Contestable funding is the dominant model for public grants. Applications are invited, assessed against published criteria, and ranked or selected from a pool that has more demand than supply. The finite pool means that some good applications will not be funded — and the process needs to be designed so that the best applications get funded, not merely the most technically compliant ones.
The term "contestable" is used widely in New Zealand and Australia. In other jurisdictions it is often described as "competitive grants" or "open rounds." The mechanics are the same: applications compete with each other for a share of available funding.
Contestable funding exists as the dominant model for good reasons:
- It allows funders to compare options and select the approaches most likely to achieve their objectives
- It creates accountability to the market — organisations must articulate their proposal clearly enough to be selected
- It is defensible: if decisions are based on published criteria applied consistently, the basis for funding and not-funding is transparent
- It prevents capture: closed funding processes, where specific organisations receive grants without competition, create dependency and reduce accountability
The downsides of contestable funding are also real:
- It advantages organisations with grant writing capability over those with delivery capability
- It creates uncertainty for funded organisations that cannot plan multi-year activity without certainty of continued funding
- It generates significant application overhead for organisations that apply to multiple rounds and are unsuccessful
- It is expensive to run: assessment processes are resource-intensive relative to the funding allocated
Neither model is universally superior. Many funders run a mix of contestable and non-contestable funding, using contestable rounds for new investment and relationship-based grants for established partners whose track record is demonstrated.
The defensibility of a contestable process rests on three things: published criteria, consistent application, and documented decisions.
Published criteria. Applicants need to know what they are competing on before they apply. The criteria, their weighting, and the evidence base for assessment need to be in the published guidelines. A programme that assesses on criteria not disclosed to applicants has a fundamental fairness problem.
Consistent application. The same criteria need to be applied to every application. Assessors who depart from the published criteria — who fund an application because they know the organisation is excellent rather than because the application scored well — are undermining the integrity of the process. The mechanism for ensuring consistent application is a structured scoring process, documented individual assessments, and a panel deliberation that refers back to the criteria.
Documented decisions. Every funding decision needs a documented basis. "The panel recommended this application on the basis of its strong strategic alignment (criterion 1) and demonstrated financial capacity (criterion 3)" is a documented decision. "The panel felt this was a strong application" is not.
The documentation creates the accountability record. If a declined applicant challenges a decision, the documentation is what the funder can point to. If an audit reviews the programme, the documentation is what establishes that the process was followed.
A well-designed contestable process uses eligibility screening to separate the assessment problem from the compliance problem. Eligibility screening asks: does this applicant meet the minimum requirements to be considered? Assessment asks: of the eligible applicants, which should receive funding?
Running both questions simultaneously — having assessors assess applications and decide eligibility at the same time — creates two problems. It wastes assessor time on applications that should have been screened out before they reached assessment. And it creates the risk that eligibility decisions are influenced by the assessor's view of the application's merit rather than objective eligibility criteria.
Separating eligibility screening from assessment:
- Eligibility screening is done first, by programme staff, against objective criteria
- Ineligible applications are notified and removed from the assessment pool
- Only eligible applications proceed to assessment
- Assessors are instructed to assume eligibility and focus on merit
For programmes with online application portals, eligibility screening can be partly automated — the portal checks certain eligibility conditions at the point of application and flags or prevents applications that don't meet them.
The most consequential design decision in a contestable process is the assessment framework: what criteria, how weighted, assessed how.
A framework with too many criteria creates cognitive overload for assessors and dilutes the importance of any single criterion. A framework with vague criteria produces inconsistent assessment. A framework where the weighting does not reflect the programme's actual priorities produces outcomes that don't align with what the funder intended.
Common mistakes in assessment framework design:
- Weighting strategic alignment highly in the guidelines but not actually prioritising it in assessment
- Using criteria that are assessable for large professional organisations but not for small community groups
- Setting high weights on criteria where most applications will score similarly, so the differentiation happens on lower-weighted criteria
- Not providing guidance on what a high, medium, or low score looks like for each criterion
Good assessment framework design:
- The criteria are the genuine priorities, not the safe or comprehensive ones
- The weighting reflects what the funder will actually value in a decision
- Each criterion is independently assessable from the application
- Guidance notes help assessors calibrate their scores consistently
Contestable funding creates a pool of unsuccessful applicants. The way outcomes are communicated to unsuccessful applicants has long-term consequences for the programme's relationship with the community sector.
Decline communications that provide no explanation ("we received many high-quality applications and were unable to fund all of them") are minimally useful to applicants seeking to improve future applications. They are also, for government funders, increasingly inconsistent with the expectations of the Official Information Act and better practice guidance on fair public process.
Better practice for decline communications:
- Acknowledge that the application met eligibility and was assessed
- Provide brief feedback on the application's strengths and the areas where it did not score as highly as funded applications
- Where the application was strong but the round was oversubscribed, say so — it helps applicants understand that their application was not simply poor
- Offer an opportunity to discuss the assessment with a programme contact
Providing useful feedback takes time. For high-volume rounds with hundreds of applications, individualised feedback is not feasible. Standard feedback templates that can be customised at the criterion level — "your application scored highly on strategic alignment but was assessed as lower on organisational capacity because [template explanation]" — make useful feedback practical at scale.
For funders designing or reviewing contestable grant programmes, the government grants management and community foundations pages cover how Tahua supports the full contestable funding lifecycle. To discuss how to design a more defensible assessment process.
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