The purpose of this guide is to provide clear, concise and tailored guidance for the management of the International Relations Grants Program (IRGP), including specific advice on the management of Foundations, Councils, and Institutes (FCIs). All references to grants in this guide should be read in the context of the IRGP. Departmental-wide grants advice is the policy responsibility of the Financial Services Branch (FSB).
The IRGP is the main grants program within the Department of Foreign Affairs and Trade. A combined total of approximately $6.7m in Administered and Departmental funding was allocated to the IRGP in 2011-12. A large part of this funding is managed by the Department’s FCIs, which play a vital role in developing and improving key bilateral relationships with China, India, Indonesia, Japan, Korea, Malaysia, Thailand, Latin America and the Arab world. IRGP grants fund projects designed to advance Australia’s international interests in a range of the priority areas including, for example, international and regional security, counter-terrorism, health, education, science, information technology, communications, cultural, gender and environmental issues.
The IRGP aims to provide a valuable and highly effective means of helping the Department meet the government’s foreign and trade policy objectives. It also plays an important role in meeting the objectives and priorities of the Department’s annual Public Diplomacy Strategy, which is approved by the Departmental Executive (for the 2011-12 Strategy, refer to CE81567H).
All Administered funding assigned to the IRGP must be spent solely on grants. A portion of the Departmental funding noted above is also allocated to the provision of grants. The balance of Departmental funding allocated to FCIs is used to fund FCI board operating costs, support costs for managing grants, and in-house programs.
The Department has a strong interest in ensuring that its grant programs are appropriately designed and administered to achieve the Government’s objectives. All spending of public money should be effective, efficient and ethical. The Commonwealth Grant Guidelines require agency staff involved in grants administration toensure that they:
- always take care to behave in accordance with the law (including regulations), government policy, agency rules (for example, Financial Management Manual) and with applicable funding agreements;
- keep commercially sensitive information secure and never use it for personal gain or to prejudice grants administration processes;
- disclose information that the Government requires to be notified; and
- disclose to their agency any form of current or prospective personal interest that might create a conflict of interest in grants administration.
- Payments that are grants must comply with the Department of Finance and Deregulation Commonwealth Grant Guidelines.
Payments classed as procurements must conform to the DFAT Procurement Manual and the Commonwealth Procurement Guidelines.
These IRGP Policies and Procedures guidelines are informed by the Australian National Audit Office (ANAO) publication Implementing Better Practice Grants Administration and are consistent with guidance contained in the Commonwealth Grant Guidelines as well as the DFAT Finance Management Manual (FMM). Where further information on a case-by-case basis is required, IRGP program managers should contact Executive Planning and Evaluation Branch (EXB) for assistance in the first instance.
2. Defining Grants
The Government’s definition of a “grant” under the Financial Management and Accountability Act 1997 (FMA Act) Regulation 3A(1) is as follows:
“A grant is an arrangement for the provision of financial assistance by the Commonwealth:
- under which public money is to be paid to a recipient other than the Commonwealth;
- which is intended to assist the recipient achieve its goals;
- which is intended to promote one or more of the Australian Government’s policy objectives; and
- under which the recipient is required to act in accordance with any terms or conditions specified in the arrangement.
A granting activity can take a variety of forms, including a payment made on a one-off or ad hoc basis; payments made as a result of competitive assessment; or payments made provided specified criteria are satisfied.”
Grants may be made to Commonwealth agencies. While these payments are not technically considered as grants under the Commonwealth Grant Guidelines, to ensure transparency the Department’s policy is to treat these payments as grants, and therefore subject to the Guidelines.
2.1 Arrangements that are not grants
Arrangements that are not grants include:
- Procurement of property or services for the agency’s own use and procurement undertaken by the Department for other agencies or third parties;
- A gift of public property or public money, including an ex gratia payment. A gift is an unconditional payment, whereas a grant requires the recipient to undertake expenditure in accordance with a specified purpose;
- A payment of compensation made under an act of grace arrangement, an arrangement for employment compensation or a similar arrangement;
- A payment of benefit to a person, including a payment of an entitlement established by legislation or by a government program;
- A tax concession or offset; and
- An investment or loan of public money.
Under the FMA Act, Commonwealth agencies can spend public money by making a grant or procuring goods and/or services. While the IRGP is focussed on grants, there are also procurement elements in the program.
Deciding whether a payment should be defined as a grant or a procurement activity is a question of fact. If the Department (Division or FCI) contributes funding to an organisation principally for its benefit to host a conference to further a shared aim of developing people to people links between Australia and another country then the payment may be a grant.
Where a grant application includes an embedded management component as part of the overall funding amount requested, this component may be considered an integral part of the grant (i.e. not a separate procurement) provided the funds are not directed to the organisation's ordinary running costs incurred regardless of whether the grant is awarded or not.
2.2 Grant Accountability and Reporting Requirements
For grant accountability and reporting requirements, IRGP managers should refer to DFAT’s Financial Management Manual (FMM) in the first instance. The main accountability and reporting requirements for IRGP grants are as follows:
- grants must be approved by an appropriate FMA Regulation 9 Approver (DFAT SES officer) before the grant is made public;
- multi-year grants must be approved by an appropriate FMA Regulation 10 Approver.
- a grant funding agreement must be entered into by both parties.
- grants must be reported on the Department’s website, within seven days of the funding agreement coming into effect (usually from the date of joint signature).
- for grants personally approved by a portfolio Minister, the Minister must write to the Minister of Finance and Deregulation within two weeks of the grant approval date (see table extract from Commonwealth Grant Guidelines below and sample letter).
- non-financial variations to existing grants are not considered to be new grants. Such variations must be properly documented;
- individual grant program guidelines must be published on the DFAT website for all grant programs to enable potential grant recipients to better understand the goals of the Commonwealth and the processes involved in those grant programs. Published guidelines may include policy guidance, administrative procedures, appraisal criteria, monitoring requirements, evaluation strategies and standard forms.
In addition, the following points, extracted from the Commonwealth Grant Guidelines, need to be considered where applicable.
3.19 The Australian Government has agreed that where a Minister exercises the role of a financial approver relating to a grant, they will not approve the grant without first receiving agency advice on the merits of the proposed grant.
