<< Summary
Compact between Newcastle's voluntary and community organisations and Newcastle City Council (March 2008)
General funding conditions
Grant funding
Contracting
Appendices
Acronyms
NCVS - Newcastle Council for Voluntary Service
PPR - Procurement Procedure Rules (the Council’s corporate rules)
PQQ - Pre-qualifying questionnaire
SLA - Service Level Agreement
VCS - Voluntary and Community Sector
1 The Context
1.1 Newcastle City Council (the council) and Newcastle Council for Voluntary Service (NCVS) have agreed to take forward a funding code of practice to cover grant funding and contracting as a part of the Compact between the council and the voluntary and community sector (VCS). The code is based on mutual trust and respect and a commitment to getting it right together for mutual advantage. The code will help develop and maintain effective funding procedures that give value for money, and result in sound decisions that support well-delivered services and programmes.
1.2 This code covers the council corporately, each of its directorates, NCVS and its members. The development of action plans to implement the guidance in this code is the responsibility of each directorate and the individual organisations.
1.3 This code is an enabling mechanism to enhance the relationship between the council and the VCS. Its authority is derived from endorsement by the council, NCVS and its members.
1.4 Newcastle City Council is the accountable body or lead agency for a range of government programmes and sometimes allocates funding to VCS groups from these programmes, either in the form of grant aid or via a procurement process. In such cases, the terms of this code will be applied wherever possible. There may, however, be occasions where the council is unable to apply every aspect of the code. Where this happens, the council will give the reasons why this is so.
2 Aims
2.1 This Funding Code of Practice aims to influence behaviour and contribute to a constructive dialogue between the council and VCS organisations. It does this through:
setting a framework for the financial relationship
setting out undertakings for both sides, based on what each can expect from the other
establishing a socially responsible funding framework
establishing a basis for sound grant and contract management
ensuring this is done efficiently and effectively
2.2 The council recognises that VCS organisations have an important role in helping it to achieve its objectives, and that the council can play a positive role in supporting the work of VCS organisations.
VCS organisations, as independent, not-for-profit organisations, bring distinctive value to Newcastle and fulfil a role distinct from that of statutory agencies and the private sector. This role includes:
- enabling individuals to contribute to public life and the development of communities by providing opportunities for voluntary action
- helping people get involved in the design and delivery of services they use
- acting as advocates for people who otherwise find it difficult to have their needs or views heard.
By doing this VCS organisations promote equality and diversity. They help alleviate poverty, improve quality of life and involve those who face social exclusion. In the context of the council’s financial requirements, getting the funding mechanisms right is an essential part of ensuring that the relationship works well.
2.3 This code sets out a strategic approach to funding. It covers all the activity undertaken by the council in respect of VCS organisations.
2.4 The council retains the right to decide what is funded through grant funding and what through contracting.
2.5 The council and the VCS have dedicated resources to Compact development. These are available to support the implementation and review of the codes of practice. As part of this process, suitable methods have been devised for reviewing how the codes operate. Reports of all reviews will be available to the council and to VCS organisations.
2.6 The council encourages other public bodies to adopt and adapt the Compact and the associated codes of practice.
2.7 The council will ensure that the issues identified in this code of practice are reflected in the council’s grant funding and contracting strategies, associated policies and guidance.
2.8 The council and NCVS will regularly review implementation of the measures outlined in the code of practice.
3 General undertakings
3.1 There are specific undertakings related to grant funding and contracting in sections 2 and 3 respectively. In addition to these there are a number of undertakings that relate to both.
The council’s undertakings
3.2 Newcastle City Council is committed to establishing and maintaining best practice in the way it funds VCS organisations. The council will implement an effective funding framework that:
- helps ensure value for money
- maximises the benefits to the community, economy and environment
- applies procedures, including making payments in advance of expenditure where appropriate, that are consistent with the principles of good regulation and the need to provide effective protection of, and proper accountability for, public money
- respects the independence of VCS organisations and their right to campaign within the law, irrespective of any funding relationship that may exist
- contributes to the sustainability of the VCS
- recognises core costs and the different ways these can be met
- promotes fair access to grants and contracts
- provides clarity in the objectives of funding programmes and their eligibility criteria
- promotes openness, fairness and objectivity in all administrative processes
Voluntary and community sector undertakings
3.3 The VCS recognises that the receipt of public funds carries with it responsibilities to the funding body and to the public that benefit from the services provided. The VCS undertakes to pursue good practice in the use and administration of public funds so ensuring that organisations
- meet eligibility criteria and conditions when applying
- have clear and effective employment policies, management arrangements and procedures;
- have effective and proportionate systems for the management, control, accountability, propriety and audit of finances
- have systems for planning and implementing work programmes
- have systems for monitoring and evaluating activities against agreed objectives
- have systems for quality assurance and accountability to service users, including complaints procedures
- have policies for ensuring equality of opportunity in both employment practice and service provision
These undertakings will be met in ways appropriate to the size of the VCS organisation.
