulation and the Department of Prime Minister and Cabinet (s 4.10)
  • identifying whether a grant agreement contains confidentiality provisions (s 5.4)
  • providing written advice to Ministers where they exercise the role of an approver (s 4.6), which must include:
    • explicitly noting the spending proposal being considered for approval is a grant
    • providing information about the applicable requirements of the FMA Act, FMA Regulations and the CGGs (particularly the Ministerial reporting requirements), including the legal authority for the grant
    • outlining the application and selection process, including the selection criteria, used to select potential grant recipients, and
    • including the merits of the proposed grant or grants relative to the grant guidelines and the key consideration of achieving value with public money.

New mandatory requirements for dealing with not-for-profit organisations

Under the new CGGs, agencies must not include suppression clauses that seek to limit, prevent or ban not-for-profit organisations from advocating on policy issues (s 3.2). This may involve including criteria in grant application and selection processes, or clauses in grant agreements, that prohibit grant recipients from political advocacy.

Where a potential applicant for a grant is regulated by the ACNC, agency staff must not request information from the applicant that has previously been provided to the ACNC. If agency staff are not sure what information has been provided, they are encouraged to contact the ACNC to find out what relevant information is available (s 4.7).

The limit on political advocacy suppression clauses only applies to not-for-profit organisations. Agencies may still include suppression clauses that seek to limit or ban other organisations from using grant funding for political advocacy activities. However, the issue is complex and agencies may benefit from legal or probity advice (or both) before including a suppression clause in grant guidelines.

Agencies should also review their grant templates to ensure political advocacy is not listed as a criterion for ineligibility applying to all entities.

Other notable changes to the CGGs

The definition of "grant" has changed

The definition of "grant" has been modified to note that a grant is intended to address, rather than promote, one or more Government policy objective. The previous list of arrangements that are not considered grants stands, with one addition: a payment of assistance for the purposes of Australia's international development assistance program is now also not considered a grant.

These changes are expected to reflect upcoming amendments to the FMA Regulations. However, until the FMA Regulations are amended, the Regulations and the CGGs will be slightly misaligned. As the Regulations are more authoritative, agencies should continue to use that definition.

Role of expert committees and advisory panels

If an expert committee or advisory panel advises on and informs an expenditure decision, the committee or panel members should be treated as agency staff for the purposes of the CGGs (s 2.8).

Reporting requirements

The time limit for web-based reporting has been extended from seven to 14 working days after a grant agreement takes effect (s 5.2).

Examples of potential risks to granting activity have been removed

The list of the examples of risks to a granting activity has been removed from the updated CGGs. However, these risks remain relevant and should not be forgotten.

Implications for agencies

The updated CGGs took effect on 1 June 2013. Any grant activity now needs to be consistent with the new CGGs.

Agencies should also review and update their process, policy and templates to ensure compliance with the new CGGs.

Further information

If you have any questions about the issues raised in this alert, please contact:

  • Col Webeck, Partner
    t: +61 2 6263 6310 | e:
Return To Top