3.20 The Australian Government has also agreed that decisions involving the award of grants within a Minister’s own electorate (House of Representatives members only) will remain within the remit of the responsible Minister or other approver in the portfolio or agency concerned.
- Each time a Minister (House of Representatives members only) approves a grant in respect to their own electorate, the Minister will write to the Finance Minister of Finance advising the Minister of the details.
- Where there is correspondence to the relevant grant recipient, a copy of this letter is sufficient, except in the circumstances outlined in paragraph 3.21(c). If there is no correspondence, Ministers will write to the Finance Minister advising of the decision as soon as practicable after it is made.
3.21 The Australian Government has further agreed that decisions involving the award of grants which the relevant agency has recommended be rejected, will remain within the remit of the responsible Minister.
- Ministers will report annually to the Finance Minister on all instances where they have decided to approve a particular grant which the relevant agency has recommended be rejected. The report will include a brief statement of reasons (i.e. the basis of the approval for each grant).
- The report will be provided to the Finance Minister by 31 March each year for the preceding calendar year.
- However, if a decision also relates to a Minister’s own electorate (House of Representatives members only) the Minister will also include this information when writing to the Finance Minister in the context of the process outlined in paragraph ii).
3. Background to the IRGP
The IRGP is the largest grants program administered by the Department of Foreign Affairs and Trade. The IRGP comprises a number of Foundations, Councils, and Institutes (FCIs) and direct grant programs – see details of individual IRGP programs.
3.1 Foundations, Councils and Institutes
The majority of the grant programs funded under the IRGP are managed by Foundations, Councils and Institutes (FCIs). FCIs have a governance structure established by a Charter, which is approved at least at the level of the Minister for Foreign Affairs. The Charter sets out the type of board each FCI has and its responsibilities, the role of the Department in supporting the board, who makes decisions about which grants are approved, and mandatory planning processes.
FCIs primarily focus on fostering and promoting a bilateral relationship with a partner country or more broadly within a region. With the exception of the ex officio member, board members, including the chairperson, are independently appointed by the Government on the recommendation of the Department. Board members are prominent members of the business, cultural, academic and other professional communities who are recognised experts in their own fields. The Secretary, or his/her representative, is usually an ex officio permanent member of these boards and the Department provides a secretariat to the FCIs to manage the day-to-day affairs of the FCI.
It is important to note that, despite having boards with independent members appointed by the Minister, FCIs do not have separate legal status from the Department. Therefore, the Department plays an important role in the oversight and management of FCIs and is ultimately responsible for the allocation of funding and the approval and management of all spending proposals recommended by a respective Board. The Departmental Finance Management Manual applies to the management of IRGP activities.
3.2 IRGP Direct Grant Recipients
Currently, IRGP direct grant funding recipients (DGR) are: the Australian National Commission for UNESCO, the Australian International Cultural Council, the Australia-France Foundation, UN Association of Australia; UN Youth Association; Australia Member Commission for CSCAP; and the Australian Institute for International Affairs. DGR funding is conditional on the annual IRGP allocation.
3.2.1 The Australian National Commission for UNESCO
The Australian National Commission for the United Nations Educational, Scientific and Cultural Organization (ANC-UNESCO) receives partial funding under the IRGP. UNESCO was established in 1946 as a specialised agency of the United Nations with Australia as one of the founding members. The ANC for UNESCO was subsequently established in 1947, in accordance with Article VII of the UNESCO Constitution.
The ANC provides expert policy analysis and advice to the Government on UNESCO matters; advises on the composition of Australian delegations to UNESCO meetings; acts as an agency of liaison between the Government, community and UNESCO; and, undertakes a range of activities within UNESCO’s fields of competence. It is managed by a board appointed by the Minister for Foreign Affairs, with a part-time secretariat provided by the Department. A Departmental officer fulfils the role of Secretary-General of the Commission and attends the board meetings. As with the FCIs, the Department plays an important role in the oversight and management of the Commission and is ultimately responsible for the allocation of funding and the approval and management of all spending proposals recommended by the board.
3.2.2 The Australia International Cultural Council
The Australia International Cultural Council (AICC) receives partial funding under the IRGP. The AICC is Australia’s peak cultural diplomacy body and draws together leaders from government, the arts and business with a common interest in promoting Australia overseas through the arts and culture. The AICC is not formally constituted but rather is an advisory group chaired by the Minister for Foreign Affairs and the portfolio Minister responsible for the Arts.
The Department is responsible for the management of the AICC, providing secretariat staff and coordinating a program of activities including: major country programs; Australian film promotion initiatives; the AICC Grants Program; and related administration including promotion, providing funding, monitoring activities, and ensuring reporting and acquittal processes are established and observed.
Under the AICC Grants Program, the Department provides funding to external individuals or organisations for arts and cultural projects that boost the AICC’s cultural diplomacy work in priority regions and enhance Australia’s foreign and trade policy interests.
3.2.3 The Australia France Foundation
The Australia France Foundation was created in 1989 as the major element of Australia’s official contribution to the celebration of the Bicentenary of the French Revolution and the Declaration of the Rights of Man and of the Citizen.
The Foundation’s objectives are to contribute to the development of Australia-France relations by promoting an accurate and contemporary understanding of Australia in France; and to strengthen institutional and people-to-people links between Australia and France.
The Foundation is currently managed by the Australian Embassy, Paris. Funding of the Foundation’s grant programs is from an Administered allocation under the International Relations Grant Program (IRGP).
3.2.4 Other IRGP Direct Grant Recipients
Other IRGP Direct Grant Recipients include:
- UN Association of Australia
- UN Youth Association
- Australia Member Commission for CSCAP
- Australian Institute for International Affairs
4. Managing IRGP Grant Programs
As noted in the introduction, the Commonwealth Grant Guidelines and the ANAO’s Implementing Better Practice Grants Administrationprovide comprehensive advice on the management of grant programs. The information contained in this chapter is intended to provide IRGP-specific advice and should be read in conjunction with the publications noted above.
Grant programs should be designed to support the Government’s foreign and trade objectives and the Department’s Public Diplomacy Strategy. Granting activity must be appropriately documented, defensible and substantiated in accordance with legislation and government policy in order to withstand external scrutiny. Grant program managers should also read the annual Public Diplomacy Strategy and consider how grants can advance the objectives and priorities it identifies.
The key planning document for all IRGP programs is an annual business plan (refer Section 5.4 Business Plans below).
