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Part 2 of 7 · Restricted fund tracker series ~5 min read

What the grant agreement actually allows

Every restricted grant arrives with a document that says exactly what the money may be spent on, and almost nobody reads it again after the week it is signed. The terms that decide whether a cost is allowed, and the dates that decide whether money goes back, sit in a PDF while the invoices are coded from memory.

Key takeaways

  • A grant agreement is a set of rules with dates. Keep it as rules, not as a file.
  • Each term points back to the clause and page it was read from.
  • A variation creates a new version from its effective date. Earlier costs keep the old rules.
  • Terms the document does not state are stored as not stated. A filled gap is an invented contract.
  • Nothing goes live until a person approves it.

Three documents, one set of rules

Grant agreements, budget schedules and variation letters converging on dated rulesThree boxes on the left feed one box on the right. Grant agreement, carrying the purpose, period and conditions, described as read once. Budget schedule, carrying the lines, amounts and what each covers, described as often a spreadsheet. Variation letters, carrying agreed changes each with a date, described as whenever agreed. All three converge on Dated grant rules, approved, versioned and clause by clause, which feeds a box labelled Every cost tested against the version in force that day. A note says a budget schedule is parsed if it is a spreadsheet and read if it is a PDF table, and either way it becomes lines with amounts rather than a picture.Grant agreementpurpose, period,conditionsread onceBudget schedulelines, amounts,what each coversoften a spreadsheetVariation lettersagreed changes,each with a datewhenever agreedDated grant rulesapproved, versioned,clause by clauseEvery cost testedagainst the versionin force that dayA budget schedule is parsed if it is a spreadsheet and read if it is a PDF table. Either way it becomes lines with amounts, not a picture.
Fig 1. Three sources, one set of rules. The variation letters are the ones that go missing, and they are the ones that change what a cost is allowed to be.
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What gets pulled out of an agreement

A grant agreement for a small charity usually runs to somewhere between a handful and a couple of dozen pages, and the terms that matter to the finance function are a small part of it. The purpose of the grant, in the funder’s words. The grant period, with a start and an end. The budget, as lines with amounts. The categories of cost the funder will and will not pay for. Whether overheads may be charged and, if so, on what basis and up to what share. How far spending may move between budget lines before the funder has to agree. When reports are due and what they must contain. And what happens to money left at the end.

Each of those becomes a field, and each field keeps a pointer to the clause and page it was read from. That pointer is not decoration. When a cost is refused because a grant does not pay for equipment, the person who wanted the laptop will ask where it says that, and the answer should be a page number rather than an opinion.

Absent means absent

Plenty of agreements say nothing about overheads, or nothing about underspend. The temptation, for a person or a model, is to fill the gap with what funders usually say. The rule here is the opposite: a term the document does not state is stored as not stated, and any cost that depends on it goes to a person. A funder’s silence on overheads is a question for their grants officer, not permission to charge a share.

This is also where a model is most likely to be wrong in a way that looks right, because a plausible default reads exactly like an extracted term. So the extraction must quote the text for every field it fills, returns null for anything it cannot quote, and the approval screen shows each field beside its quotation.

One grant, five dates that mattered

The dates in one grant's life, from signature to repaying an underspendA horizontal row of five boxes joined by arrows. Signed: twelve months, twenty-four thousand pounds, four budget lines. Variation: at month five, two thousand one hundred pounds moved into staff costs. Deadline: the last day to agree a change is the end of the period. Period ends: nine thousand three hundred and fifteen pounds unspent, and nobody asked. Repaid: under the agreement's own term, with no penalty. A note says only the first two boxes were ever documents, that the third was a sentence inside the first, and that it was the only date shown that could have changed the outcome.THE ENERGY ADVICE GRANT, AS A CALENDARSigned12 months,£24,000, 4 linesVariationmonth 5: £2,100into staff costsDeadlineto agree a change:the period endPeriod ends£9,315 unspent,and nobody askedRepaidthe agreement'sterm, no penaltyOnly the first two boxes were ever documents. The third was a sentence inside the first, and it was the only date here that could have changed the outcome.
Fig 2. The energy advice grant from signature to repayment. Every one of these dates except the variation was knowable on the day the agreement was signed.

Variations are versions

The variation at month five moved £2,100 from the materials line into staff costs, because the charity had taken on a second adviser and printed fewer leaflets than planned. The obvious way to record that is to edit the budget. The right way is to start a second version of the rules with an effective date, so a staff cost in month three is tested against the budget as it stood in month three.

That sounds pedantic until the funder’s monitoring officer asks why staff costs were over budget in the second-quarter report. With versions, the answer is that the report was built against version one, the variation came later, and both documents are attached. Without them the history has been quietly rewritten, and the report now contradicts the budget it was sent with.

What a grant rule holds

  • Purpose. In the funder’s words, quoted, with the clause reference.
  • Period. Start and end dates, and any date by which a change must be requested.
  • Budget lines. Amount, the cost categories each covers, and how far spending may move between them.
  • Overheads. Allowed or not, the basis, and the cap — or not stated.
  • Reports. Due dates, and what each one must contain.
  • Underspend. Repaid, retained, or by agreement — or not stated.
  • Version. Effective from, the document it came from, and who approved it.

Deadlines come out of the rules, not a diary

Once the terms are fields, the calendar writes itself. Report due dates, the end of the grant period and any date by which a change must be requested become reminders to named people at sensible intervals, each with the current position of the fund attached. Eight weeks before the energy advice grant ended, the reminder would have shown a grant heading for an underspend of several thousand pounds, which was early enough to ask for more time or a change of use.

That reminder is most of the value of this part of the system, and it depends entirely on the underspend clause being a field. A clause in a PDF cannot send anybody an email.

The next post is where the rules meet the spending: an invoice arrives, and something has to decide which fund pays for it and show that the fund was allowed to.

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