9Proportionality

9 Proportionality

9.1 Proportionality in grants administration involves striking an appropriate balance between the complexity of a granting activity, including the ongoing requirements for the grant recipients, and managing the risks for beneficiaries and the Commonwealth. Agency staff should ensure that grant processes appropriately reflect the capabilities of grant recipients and accommodate the Government’s need for robust and accountable processes, consistent with the risks involved. Agency staff should apply the proportionality principle to suit the specific circumstances of their particular granting activities.

9.2 Granting activities vary widely in nature, scale and degree of complexity.

 Some granting activities may involve grant recipients, such as individuals, small business or the not-for-profit sector while others involve large corporations, primary producers or whole industry sectors. Some potential grant recipients may have prior experience in applying for and delivering grants, while others may not.

 Some granting activities support the ongoing delivery of services, with grants provided to the same or similar organisations over a period of years. Other granting activities may support new policy, with the associated risks of doing something for the first time, due to social, business or strategic changes.

 Some granting activities provide short-term, one-off assistance to grant recipients, while others may be for a longer duration with multiple application rounds.

 Some granting activities require only a broad specification of purposes and relatively simple accountability requirements, while others may require tight specifications and complex accountability.

9.3 Agency staff should use the proportionality principle to inform the choice of the application and selection process, the grant agreement to be used and the reporting and acquittal requirements. Agency staff should tailor grant guidelines, application processes, grant agreements accountability, and reporting requirements based on the potential risks and specific circumstances (see paragraph 7.9). In doing this, agency staff should consider: an assessment of the capability of grant recipients; the policy outcomes being sought; the purpose, value and duration of a grant; the nature and type of deliverables; governance; accountability requirements; and the nature and level of the risks involved.

 Grant agreements for a small-scale one-off grant should take the form of a simple letter of offer or exchange of letters.

 For low risk grants, where the likelihood of identified risks occurring is remote or the impact of the identified risk is minimal, the grant agreement should cover those risks that can be appropriately managed through the agreement and ensure that the grant recipient is not overburdened.