Grant program managers may also consider proactive strategies to target grant fund recipients. The aim should be to identify and approach suitable individuals, organisations or groups with a view to carrying out funded projects, consistent with legal and government requirements. Special attention should be given to activities that address gender equality and women’s empowerment, including programs that advocate women in decision-making and leadership roles, and that aim to enhance economic opportunities and security for women.
4.2 Funding Arrangements
4.2.1 Departmental and Administered allocations
IRGP grant programs may be funded from either Departmental or Administered appropriations. Some IRGP grant programs receive a Departmental allocation as part of the Department’s annual budgetary process, to supplement allocated Administered funding.
Cost Centres for the Departmental allocations are:
|Cost Centre||Cost Centre Name|
|K0060||Australia China Council|
|P0041||Australia India Council|
|P0040||Australia Indonesia Institute|
|K0075||Australia Japan Foundation|
|K0050||Australia Korea Foundation|
|P0062||Australia Malaysia Institute|
|P0061||Australia Thailand Institute|
|R0033||Council for Australia Arab Relations|
|C0013||Council on Australia Latin America Relations|
|N0046||United Nations Association of Australia|
This Departmental allocation is subject to the Department’s standard financial management requirements (e.g., annual efficiency dividend, End-of-Month reports, Mercury administrative procedures checklist, SAP budgeting and planning etc.). The Departmental Executive allocates Departmental funding in accordance with Departmental policies and procedures, and divisions are responsible for the appropriate day-to-day management and expenditure of these funds. IRGP program managers seeking increases in Departmental funding allocations should do so in accordance with regular Departmental mechanisms. The key vehicle for this is the annual Budget Allocation Review (the BAR).
The majority of the Department’s IRGP grants are funded through an Administered appropriation. As with Departmentally-funded grant programs, IRGP Administered allocations are managed through standard Departmental processes and are subject to annual review. However, unlike Departmental allocations, Administered allocations are not subject to annual parameter adjustments.
Relevant IRGP payment codes and internal order numbers are as follows:
|FCI/Other Grant Programs||Coy Code||Internal Order||Cost Centre||GL Code Payments||Internal Order Refunds Current Year||GL Code Refunds Current Year||Internal Order Refunds Prior Year||GL Code Refunds Prior Year|
|Australia China Council||2000||210004||X2030||28565||210004||28565||240180||18016|
|Australia Korea Foundation||2000||210005||X2030||28565||210005||28565||240180||18016|
|Australia India Council||2000||210006||X2030||28565||210006||28565||240180||18016|
|Australia Indonesia Institute||2000||210007||X2030||28565||210007||28565||240180||18016|
|Australia Japan Foundation||2000||210180||X2030||28565||210180||28565||240180||18016|
|Australia Malaysia Institute||2000||210243||X2030||28565||210243||28565||240180||18016|
|Australia Thailand Institute||2000||210242||X2030||28565||210242||28565||240180||18016|
|Council for Australia-Latin America Relations||2000||210240||X2030||28565||210240||28565||240180||18016|
|Council for Australia-Arab Relations||2000||210241||X2030||28565||210241||28565||240180||18016|
|Australian International Cultural Council||2000||210009||X2030||28565||210009||28565||240180||18016|
|Australian Institute of International Affairs||2000||210008||X2030||28565||210008||28565||240180||18016|
|Australian Member Committee of the Council for Security Cooperation in the Asia Pacific||2000||210021||X2030||28565||210021||28565||240180||18016|
|Australia National Commission for UNESCO||2000||210015||X2030||28565||210015||28565||240180||18016|
|United Nations Association of Australia||2000||210014||X2030||28565||210014||28565||240180||18016|
|United Nations Youth Association||2000||210018||X2030||28565||210018||28565||240180||18016|
|Australia France Endowment||2000||200340||X2010||28565||200340||28565||240180||18016|
4.2.2 Grants for future activities
Ideally grants issued in one financial year will fund activities that begin and conclude in the same financial year. However, this is not always possible, particularly in the cases of grants issued at the end of the financial year and multiyear grants.
When IRGP managers receive grant proposals which are scheduled to commence in the following financial year, boards and direct grant program managers may agree “in-principle” to recommend the spending proposal to the relevant delegate, but must note that this is subject to funding availability. The relevant delegate should not approve spending proposals “in-principle” or otherwise until grant funding has been officially allocated (usually in July of each year). Grant applicants should not be officially notified that they will receive grant funding until the delegate has approved the spending proposal.
Treatment of multiyear grants is outlined at 4.3.5 FMA Regulation 10 below.
Unspent funds are to be declared in the annual review process and returned to the centre. Funds which have been committed into SAP but not yet paid by the end of the financial year do not need to be returned to the centre. The grant program manager must declare these amounts and the intended recipient in the annual review so that EXB/FSB can advise Finance.
In the event that an IRGP manager anticipates an over-spend for an approved Administered grant program, EXB and FSB must be consulted as soon as possible to ascertain whether additional funding may be available. In some cases, it may be possible to arrange for a re-allocation of funds from another grant program that is funded from the same appropriation, if the funds are available. IRGP managers must not make commitments that would overspend their allocations unless they have consulted with EXB and FSB and received formal approval to proceed. NB – Administered allocations are currently made to internal orders for which availability control has been activated. This means that SAP will not process Administered transactions unless there is sufficient remaining budget (Plan Version 3).
4.2.3 Unearned income
Unearned income is income received from an external entity for which goods and services are yet to be provided by the Department. All unearned income should be recorded in the SAP end of month (EOM) schedules.
4.3 Selection of Projects
Grant application rounds are conducted at least annually.
4.3.1 Advertising a program
All IRGP grant programs offering individual grants must be advertised on the DFAT website. Other forms of advertising include Australian or international newspapers, contacts mail outs or emails, newsletters, grants websites (e.g Grantslink) or sector-specific sites (e.g. Artshub), press media or twitter releases.
When advertising a grants program, consideration should be given to including the following information:
- background information
- program objectives
- target audience
- support for the Government’s Not-for-Profit Sector reform agenda
- eligibility requirements and limitations
- selection criteria
- referee requirements
- funding arrangements and limitations
- closing and notification dates
- contact details
The majority of grant applications are submitted through an on-line portal linked to the DFAT website known as Smartygrants, although paper-based submissions are also allowed to ensure equity.
