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Funding and Contracting Options FAQs

Skip Navigation LinksThe Funding Reform Funding and Contracting FAQs

What is the difference between grants and services agreements?
A grant is a one-off payment for a particular purpose and period, paid either as a lump sum or as instalments. Grants are usually associated with start-ups or pilot initiatives and generally have few reporting and compliance requirements.
Service agreements are created to support the ongoing delivery of services and are usually for a longer period of time (ie 3-5 years) with clear reporting requirements. Service agreements are the main funding source being examined and changed in the DCSP policy.
However, it is important to note that for a prolonged period of time, some service agreements have been masquerading as grants. These are grants that have been automatically rolled over year after year to the same organisations. Under the Policy these kinds of arrangements will be reviewed, and possibly turned into service agreements.

Where are we likely to see the ‘flexible arrangements’ referred to in the Policy?
It is likely that these flexible arrangements will most commonly be seen in the disabilities and mental health sectors, where initiatives such as individualised or self-directed funding are being trialled.
It is currently unclear if there are any other flexible arrangements in funding and contracting that will roll out as a result of the Policy and what these might look like.

My funding agency is putting forward both a service delivery model and the maximum budget that they have. Does this adhere to the Policy?
Under the DCSP Policy, government agencies should not be setting a maximum figure or limit on a Request for Funding proposal; services should be funded according to the actual cost. In requesting both a service delivery model and a price, government agencies prevent community organisations from being able to put forward a price that is workable and sustainable for them in accordance with the DCSP Policy.
However, it should be acknowledged that because the Policy does not provide a panacea for all funding issues, it is difficult for government agencies to accept prices that may be well beyond their budget. So – our understanding is that agencies can do one of two things –
1. Put forward the service delivery model with no price, and allow organisations to come up with a sustainable price for them to deliver that service
2. Put forward a maximum price, but with no fixed service delivery model. This allows organisations to figure out their sustainable price, and if they cannot deliver what is required for the funds available, they have the opportunity to modify the service model. For example, they may deliver less in quantity or quality, look at partnerships that could assist in filling gaps, deliver on only one part of the service or deliver on only a few of the outcomes.

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