Grants and Contributions
The Treasury Board of Canada policy issued in 2015 (reference below) defines a grant as “a transfer payment subject to pre-established eligibility and other entitlement criteria” and a contribution as “a transfer payment subject to performance conditions specified in a funding agreement.”
In 2006 the Blue Ribbon Panel on Grants and Contributions Programs (reference below, report pdf on right) had noted that:
“… the theory is that grants are unconditional transfers of funds, while contributions are conditional and involve the reimbursement of eligible expenditures. In practice, however, the distinction between the two forms of transfer payment is far less clear. … Many grants … require approved Terms and Conditions like contribution programs and may also have reporting requirements (e.g., to establish continued eligibility and reports on cash flow). To add to the confusion, contributions are also not managed in a consistent way. Some have more and some have fewer conditions and reporting requirements. Some, like grants, may allow up-front payments, while others do not.
“In practice, there is a continuum of transfer payments where terms and conditions, and monitoring and reporting requirements, vary. This would make eminent sense if the variability in this multitude of categories lined up with sensible factors such as risk or the size of the transfer payment. However, small low-risk payments are often treated as contributions and require a disproportionately high level of compliance effort.
“The issue is further complicated by the use of contribution agreements to fund the delivery of services by a third party that the government, for sound policy reasons, wishes to see provided. Although these arrangements have the character of contracts (in that they are long term or recurring, and they involve the provision of services that the government could theoretically supply itself), they are administered as though they were projects funded by short-term contributions. These practices lead to a variety of funding and reporting difficulties – in essence, unreliable funding for what is essentially a long-term relationship.”
A perennial concern in the design and administration of grants and contributions programs is Conditionality and Reporting Requirements. Concerns related to Incrementality and Fungibility press in the direction of increasing conditionality and reporting requirements, while efforts at Red Tape Reduction press in the opposite direction.
Atlas topic, subject, and course
Treasury Board of Canada Secretariat (2015), Policy on Transfer Payments, Appendix A – Definitions, at https://www.tbs-sct.gc.ca/pol/doc-eng.aspx?id=13525#appA, accessed 12 October 2017.
Independent Blue Ribbon Panel on Grant and Contribution Programs (2006), From Red Tape to Clear Results, at http://publications.gc.ca/collections/Collection/BT22-109-2007E.pdf, accessed 12 October 2017.
Page created by: Ian Clark, last modified 12 October 2017.
Image: ecdpm, http://ecdpm.org/great-insights/trade-and-human-rights/political-conditionality-eus-dev-cooperation-broader-debate/, accessed 12 October 2017.