4.3.2 Assessing applications
Applications must be assessed for eligibility and the extent to which they meet the published selection criteria. A sample template using formal score rankings may be used. Rankings or groupings of applicants are necessary where there are more eligible applicants than funds available. Delegates responsible for approving grants should ensure that all decisions are appropriately documented to withstand external scrutiny.
4.3.3 Approving Applications
Before a delegate can approve a payment or grant they need to conform with requirements outlined in FMA Regulations 9 and 10.
Responsibility for approving grant applications has been delegated to certain SES officers, usually the FAS/AS of the relevant division. Ministers are also Approvers in their own right. IRGP-related spending proposals should only be approved by the relevant financial delegate, on the recommendation of the appropriate board or equivalent, and only if it can be clearly demonstrated that the proposed activities, particularly grants to third parties, are consistent with the objectives detailed in the current business plan.
For grants, only SES officers, or their authorised approver’s agent can give Regulation 9 approval and enter into an arrangement (sign a funding agreement).
4.3.4 FMA Regulation 9
Any spending of public money is governed by a number of regulations to ensure the efficient, effective, economical and ethical use of these funds. FMA Regulation 9 requires all delegates to only spend public money for which an appropriation has been received. Internally this means that delegates should only approve spending proposals up to the total budget that has been allocated to cost centres/internal orders/work breakdown structures that they have a delegation for.
The procedures for approving a grant spending proposal under FMA Regulation 9 will depend on the nature of the grant:
- The Minister should approve a grant under FMA Regulation 9 where the Minister or the government has decided the grant should be provided;
- Foundations, Councils and Institutes with advisory boards appointed by the Minister should submit annual business plans. Individual grants that are in accordance with an approved business plan are to be approved by an SES-level Departmental FMA Regulation 9 delegate; and
- Other (i.e. non-FCI) IRGP grants must also be approved by an SES Officer, in accordance with annual approved business plan.
- A grant proposal can be referred for the Minister’s approval under FMA Regulation 9 where the delegate considers it is appropriate to do so.
FMA Regulation 9 requires an approver (i.e. Minister or Departmental official) to be satisfied, after making reasonable inquiries, the spending proposal would be a proper use (i.e. efficient, effective and ethical) of Commonwealth resources. An approver must also ensure sufficient uncommitted funds are available and FMA Regulation 10 approval has been provided where necessary.
FMA Regulation 12 now requires grant approvers to record the basis (i.e. the substantive reasons why the approver is satisfied that the proposal would be a proper use of Commonwealth resources) and the terms of the approval. This requirement should be addressed by way of supporting documentation provided to the approver to assist the decision making process.
Approval of a spending proposal must be given in writing, but if this was not possible the approver must record their approval in writing as soon as practicable after giving approval.
4.3.5 FMA Regulation 10
Most IRGP grants provide funding in the financial year they are approved. However, it is possible to provide grants in which a commitment is made to pay amounts in one or more future financial years, which are known as multi-year grants. Before a multi-year grant can be approved, the future year commitment must be approved by a FMA Regulation 10 delegate.
If the grant funding agreement requires DFAT to indemnify the grant recipient, the CFO’s Regulation 10 approval must be sought.
4.3.6. Publishing IRGP grants on the DFAT website
All IRGP grants must be published on the DFAT website within seven days from the day the grant comes into effect, which is usually the date the funding agreement was signed by both parties. FSB maintains a web reporting Excel template that all grants must be entered into. Once complete, the excel template should be sent to the Financial Management inbox, to provide consolidated grants information to the webmaster.
4.4 Managing Funding Agreements
4.4.1 Funding Agreements with Third Parties
All IRGP grants must be formalised through a signed funding agreement, which is an important tool in managing the risks associated with a grants program. Risks include: fraud; breaches of privacy or security; grant activities being inconsistent with Government policies; grant funding used contrary to the terms and conditions of the grant; and the possibility that an organisation may receive more than one grant for the same activity from the Commonwealth (‘double dipping’).
Under the principle of proportionality, IRGP delegates must conduct a risk assessment on each grant based on the scale, nature, complexity of the proposed activity. Lower value grants involving simple activities have lower levels of risks. Accordingly a simple funding agreement is recommended.
A more complex template funding agreement should be used for those grants assessed as being higher risk (i.e. higher dollar value of grant funding, complex grant activity, etc).
Such agreements may be novated if the funding recipient changes their place of employment.
4.4.2 Acquittal and Reporting Process
IRGP managers are responsible for ensuring that grant funding is properly and fully acquitted in a timely manner. Grant moneys should be acquitted as project milestones are reached and within 28 days of the completion of a project. As acquittal requirements contribute to risk management of grant funding, the type of acquittal should be determined with reference to the inherent risk of the grant. Lower risk grants can be certified by an official from the organisation that received the grant and riskier grants should be certified by a qualified accountant. As a general rule, all grants of $40,000 or more should be certified by a qualified auditor. The cost of certification can be included in the grant funding provided.
All grants must be fully acquitted promptly, as specified in each funding agreement. Multiyear grants should be subject to a partial acquittal at the end of each financial year as part of milestone reporting processes. As part of the acquittal process, grant recipients need to indicate how the money spent can be linked back to the activities for which funding was originally requested (example acquittal template). All unspent funds should be returned to the Department no later than March each year to enable reallocation and spending to occur well before the end of the financial year.
Both the simple and complex template funding agreements contain clauses requiring funding recipients to keep all receipts and records for five years and to make these available upon request.
4.4.3 GST and Withholding Tax
Goods and Services Tax (GST) is payable on IRGP grants where:
- the grant recipient is registered for GST; and
- a binding agreement is entered into where the grant recipient is required to supply goods or services to the Department or another party in return for the grant. Note: A report by the recipient on how they spent the grant does not constitute a supply; and
- the goods or services supplied are part of the grant recipient's business; and
- the supply of goods or services is made through an enterprise that the supplier operates in Australia. Note: Services (e.g., artistic performance) may be exempt from GST where the service is used or enjoyed overseas.
It is the responsibility of the grant recipient to determine their taxation obligations. Where the recipient is unsure they should be advised to seek professional advice.
