A grant agreement — sometimes called a grant contract, grant deed, or funding agreement — is the legal document that establishes the terms on which a grant is made. It protects both the funder and the grantee: the funder has legal recourse if funds are misused, and the grantee has clear documentation of what they're expected to deliver and what conditions apply.
This guide covers what a grant agreement needs to include, how to use templates effectively across different grant types, and common mistakes to avoid.
Parties. The full legal names of the funder and the grantee, including legal entity type (incorporated society, charitable trust, company, government agency). The parties section establishes who is legally bound by the agreement.
Purpose. A clear description of the purpose for which the grant is made — the project or activity to be funded. The purpose clause establishes what the grant is for and is the reference point for assessing whether funds have been used appropriately.
Amount. The total grant amount, the currency, and the payment schedule (if multiple payments). Ambiguity about the total grant amount or timing creates disputes.
Term. The period during which the grant must be used — start date and end date. Grants that can be used indefinitely are problematic for acquittal and financial management. Clear end dates, with processes for extending if necessary, are better practice.
Conditions. Specific conditions that must be met before payment is made or retained — ethics approval, matching funding, insurance, building consent. Conditions must be specific and verifiable.
Deliverables and milestones. What the grantee must produce, achieve, or deliver, by when. For larger grants, milestone dates and milestone-specific deliverables create interim accountability. Deliverables should be specific and measurable — not "deliver a community programme" but "deliver 12 weekly community sessions to a minimum of 30 participants."
Reporting requirements. When reports are due, what they must cover, and in what format. The reporting section should be proportionate to the grant size — one final report for a small project grant, multiple progress reports for a large multi-year grant.
Financial accountability. Whether a financial acquittal is required and in what form (narrative receipts, financial statements, audited accounts). The financial accountability provisions must match the grant size and risk.
Permitted uses. What the grant may and may not be used for. Some agreements specify that overhead costs may only be funded up to a percentage; others prohibit use for specific purposes (capital expenditure when funded for operations, international activity when funded for local delivery).
Payment terms. How payment will be made (bank transfer, cheque), to what account, on what basis (upfront, on milestone, in arrears).
Variation process. How the grantee applies to vary the grant — change the budget, extend the timeline, modify the scope. A clear variation process prevents informal verbal changes that create disputes later.
GST. Whether the grant amount is inclusive or exclusive of GST (or VAT/tax equivalent), and who is responsible for tax compliance. In New Zealand and Australia, most grants to registered charities are exempt from GST but this should be confirmed.
Termination. Circumstances under which the funder can terminate the agreement and require repayment — including material breach, misuse of funds, and insolvency.
Dispute resolution. How disputes will be resolved — informal discussion, mediation, or arbitration before litigation.
Governing law. Which jurisdiction's law governs the agreement — important for grants across jurisdictions.
Most funders maintain multiple grant agreement templates at different levels of complexity, matched to grant size and risk:
Simple letter agreement. For small grants (under $10,000-$20,000), a 2-3 page letter with basic terms — purpose, amount, term, single report requirement — is proportionate. Complex 15-page agreements for $3,000 community grants are disproportionate.
Standard agreement. For mid-sized grants, a 5-8 page agreement with standard provisions for purpose, milestones, reporting, variation, and termination.
Full agreement. For large grants — particularly capital grants, multi-year grants, or grants with significant conditions — a comprehensive agreement reviewed by legal counsel, with detailed milestone schedules, comprehensive variation provisions, and appropriate termination provisions.
Deed. For very large grants or those with significant legal complexity (property grants, grants with IP provisions, grants with equity provisions), a formal deed executed under seal provides a higher level of legal certainty.
Templates should be reviewed by legal counsel. Even a simple letter agreement template should be reviewed by a lawyer with charity or public sector experience before being used. This is a one-time cost that prevents disputes and provides confidence in the legal effectiveness of the document.
Templates need version control. Agreements should be dated and version-controlled — so that if a dispute arises, there's no question about which version applies.
Customise within the template, don't rewrite from scratch. Templates have standard clauses that have been legally reviewed. Rewriting them for individual grants introduces risk. Customise by filling in the specific details (purpose, amount, milestones) while keeping the standard clauses.
Separate schedules for complex provisions. For grants with detailed milestone schedules, outcome frameworks, or complex budget provisions, use separate schedules attached to the main agreement rather than embedding all the detail in the body. This keeps the main agreement readable while capturing the necessary detail.
E-signatures. Electronic signatures are legally valid in New Zealand (under the Contract and Commercial Law Act 2017) and Australia (under the Electronic Transactions Act 1999 and state equivalents) for most grant agreements. E-signature platforms reduce the turnaround time for agreement execution.
Vague deliverables. "Deliver a community programme" or "support community wellbeing" are not deliverables. Specific, measurable deliverables — number of sessions, number of participants, specific outputs — are needed for accountability.
No end date. Grants without a clear end date cannot be acquitted and create financial uncertainty for both parties.
Conditions that can't be verified. Conditions should only be included if the funder will actually verify them. A condition requiring "appropriate governance" that the funder doesn't check is meaningless.
Over-complex agreements for small grants. Using a 20-page agreement for a $2,000 grant is disproportionate, signals distrust, and discourages applicants.
No variation process. Without a clear variation process, grantees either seek informal oral approval (which creates disputes) or don't seek approval and risk a breach finding.
Inconsistency between agreement and application. If the grant is for a different purpose, amount, or scope than what was applied for, the agreement needs to explicitly reflect the change.
Tahua's grants management platform includes customisable grant agreement templates, e-signature integration, and automated agreement execution workflows.