In addition, VCS organisations that hold charitable status must also comply with the accounting framework for charities and follow appropriate guidance from the Charity Commission.
4 Joint bids
4.1 Where they present a clear advantage, joint bids will be encouraged. This is because they may
- help achieve value for money
- assist the viability of the project and the individual partners
- benefit the organisations and service users through sharing expertise and resources e.g. where the savings generated can be used to add value to the service
- be an effective way for larger VCS organisations to assist smaller VCS organisations to access resources.
4.2 The joint bid should identify the partner with lead financial responsibility.
4.3 The VCS undertakes to actively consider the opportunities that exist for greater joint working between VCS organisations.
5 Small community organisations
5.1 In Newcastle there are a large number of small VCS organisations that consider themselves community based. The council acknowledges that a long-term commitment to strategic funding may be the most efficient and effective means of supporting community self help.
5.2 The council will try to ensure that small community organisations can access relevant funding. This includes:
- considering how funding policies, procedures and practices affect small community organisations
- operating grant funding programmes with user-friendly procedures
6 Open and fair processes
6.1 The council recognises that funding processes should be open and objective. This includes the assessment process which covers:
eligibility
risk assessment
initial assessment
consultation on applications
detailed assessment of applications
decisions and recommendations
consequences of the recommendations
6.2 While the council will give a specific deadline for applications, it is the responsibility of VCS organisations to submit bids and tenders on time.
6.3 The funding processes will follow a realistic time-table that allows time for the dissemination of information about the procedures, and for VCS organisations to receive and respond to guidance and support.
6.4 The funding processes will, where practical, offer an opportunity for VCS organisations to discuss potential grant funding or contracting arrangements with the council and each other.
6.5 The council will make details of the funding processes widely available, for example through the press, umbrella organisations, networks, directories, newsletters and the internet. They will ensure that guidance notes and application forms are readily available to applicants, including on the internet. Where necessary, they will provide information in Braille, large typeface, audio, and in languages other than English.
6.6 The council will give appropriate advance notice of changes to the processes before the changes come into effect, and will regularly review the arrangements for ensuring fair access.
7 Equal opportunities
7.1 VCS organisations that support and represent disadvantaged or marginalised communities have a crucial role in helping to reach some of the most socially excluded people in Newcastle, combating discrimination and disadvantage, and providing vital services to their communities.
The council’s funding policies and practices will take careful account of the needs of these VCS organisations. This includes:
- consulting relevant organisations on the design and evaluation of funding and contracting programmes
- ensuring that such organisations have access to an appropriate share of available resources
- where appropriate, providing funding to develop and sustain local infrastructure and capacity
- where appropriate, providing start up funding
- where appropriate, providing funding for research and policy development
- giving attention to the particular needs of communities of interest, such as the accessibility needs of disability organisations by providing audio or large print application materials.
7.2 The council is prepared to fund VCS organisations that support and represent disadvantaged or marginalised communities to deliver wider services, not just services to their own communities.
7.3 The council makes it a condition of funding mainstream infrastructure organisations that their services are made available to disadvantaged or marginalised communities. The organisations will be required to report on how they are performing in this respect.
7.4 The council aims to publish the number and amounts of grants and contracts received by organisations serving particular communities of interest, e.g. black and minority ethnic groups, subject to the data available. This will help to determine whether the arrangements are fair and effective, and whether any further action, both by the council and the VCS, is necessary.
8 Agreeing terms of delivery
8.1 VCS organisations submitting applications are responsible for costing, pricing (unless specified), and planning their work. This includes taking account of cost increases over time such as inflation, salary increases or compliance costs resulting from new legislation.
8.2 VCS organisations will have terms of delivery that are appropriate and focus on the outputs and outcomes to be achieved. These terms will also set out the risks that the organisation is responsible for managing.
8.3 The VCS recognises that, in appropriate circumstances, funders may ask for public recognition of their funding from funded organisations and specify the forms that this should take.
9 Service level agreements (SLAs)
9.1 An SLA is a detailed specification that can form part of the terms and conditions of a grant, or form part of a contract. It is not a separate structure, it is simply a way of making the arrangements clearer.
9.2 SLAs set out what is required in a service and the basis for delivery and payment. They are negotiated jointly between the council and the VCS organisation.