A grant should be paid on the basis of a correctly rendered invoice. If GST is payable, then the grant recipient should provide a tax invoice to the Department. The grant will be grossed-up by 10% to include GST. Where a tax invoice has been provided the Department can claim the GST paid from the Australian Taxation Office.
If the grant recipient does not have an Australian Business Number and is not registered for GST the recipient should provide a completed Statement by a Supplier form.
Where this form is provided the grant is paid GST exclusive. Where this form is not provided, the Department must withhold 46.5% of the grant and remit the amount to the Australia Taxation Office (ATO).
4.4.4 Overseas Payments
Two alternative methods for dispersing funds overseas are as follows:
- For grants less than $A10,000, an overseas vendor form is recommended; and
- For grants $A10,000 and above, a cable should be sent to the relevant overseas post, providing Canberra costs centre details.
Note that the spot exchange rates, sourced from the Departmental intranet exchange rate database, and not the Budget Exchange Rate (BER), should be used for the payment and acquittal of grants made in foreign currency.
5. Managing IRGP Programs
FCIs and other institutions managed by external boards form part of the Department and are not considered to constitute separate legal entities. Each of these organisations is required to comply with the requirements of the Financial Management and Accountability Act, 1997(FMA Act), Finance Regulations and Orders, the Finance Management Manual and other Departmental instructions.
Direct Grants Recipient managers in DFAT do not provide Secretariat services to external funding recipients. These work units do however provide the main point of contact between the Department and the grant recipient. Due care should be taken to ensure DGR program management is consistent with IRGP policies and procedures and Departmental guidelines.
5.1.1 Executive Planning and Evaluation Branch
Executive Planning and Evaluation Branch (EXB) is responsible for the following:
- developing and disseminating IRGP policy guidance;
- coordinating annual reviews of business plans, and Board reviews where applicable and reporting on these to portfolio Ministers through the Departmental Executive;
- assessing annual allocations of IRGP Administered funding and making recommendations to the Departmental Executive on Departmental and Administered funding allocations; and
- providing routine advice to IRGP managers on policy issues as they arise.
5.1.2 Financial Services and Performance Branch
Financial Services and Performance Branch (FSB) is responsible for the following:
- managing the Department’s responsibilities with regard to web reporting, in conjunction with CPD web managers;
- advising divisions of annual IRGP (Departmental and Administered) funding allocations;
- setting DFAT’s financial policy, including grant policy; and
- providing financial policy advice as required (noting all advice to IRGP managers should include EXB as a recipient).
Divisions are responsible for the operation and management of IRGP grant programs, including:
- establishing and operating FCIs and other bodies managed by external boards in accordance with the directives laid out in the relevant Orders-In-Council or other Charter;
- providing secretariat services to each FCI or body managed by an external board where required;
- advising IRGP grant applicants of Departmental delegates’ decisions, executing funding agreements, and monitoring grant recipient performance, and ensuring all documentation, including acquittal information, is filed and stored appropriately;
- implementing Departmental policy guidance in relation to the administration and management of IRGP grant programs, including FCIs and other bodies managed by external boards;
- submitting business plans to EXB annually;
- providing annual reviews of activities to EXB;
- providing FSB with timely and accurate information on approved grants to be published on the DFAT website;
- provide information to be shared on the Departmental intranet;
- approving board spending proposals which fall within their delegations;
- producing a program report each year to be reflected in the DFAT Annual Report;
- ensuring all grants are issued, managed and acquitted in accordance with Departmental policy; and
- conducting self-reviews, including annual Board reviews, and other reviews as required.
The specific functions and responsibilities of each board are laid out in the relevant Orders-In-Council, Rules of Procedure or Administrative Circulars. In general, boards may be responsible for the following:
- providing advice as appropriate on bilateral issues (or multilateral issues where appropriate) with the target country(ies) based on their experience, expertise and detailed understanding of the issues;
- establishing and maintaining effective networks between the Australian government (represented by the Department) and key stakeholders. Key stakeholders may include other government organisations, the business community, academia, legal institutions and the wider community in both countries;
- formulating strategies for the development and promotion of the bilateral relationship (or multilateral relationships where appropriate);
- evaluating applications for government funding and making recommendations on spending proposals based on contemporary Government policies;
- providing experience-based feedback from successes and failures that can enhance the effectiveness of the FCI or other body; and
- monitoring and evaluating the activities of the FCI or other body as appropriate.
5.1.5 Ex Officio Members
The Secretary or his/her representative should be a permanent ex officio member on the board of all FCIs and may be represented on the board of other bodies as required. Charters should be updated to reflect this where required. The ex officio member must have full voting rights on the board and be responsible for the following:
- providing recommendation on board member appointments and extensions to the Minister for Foreign Affairs;
- providing strategic-level policy advice to the board on the government’s foreign and trade priorities to ensure grant activities are in line with Government priorities;
- providing strategic-level advice on the administration and management of grant programs; and
- ensuring all spending proposals recommended for approval are consistent with grant program guidelines and the Department’s financial management and accountability requirements.
5.2 Charters - Order in Council or Administrative Circular
All boards must have some form of Charter which sets out the basis for their establishment and operation. These Charters are formalised either under the Order in Council or the Departmental administrative circular establishing the Foundation/Council/Institute.
This document may specify such matters as:
- the functions, powers and membership of the board;
- members’ appointment and termination provisions;
- the role and responsibilities of members e.g., due diligence and good faith, commitment to acting in the best interests of the organisation as a whole, attendance, participation in discussions, commitment to read and understand papers, to raise concerns, to deal with other members and staff with courtesy and respect, access to information, outside advice and confidentiality;
- the role of the chairperson including promoting full participation by all members, constructive questioning, strategic thinking, risk management, consideration of the right issues, decision-making and follow-up, adequate reporting and relations with the organisation head, Minister and key stakeholders;
- processes for identifying and measuring conflict of interest;
- basic meeting procedures e.g., quorum, agenda, papers, minutes, declarations of interest and how these are to be handled, powers of the chair, voting procedures;
- policies on member remuneration (where relevant);
- funding arrangements (if required);
- annual reporting requirements; and
- policies on board performance review.
FCIs may wish to expand their existing Orders in Council or Administrative Circular to incorporate some or all of the above issues rather than producing a separate Charter. The Charter and/or Orders in Council should be reviewed and updated, if required, at least every five years and preferably every three years. Ideally this would occur at the expiry of the term of appointment of the chairperson. The relevant division is responsible for coordinating this review in close consultation with EXB. Changes to the document must be approved by the relevant issuing authority, e.g., the Governor-General or the Minister for Foreign Affairs.
