Effective Date: April 1, 2016

Applicable FAM Policies: 805 - Contributions; 810 - Grants and Grants-in-Kind

Applicability: GNWT Departments and Public Agencies

This interpretation provides guidance on establishing an agreement pursuant to a contribution (including block funding), grant or grant-in-kind (non-cash assets).

INTERPRETATION

Scope

Although all funding Public Agencies are in scope of the applicable FAM Policies, the Financial Administration Act excludes the Local Housing Organizations (LHOs)  of the NWT Housing Corporation and also the subsidiaries of the NWT Business Development Corporation as these LHOs and subsidiaries are incorporated by Legislation and considered as non-related parties.

Federal grants or contribution agreements that were transferred to the Government or a Public Agency to fund under a separate agreement (e.g. Canada Mortgage and Housing Corporation (CMHC) 35 year social housing agreement) may be excluded on the basis of its initial establishment and long term basis or with the approval of the Comptroller General.

Application for Transfer of Funding or Grant-in-kind

Every application for a contribution, grant or grant-in-kind should provide the following information. The application may form part of the agreement between the Government or Public Agency and the recipient.

• The proposed transfer recipient’s legal name and legal address;
• The proposed recipient’s legal status, i.e., individual, business, non‑profit society, board, agency or other government;
• If the proposed recipient is an organization, the purpose and structure of the organization and the names of all officers, board members and executive directors;
• Reason(s) why the Government or Public Agency should pay for or offset any of the proposed recipient’s costs;
• Which Northwest Territories residents will benefit from the transfer;
• How Northwest Territories residents will benefit from the transfer;
• Objectives of the program or project to be supported;
• Anticipated results of the program or project to be supported;
• Specifically what costs the transfer will pay for or offset (e.g. salaries, goods, services, capital assets, rent, etc);
•  Disclosure (where appropriate) of the proposed recipient's revenue and expenditure requirements for the time period or project to which the transfer applies, including projected or incurred expenses, projected or received revenue from all sources and financial statements (where appropriate) to substantiate the recipient's eligibility and need for subsidy;
• On contributions exceeding $100,000, the proposed recipient's projected monthly or quarterly cash flow requirements during the Government fiscal period(s) to which the transfer applies;  and
• Signature(s) of official(s) authorized to enter into the proposed agreement on behalf of the recipient.

Funding Agreement Minimum Standard Requirements

Every standard contribution, grant or grant-in-kind agreement for at least $50,000 in value must provide all applicable information as follows. (Non-standard transfer agreement terms or conditions must be approved in advance by the Legal Division, Department of Justice including non-standard indemnity clauses, which require additional approval by Risk Management and Insurance, Department of Finance.) Small contribution, grant or grant-in-kind agreements under $50,000 should still follow the documentation requirements below, or as determined by the department or public agency program guidelines.

a)    The transfer recipient’s legal name and legal address;

b)    The recipient’s legal status i.e., individual, business, non‑profit society, board, agency or other government including the organizational structure and the names of all officers, board members, and executive directors if the recipient is an organization;

c)    The authority under which the funding is being made (i.e., referencing either the specific Legislation, Policy, or Ministerial Approved Program) and where appropriate, public acknowledgment of the funding Minister and Department/Agency (in print, signage or another form of announcement);

d)    Specifically, what costs the transfer will pay for or offset (e.g., salaries, goods, services, capital assets, rent, etc.);

e)    The names, positions, and signatures of officials authorized to execute the transfer agreement on behalf of all parties and the dates of all signatures;

f)     Conditions and instructions for notification in the event of amendment or termination of the transfer agreement;

g)    The condition that any Government expenditure under the transfer agreement “will be incurred only if there is a sufficient uncommitted balance in the appropriated item for the fiscal year in which the expenditure is required”;

h)    Insurance and indemnification conditions as and if required to save harmless both the Government or Public Agency and the Minister responsible for the transfer agreement and to protect the recipient’s ability to fulfill its obligations under the transfer agreement;

i)     State and substantiate the recipient's projected expenses during each Government fiscal year in which the transfer agreement exists;

j)     State or estimate all projected income the recipient will receive from all sources, in relation to the same project, during each Government fiscal year in which the transfer agreement exists, including but not limited to:

• Other contributions, block funding, grants and g, ants-in-kind;
• Borrowed money;
• Interest on deposits and investments;
• Fee collection; and,
• Other revenue-raising activities, gifts, etc.

k)    Schedule contribution payments on a monthly, quarterly, seasonal or other basis appropriate to the recipient's cash flow requirements, the nature of the recipient's operations and the contribution amount;

l)     The dates of initial and subsequent payments to be made to the recipient;

m)   Recording of contribution payments as accountable advances if an accounting has not been received;

n)    The recipient's obligations and accounting treatment to the Government or Public Agency with respect to unused funding including surplus funding related to multi-year carry-overs or, surpluses related to multiple sources of revenue, and liabilities (Not applicable to block funding, grants and grants-in-kind);

o)    The rights, contract obligations and responsibilities of the Government or Public Agency and the recipient with respect to the release of information about the transfer agreement, in accordance with the requirements of legislation (such as the Access to Information and Protection of Privacy Act) and the Government or Public Agency's policies of disclosure within the Public Accounts;

p)    The recipient's obligations to maintain and make available to the Government or Public Agency specified results information and financial records complete with the required duration for record retention (Not applicable to block funding, grants and grants-in-kind);

q)    Contribution agreements should contain the following based on contribution amount (materiality) or complexity thresholds: (Not applicable to block funding, grants, and grants-in-kind)

• a timed schedule of the recipient's program or project performance obligations;
• a reporting format and timed schedule of the recipient's results information reporting, financial accounting, auditing obligations (including instructions for adequate and proper disclosure in the recipients financial statements), and a self-evaluation as to the success of the program or project;
• a holdback portion of 15-25% of the funding due (where the recipients situation permits), and releasing the holdback portion only after the full financial and results accountability for the program or project is received.
• the recipient's obligations to the Government or Public Agency with respect to the acquisition and disposal of assets purchased with contribution funds;
• a clause binding the agreement on all successors, heirs, and assigns; and
• a clause under which the agreement would not expire until all conditions of the agreement were met.

Conditions for Payment

Every transfer agreement is a contract.  However, the requirement in the Government Contract Regulations for the certification of a “contract authority” does not apply as it does in other types of contracts where goods, services or other items are supplied directly to the Government. In a contribution or grant agreement, contract consideration flows from the recipient to the Government or Public Agency in the form of services supplied to the public, so an expenditure officer authorizing the agreement is not required to be a “contract authority” as defined by the Government Contract Regulations.

A Minister (or delegate) responsible for a transfer agreement may, where he or she deems appropriate, authorize a disbursement of funds for a pending transfer agreement before the transfer agreement is signed.

A release of payment before a pending agreement is signed should be on the condition that the recipient will, as soon as possible, enter into the agreement already described in reasonable detail by the responsible department/agency (e.g., in the department’s existing standards for other similar transfer agreements).

The expenditure officer and accounting officer responsible for disbursements under an existing written transfer agreement may, where the conditions of payment have not been met fully:

• Authorize the release of a scheduled disbursement, provided that the amount of the disbursement is reduced by an amount equal to the value to the Government or Public Agency of any unmet payment conditions.
• Deduct the Government or Public Agency’s full cost of carrying out the work from any payment otherwise due to the recipient or else recover the full cost from the recipient by other means.

Changes to the Agreement

Expanding or reducing a program or service or adapting to unforeseen changes may result in changes to the funding agreement. The government or public agency and the recipient must confirm and approve any decision to change funding levels. Program managers should work closely with a recipient to review cost changes and consider how to limit increases while still achieving intended goals and objectives.

Funding increases should only happen if the department/agency budget allows and increases should reflect factors such as the ability of the recipient to adjust services or costs to stay within budget.  The recipient will need to assess available measures and their effects on reducing the need for the increased funding. Changes to agreements as agreed to by all parties involved should only be done through a written agreement (see Sample form below). A signed amendment must be completed before more money is given to the recipient. The signed amendment requires information and calculations supporting why the change is needed.  

IB 805.01 Funding Agreement Application Sample document