9.3 The SLA will only include requirements that are essential.
10 Agreeing payment terms
10.1 Both the council and the VCS agree that payment methods can be adapted to meet the needs of the recipient. This means that:
- The VCS will seek payment terms that allow services to be funded in the most effective way
- The VCS undertakes to have good systems in place to manage and account for finances
- VCS organisations recognise that the onus is on them to agree a clear understanding about payment terms with the council.
11 Monitoring and evaluation
11.1 Monitoring and evaluation (*) are important elements within funding. They show the success of the delivery of services against agreed objectives. There may be both intern al and external monitoring, r eporting and evaluation
of individual projects and t he organisation as a whole.
(*) Definitions of 'monitoring' and 'evaluation' are given in appendix 1: glossary of terms.
11.2 Monitoring and evaluation can foster open and constructive dialogue wi th all those involved or who have something to contribute. This may be done through partnership arran gements with VCS organisations and those from the public and private sectors.
11.3 The VCS recognises that public accountability requires a certain level of reporting and undertakes to be honest, transparent and timely in this.
11.4 Performance standards will be built into grants and contracts. This may enable failing grants and contracts to be identified early. Once identified, a range of actions will be considered in consultation with the interested parties.
11.5 Effective monitoring focuses on outputs and outcomes, and is proportionate. It ensures transparency about the use of funds and what they have achieved. To be effective the framework for monitoring and evaluation will:
- be clear about the roles and responsibilities of the council and the organisation or organisations
- be relevant, collectable and proportionate
- be consistent with the need for the effective protection of, and proper accountability for, public money
Monitoring procedures should provide a sufficient review of performance to inform future funding. These reviews and the feedback from them will highlight good practice and the lessons to be learned, so assisting the improvement of future arrangements.
12 Financial reporting
12.1 The VCS organisation and the council will agree a series of trigger points for information and accounting reports. Unless there is good reason, directorates will not demand more stringent accounting and auditing requirements of charities than is required by the Charities Act, or more of companies than is required by the Companies Act.
(The Charity Commission sets out best practice in 'Accounting by Charities: Statement of Recommended Practice'. This follows a similar format to the accounting requirements for limited companies. It asks for a statement of financial activities, rather than a profit and loss account. To highlight these requirements the Charity Commission has produced two leaflets, 'Accounting for the Smaller Charity' CC54 and 'Accruals Accounting for the Smaller Charity' CC55. These leaflets are available at www.charity-commission.gov.uk)
13 Financial and other difficulties
13.1 Where an organisation is in financial or other difficulty that may affect a grant or contract awarded by the council, the group will inform the council promptly of the situation and any action being taken. If the council becomes aware of problems, the relevant directorate should at an early stage give formal notification to the group.
In the event of an organisation failing to deliver to the agreed terms and conditions or performance standards the council may consider the following:
- meetings with the organisation to discuss the scope and cause of problems
- offering support and guidance to resolve these problems
- additional and/or more intensive monitoring arrangements
- issuing warning notices
- begin the process of grant or contract termination
13.2 The primary concern of the council is to protect public funds. The funding directorate should consider with the council’s lawyers and auditors what action needs to be taken.
The terms and conditions of the grant or contract will give the general circumstances in which investigations may be made, and in which the grant or contract may be suspended, withdrawn and the monies recovered.
Subject to the requirement to protect public funds, the council and the organisation may agree a recovery plan. The recovery plan must be specified as part of the grant conditions or written into the contract.
13.3 In respect of charities, any proposed intervention will avoid interfering with the discretion of the trustees and the independence of the charity. The council should discuss with the trustees the difficulties that have arisen and what can be done to rectify the situation. It is, however, for the trustees to decide the action to be taken. The trustees should consider whether they need advice from the Charity Commission. This does not affect the council’s discretion to carry out investigations, to suspend or withdraw the grant or contract, or to seek to recover monies.
13.4 Every grant and contract will include details of the council’s contact officer. Their role is to monitor the provider and be the first point of contact for any form of representation. Appropriate action will be taken by the council under the terms of the grant or contract.
14 Concluding a financial relationship
14.1 A financial relationship between the council and a VCS organisation may conclude when
- the grant, contract or other financial relationship finishes
- the VCS organisation fails to meet the terms and conditions of grant funding
- delivery targets are not met
- a review of funding leads to the end of the financial relationship.
14.2 The VCS recognises that funding may end as priorities change or if outputs or outcomes are not delivered. The VCS undertakes to plan in good time for different situations to try to reduce any potential negative impact on both beneficiaries and the organisation.
15 Procedure for resolving disagreements
15.1 Any constituted voluntary organisation can make a complaint under the Compact.
15.2 All complaints relating to the Compact and its codes of practice will follow the procedure outlined in the Compact document ‘Procedure for Resolving Disagreements’ (July 2005).