5.3 Funding Allocations
FCIs and other bodies managed by external boards usually receive two IRGP funding allocations: a Departmental allocation and an Administered allocation. The Administered allocation is determined by its specific appropriation and remains fixed until the appropriation changes or internal allocations are re-prioritised. Departmental allocations are subject to normal parameter adjustments that are made to all Divisions and Posts.
5.3.1 Departmental Allocation
The Departmental allocation is used to pay for board and associated expenses, program support activities and programs which are developed and delivered using “in-house” resources, including board and secretariat members. Departmental funding may also be used to fund grant programs if required as long as these grant programs are consistent with the business plan.
5.3.2 IRGP Administered Allocations
All IRGP programs currently receive an IRGP Administered allocation. EXB is responsible for coordinating the allocation of this Administered funding. This allocation can only be spent on grants to external parties. In other words, IRGP Administered funding must be used exclusively for grants.
Grants should be linked to the delivery of specific services or to the participation in specific projects. Grant funding may not be used as subsidies of general secretariat expenses or support for a research officer.
5.4 Business Plans
All IRGP program managers are required to develop a business plan in March each year for the coming financial year. The business plan should outline the mission statement, objectives, key priorities and program strategies together with a broad estimate of costs. Business plans must be submitted to EXB before 31 March each year. Current business plans should also be available on the Departmental intranet.
5.5.1 Board, Secretariat and Administration Costs
Board and associated administrative expenses are a recognised cost to FCIs and other bodies managed by external boards. These may include:
- Sitting fees;
- Venue hire and formal functions for board meetings;
- Travel, accommodation and per diem expenses for board member and secretariat attendance at board meetings;
- Travel, accommodation and per diem expenses associated with travel to the relevant country for board and secretariat staff for the purposes of informing the board members and establishing and developing networks;
- Telephone calls for board-related activity;
- PO box rental, postage and courier fees for board and secretariat correspondence;
- Annual program reports;
- Website development and maintenance;
- Grant advertising;
- SmartyGrants licensing fees;
- Publicity/publicist fees;
- Stationery; and
- Relevant literature, DVDs and educational materials purchased for the information and education of board members which are subsequently held within the secretariat.
To ensure FCIs manage their resources in an efficient and effective way which maximises the amount of money devoted to program delivery, expenditure on board and associated administrative expenses should be limited to 10% of the FCIs’ total annual funding as allocated by DFAT (s31 revenue [revenue from third parties] is excluded). FCIs and other institutions proposing to spend in excess of this limit must consult with EXB and FSB prior to undertaking the proposed activity.
Even though IRGP Administered funding may be taken into account when calculating the upper limit available to spend on board and associated administrative expenses, it may not be used to fund any of these costs. Board and associated administrative expenses must be fully funded from the FCI’s Departmental allocation. IRGP Administered money must be used exclusively for grants and not administrative expenses.
5.6 Annual Evaluation Review
EXB coordinates an annual review of the grant programs funded under the IRGP in April of each year. It allows the Departmental Executive to assess the overall effectiveness of FCIs and other grant programs to ensure the objectives specified in business plans were fully met and to identify key priority areas, and funding bids, for the coming year.
Key grant reporting for DFAT includes:
- On-going web-based reporting (within seven days of the grant taking effect);
- Reporting of grants approved by a Minister that will be spent in their electorate (House of Representatives only) to the Finance Minister;
- Reporting to the Finance Minister any grants approved by the Minister contrary to Departmental advice, and
- Contributions to the DFAT Annual Report.
5.8 Appointment of Board Members
5.8.1 Board terms and number of Board members
The standard term of appointment for board members (with the exception of ex officio members) is part-time for three years, with one option to extend for a second part-time term of three years. Appointments should not extend beyond six years, unless agreed by the appointing authority. This ensures boards maintain diverse and dynamic cultures which are open to new ideas and is consistent with better practice governance practices.
Boards should consist of no fewer than four members and no more than eight members, not including the Chairperson or the ex officio member, which should be reflected in each Charter. If a board member’s term expires, or the member leaves the FCI either at the Minister’s request or at his/her own volition, the replacement of the member will be at the discretion of the Minister on the recommendation of the Department, subject to the relevant Charter.
5.8.2 Selecting new potential Board members
Secretariat staff are responsible for canvassing potential board members, consulting with the ex officio member and relevant agencies and Departments as well as other areas within the Department on the proposed appointment, and completing all the necessary paperwork for the nomination, approval and announcement of board members.
Sufficient time should be allowed for the process of identifying and selecting appropriate board members. Up to six months may be necessary. Possible candidates may come from diverse backgrounds including academia, business, government, the arts, medicine, law or other areas and should be recognised professionals in their area of expertise with the appropriate experience and qualifications required to fulfil the duties of the position. Due regard should be given to encouraging the nomination of individuals drawn from a broad cross section of Australian states, as well as ensuring an appropriate gender balance.
The initial list of nominations for board members should be forwarded as part of a ministerial submission from the relevant division, after consultation with the relevant ex officio member and/or relevant Deputy Secretary, to the Minister for Foreign Affairs (and the Minister for Trade where applicable).
Once the Minister(s) has/have indicated nomination preferences, the next steps vary depending on where approving and appointment authority lies. This will be noted in the respective Charter as either the Governor General/ Executive Council (EXCO), Prime Minister/Cabinet or the Minister for Foreign Affairs.
The relevant processes are summarised in a Board appointments flowchart. Relevant documentation should be prepared in accordance with Department of Prime Minister and Cabinet guidelines, if and as required by the IRGP program’s Charter / Order in Council.
5.8.3 Ex-officio Members
The Secretary, or his/her representative, should be a permanent ex-officio member on the board of each FCI. Departmental officers may also be present at board meetings for the AICC and the ANC to UNESCO if required, although not necessarily in an ex officio role. The term of representation for an ex officio member will vary according to the terms of the Charter constituting the FCI.
