A grant agreement is the formal contract between funder and grantee — recording what has been agreed, establishing the conditions on which the grant is made, and defining the rights and obligations of both parties. A well-drafted agreement protects both funder and grantee; a poorly drafted one creates ambiguity, disputes, and accountability failures.
This guide covers the essential clauses every grant agreement should include.
Grant purpose. The agreement should clearly state the purpose for which the grant is made — the project or activity being funded, the intended beneficiaries, and the outcomes sought. Vague purpose statements ("for general community purposes") create accountability problems; specific purpose statements ("for the delivery of twelve youth mentoring workshops for rangatahi aged 14-18 in Tāmaki Makaurau between October 2026 and March 2027") are both clearer and more enforceable.
Approved activities. For larger grants, the agreement may annex a project plan or approved budget — defining in more detail what activities are approved and how funds may be spent. The agreement should specify whether any variation to the approved activities requires funder approval.
Eligible expenditure. What categories of expenditure are permitted? If there are expenditure categories that are not permitted (e.g., capital expenditure, international travel, alcohol, political activities), these should be stated explicitly.
Grant amount. The total grant amount, and the currency (NZ dollars, Australian dollars — specify if there's any ambiguity).
Payment schedule. When will payments be made? Upfront payment in full, milestone-based tranches, reimbursement after expenditure? For multi-tranche payments, what conditions must be met to trigger each tranche?
Conditions on payment. Any conditions that must be met before payment is released — signed agreement, evidence of bank account, completion of specified milestone, receipt of previous progress report.
Bank account details. The bank account to which payments will be made. The agreement should include a provision for the grantee to notify the funder of any change in bank account, with verification requirements for changes.
Delivery obligations. What must the grantee deliver? By when? This section defines the accountability basis for the grant.
Reporting obligations. What reports must the grantee submit? Progress reports (how frequently? by what date?), a final narrative report, and financial acquittal. The agreement should specify the format, due dates, and what information is required in each report.
Record-keeping. The grantee must maintain adequate financial records of grant expenditure and produce those records if requested by the funder for audit or compliance purposes.
Acknowledgement and recognition. Most funders require grantees to acknowledge the grant in their communications, publications, and promotional materials. The agreement should specify any specific requirements (logo placement, specific wording, funder approval of materials mentioning the grant).
Compliance with laws. The grantee must operate in compliance with all applicable laws and regulations — including employment law, health and safety, privacy, and charitable obligations.
No unauthorised sub-contracting. Grants are made to specific organisations. The grantee should not pass grant funds to another organisation (sub-grant or sub-contract) without the funder's written approval.
Unexpended funds. If the grantee does not spend the full grant amount, the unspent balance must be returned to the funder (or in some cases, approved for reallocation to an alternative purpose).
Misused funds. If the funder determines that grant funds were used for purposes other than those approved, the funder can require return of the misused amount.
Change of purpose. If the funded project cannot proceed as approved — the organisation ceases to operate, the project is cancelled — the grant amount (or the unspent portion) must be returned.
Right to information. The funder has the right to request information about the use of grant funds at any time during the grant period.
Right of access. The funder (or its authorised representatives) has the right to visit the project and speak with project staff, with reasonable notice.
Audit rights. The funder (or its authorised auditors) has the right to audit the grantee's financial records relating to the grant.
Right to publish. The funder may publish the fact of the grant — the grantee name, grant amount, and grant purpose — in its reports, website, and other public communications.
Funder's right to terminate. The funder may terminate the grant agreement if the grantee: materially breaches the agreement, misuses grant funds, ceases to operate as a charitable organisation, becomes insolvent, or fails to remedy a breach within a reasonable notice period.
Effect of termination. On termination, the grantee must cease expenditure of grant funds and return any unspent funds.
Grantee's right to withdraw. If the funded project cannot proceed, the grantee may notify the funder and return any unspent funds — ending the agreement without default.
Notice of dispute. Either party may give notice of a dispute; the parties agree to attempt to resolve disputes in good faith before resorting to formal dispute resolution.
Mediation. If good-faith negotiation fails, the parties agree to attempt mediation before litigation.
Governing law. Specify the governing law (New Zealand law, Australian state law) and jurisdiction.
Tahua supports grant agreement management with configurable templates, electronic signature, and agreement tracking — ensuring every grant has an executed agreement on file before payment is released.