NGO support toolkit (English)  >  NGO Support Programme management  >  Finance 

Grant management

NSPs need to develop procedures and systems to manage the disbursement and monitor the use of grants to NGOs and CBOs to ensure they are in compliance with donor restrictions and statutory obligations.

Just as there is normally an agreement or Memorandum of Understanding (MOU) between a donor and an NSP, so too, written agreements between the NSP and the local NGO/CBO grantees should be drawn up. The agreement between the NSP and the grantee NGO/CBO should include the following in relation to each grant:

• how budgets and workplans should be developed and in what format
• the start and end dates of the projects covered by the grant
• the amount of the grant and the schedule of disbursement
• contractual details, including responsible signatories from each organisation
• monitoring, reporting, accounting and audit requirements
• donor restrictions on the use of the grant, and how to adhere to these.

Issues to consider

NSPs will also need to identify statutory regulations in relation to:

• opening bank accounts
• whether or not advances can be made
• whether or not organisations have to be registered
• what is taxable and who is responsible for paying tax
• who should keep original documentation of financial transactions.

It is important for NSPs to keep up-to-date with financial, tax and other regulations affecting NGOs and CBOs, especially in countries where the legal status of NGOs and CBOs is changing or developing rapidly.

It is important for NSPs to be able to adapt the agreements and financial requirements according to the capacity of the NGO or CBO receiving the grant.

The degree of hands-on financial support and control offered by NSPs will need to be tailored to the strengths and weaknesses of individual NGOs or CBOs. For less experienced NGOs and CBOs, it may be appropriate to make advances before financial systems are fully developed, and request monthly reports and original documentation of financial transactions. NGOs and CBOs with stronger financial systems can be expected to report quarterly. Such reports may not need to be supported by original documentation of financial transactions.

NSPs will need to be prepared to devote substantially more resources and effort into assisting NGOs and CBOs which have no previous experience of receiving formal grants.

It is important for NSPs to be able to adapt the agreements and financial requirements according to the capacity of the NGO or CBO receiving the grant.

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