5.9 Board Meetings
5.9.1 Frequency of Board Meetings
Boards should meet as necessary for the performance of their functions and in accordance with the relevant Charter, but ordinarily not less than one and not more than four board meetings should be held each year. At least one board meeting, and not more than three board meetings, should be held with board members physically present. Additional meetings may be conducted by video or telephone conference as required. Board meetings should normally be held in Australia in the most cost-effective location, taking into account the costs of venue hire, accommodation and travel expenses.
5.9.2 Meeting Procedures
Where not specified in the Charter of the FCI or other institution, boards should agree to basic meeting procedures for the conduct of the meetings, quorum requirements, agenda, papers, business arising, voting procedures, powers of the chair, outcomes and minutes. These procedures should be documented, retained in the secretariat and reviewed on a regular basis every three to five years. These procedures may be appended to the Charter of the FCI or other body and may include a sample certificate of attendance, for Board remuneration purposes.
5.9.3 Out of Session Decisions
FCIs and other bodies managed by external boards may make “out-of-session” decisions on routine matters as required which may or may not involve all board members in accordance with their Charter or agreed procedures. Out-of-session decisions on routine matters should be appropriately documented and filed in the secretariat. Where appropriate, these decisions should be advised to remaining board members either via email or at the next board meeting.
The Chairperson may at his/her discretion declare an “out-of-session” issue to be a major issue and request input and a decision from all board members. In these situations, the secretariat must contact each board member by email or phone to provide them with background information and to advise them of the requirement to provide input and/or lodge a vote. Every effort should be made to ensure all board members are aware of the requirement for an out-of-session vote. Votes should be lodged with the Secretariat by the nominated deadline. Board members should be given at least 48 hours notice to lodge their vote.
5.10 Conflicts of Interest
Situations may arise in which the impartiality of a board member in discharging his/her duties could be called into question because of the potential, perceived or actual, influence of personal considerations, financial or other. The conflict in question is between the board member’s official duties and obligations on the one hand, and private interests on the other.
5.10.1 Declaring a Conflict of Interest
As part of the appointment process, board members must sign a Private Interests Declaration (PID) in which the nominee declares any potential conflict of interest which may arise as a result of his/her appointment. Copies of these declarations should be kept in the FCI secretariat.
If, during the course of performing board member duties, a sitting board member believes he or she is likely to have a conflict of interest with regard to any issue, the board member should declare the potential conflict of interest at the commencement of the relevant board meeting when the board is considering the agenda for the meeting. The board member should:
- disclose the existence and the nature of the interest;
- provide details of the interest as requested by other board members to determine the nature and extent of the interest; and,
- in the case of a material personal interest (defined in 5.10.3 below), leave the meeting while other board members discuss the appropriate level of participation by that board member in the consideration of the matter.
If a material personal interest is established in a matter for consideration, the board member must not be present during the board’s consideration or decision. However, prior to their departure from the meeting the board may invite them to provide input based on their expertise and answer questions on the issues from other board members.
A board member who discloses a non-material interest may participate fully in the consideration of the relevant item. The board member may choose to be absent or not participate in the consideration or decision on the item.
A board member may make a declaration at any time if a matter comes to his or her attention and the board member has not already made an appropriate declaration. A board member may also give a standing notice of an interest. This will remain current until a new board member joins the board or the nature of the interest changes in any material way.
The Chairperson is responsible for ensuring the appropriate participation of board members during board meetings. The Chairperson, in consultation with the ex officio member, is responsible for determining whether a declared interest is material or not. Where the Chairperson has declared a material or non-material interest, the ex officio member, in consultation with the other board members, is responsible for determining whether the interest is material or not.
5.10.2 Conflict with Government Policy
If a board decision appears to be in conflict with Government policy or is against the principles and practices associated with sound public administration, the ex officio or other Departmental observer in attendance should, in the first instance, seek to resolve the apparent conflict through discussion and consultation with the Chair and/or the board. Failing this, and depending on the seriousness of the situation, he or she may:
- immediately bring the matter to the attention of the board;
- request that his or her concerns are recorded in the Minutes of the meeting;
- request that a formal vote be taken on the issue;
- ask the Chair to inform the Minister of the board’s intended action; and
- inform the Chair that he or she intends to inform the Minister of the board’s decision (in a situation where the Chair refuses to inform the Minister).
5.10.3 Types of Interest
A material personal interest is an interest or duty that is significant enough to divide the board member’s loyalties. This would include an interest in, or duty to, another entity that interferes with the board member’s ability to bring independent judgement to bear, or where there would be reasonable perception of such a conflicting interest. Material personal interest includes direct pecuniary interests where the board member or his/her immediate family, family trust or business partner’s business interests are affected. It also includes material non-pecuniary interests, for example, when a board member is an office-holder or employee of an industry association representing members whose interests are directly affected.
A non-material interest is an interest where a person, company or organisation with which the board member has an affiliation is affected by an item, either non-financially or financially. The board may classify such interests as non-material. In so classifying, the board will satisfy itself that the point of benefit is far removed from a matter and does not disqualify the board member from participation in the consideration of that matter.
All declarations of interest and the consideration of these by the board should be recorded in the Minutes of the meeting.
With the exception of ex officio members, board members will be paid fees in accordance with the rates, if any, specified in the Charter relevant to their board. FCI board member remuneration is usually set at the rates, and subject to the conditions, determined from time to time under the Remuneration Tribunal Act 1973 for part-time holders of public office.
The standard of remuneration for FCI board members is:
- the “Category 2” daily fee exclusively undertaken for board business, including attendance at board meetings;
- “Tier 2” travelling allowance for attending board business; and,
- reimbursement of reasonable expenses incurred on board business as approved by the relevant financial delegate of the managing division.
The chairperson is required to certify the payment of all fees and allowances to board members prior to approval by the appropriate financial delegate. Sitting fees are taxable (subject to PAYG taxation requirements) and must only be paid to the board member, not to his or her employer or associated company.
5.11.1 Remuneration for Ex Officio Members
Ex officio members are not paid fees for conducting board business, including attendance at board meetings. Ex officio members are paid allowances in accordance with DFAT policies.
5.12 Board Travel
Board members are not expected to gain or lose financially as a result of travelling on official business. Board members must only incur or commit the Commonwealth to meet expenses following the express approval by the Departmental delegate where funds are lawfully available to do so. Travel may only be undertaken where its purpose is consistent with the duties of the board member.
5.12.1 Travel Policies
The standard of accommodation and travel provided to board members should normally be at the “Tier 2” level for official travel in accordance with the rates, and subject to the conditions, determined from time to time under the Remuneration Tribunal Act 1973 for part-time holders of public office. Board members may forego allowances and/or accept a lower standard of accommodation and travel in order to minimise costs to the FCI if they wish. Ex officio members will be paid allowances and provided with travel and accommodation in accordance with DFAT’s travel policies. Domestic and international travel expenses for ex officio members at the Deputy Secretary level will be met by EXB.
FCI secretariat staff should normally make all flight and accommodation bookings for FCI-related travel for board and secretariat members except ex officio members. Bookings for Departmental ex officio members at the Deputy Secretary level will be made separately by their personal assistants. If FCI and other board members book their own travel and accommodation (e.g., because they are able to obtain better rates), the appropriate delegate in the managing division may approve the reimbursement of travel costs to the travelling board member. Taxi fares should be either reimbursed or e-tickets provided (non ex officio Board members are not entitled to Cabcharge cards). The decision to reimburse privately-booked travel must be fully documented and approval must be obtained prior to the booking of the proposed travel. Subsequent reimbursement of approved travel costs may be made on completion of the travel subject to the presentation of receipts and boarding passes, and the amounts claimed being consistent with those approved prior to the travel. Secretariat staff should request board members to comply with the “Best Fare of the Day” principle when booking travel privately and raise any cases of obvious non‑compliance with the board member concerned and/or the Chair.
5.12.2 International Travel
From time to time board members may travel to their relevant country for FCI-related activity such as developing and maintaining high-level relationships and informing themselves about FCI projects. Overseas based Board members may travel to Australia to attend key Board meetings in person.
International bookings must be approved by an appropriate DFAT delegate prior to travel. International travel costs must fit within the 10% annual administrative limit (see 5.5.1).
5.12.3 Conduct of Private Business
If a board member is travelling with the initial and primary purpose of conducting official FCI-related business and wishes to engage in private business during the trip, the board member should declare this prior to the commencement of the travel. Depending on the extent and nature of the private business, it may be appropriate for the board member to contribute to the costs of travel and accommodation and to relinquish any claim to remuneration and allowances for the period during which he/she is engaged in private business. The appropriate cost-sharing arrangement should be discussed and agreed with the secretariat in consultation with the chairperson and approved by the appropriate financial delegate prior to the commencement of travel.
If a board member is travelling for the initial and primary purpose of conducting private business at his/her own expense and agrees to engage in official business during the trip, the board member may be entitled to seek remuneration and allowances for the period of official business. The intention to seek remuneration and allowances should be declared and agreed with the secretariat in consultation with the chairperson and approved by the appropriate financial delegate prior to the commencement of travel. The board member should make his/her own bookings and would not normally be entitled to claim for travel and accommodation costs in this situation unless the period of official business is considered significant.
5.12.4 Travel Insurance
Board members travelling on official business are provided with travel insurance in accordance with the Department’s travel policies for short-term missions for all FCI related travel only. For further information please refer to Comcover references on the Departmental intranet or contact Procurement and Contracts Governance Section.
Board members travelling overseas should normally travel on ordinary passports. If the board member considers that an official passport is essential to carrying out the Government’s business overseas he/she should discuss this with the FAS or AS of the managing division. If the FAS/AS agrees that an official passport is required, the secretariat must submit to the Assistant Secretary, Passport Client Services Branch (AS PCB) DFAT, a well-argued case seeking special approval and explaining why the presentation of an official letter setting out the purpose of the travel would not achieve the same objective. This must be done before the application is lodged. If approval is given, a copy of the advice approving the issue of the passport must be submitted with the application. Diplomatic passport applications will only be considered in exceptional circumstances.
5.12.6 Travel Advice
Board members should be made familiar with the relevant Departmental travel advice before proceeding on any board-related travel overseas. The Department’s policies on travel with consular implications and staff safety while on overseas travel will apply to all official travel by board members. FCIs may wish to consider obtaining a travel waiver from board members planning to travel to countries where DFAT has advised travellers “to reconsider the need to travel” or “not to travel” in the travel advisory.
5.13 Board Review
In accordance with ANAO better practice guidelines, boards should undertake an annual review of their own performance. Where feasible, every three years this review should be conducted by an external body in accordance with ANAO better practice guidelines. The following areas should be included in the assessment:
- board impact: has the board achieved its strategic objectives?
- individual performance: does the board operate well as a team? Do members question and debate issues when matters of concern are raised? Is the chair effective in fulfilling his or her role? Do members attend and actively participate in an adequate number of meetings? Do the board members provide an adequate range and depth of expertise and knowledge for the effective operation of the FCI?
- regulatory requirements: have the relevant legal requirements for the board and its members been identified and communicated to the board?
- board Charter: is it up to date and relevant? Does it establish standards and procedures in key areas such as policies and procedures for appointments, remuneration, financial management and business planning? Does everyone understand their roles and responsibilities?
- meetings: are the frequency, detail and conduct of meetings satisfactory? Are the out-of-session decision-making arrangements adequate?
The board may decide an appropriate review method which may include:
- each board member filling in questionnaires and using them as the basis for board discussion;
- use of an outside facilitator experienced in board performance reviews (subject to availability of resources);
- peer review; or
- another form of review deemed appropriate by the board.
It is important that the findings of the reviews of governance arrangements and of board performance are acted upon within a reasonable time frame. The results of the board self-assessments should be forwarded to the relevant FAS of the managing division, and AS EXB for information. The results of the external assessments may be forwarded to the Audit and Risk Committee for consideration.
5.14 IRGP Timeline
An indicative IRGP reporting timeline is as follows:
Jan/Feb: Board self-assessment review.
End March: IRGP managers submit current year Annual Reviews and forward-year Business Plans to EXB.
Mar/April: Divisions to submit bids for additional Administered grant funding to EXB. Divisions to submit BAR bids seeking increased Departmental allocation for coming financial year if required.
April/May: Business plans and recommendations for Administered and Departmental funding allocations for coming financial year to Departmental Executive.
May /June: IRGP managers advised of approved funding allocations.Annual review of grant program activities presented to Minister(s) for information.
July: Contribution to the DFAT Annual Report. Annual joint meeting of FCI chairs.