New Zealand Aid Tools Financial Requirements and Accountabilities 

Working with Civil Society Organisations

Financial Requirements and Accountabilities

In funding CSOs, NZAID must meet the audit and good practice requirements applicable to all public sector management, including openness and transparency in government procurement and financial accountabilities. Key principles that govern the decision making about funding arrangements with CSOs across the public sector include lawfulness, accountability, openness, value for money, fairness, and integrity.

NZAID is accountable for taking appropriate measures to ensure that public funds devolved to CSOs are in accordance with these principles. Effective relationship management, the need to tailor funding conditions to the scale of risk for individual CSOs and Activities, and practical, effective financial and operational reporting requirements must all be taken into account in managing resources responsibly.

There are, however, competing risks, e.g. lack of transparency from under-reporting versus high compliance costs. If there is to be value for money there must be a balance between funding administration and funding activities. No one-size fits all and a flexible risk based approach is helpful.

Funding Continuum

Provision of funding can be viewed as a continuum1, for example:

  1. Contributions with no ear-marked deliverables and general reporting only (eg multi-donor or annual report)
  2. Un-earmarked programme funding: High-level programme-based funding relying on CSO’s standard reporting functions
  3. Ear-marked funding: Support for CSO’s basic and on-going organisational costs, or for programme/Activity costs, with specific reporting and accountability requirements
  4. Funding to assist attendance at a conference, course, or meeting with full accountability for expenses.
  5. Contracting for service delivery/activities with milestone deliverables, accountable expenses and fee-based price.

GST

NZAID grant funding is usually provided to New Zealand NGOs for Activities undertaken in developing countries.  In general, NZAID grant funding received by a New Zealand CSO registered for GST in New Zealand attracts GST.  However, where such grant funding is transferred to an overseas partner organisation it may be exempt from GST if certain conditions are met. 

To be eligible for an exemption to GST the following requirements must be made specific conditions of the grant by NZAID and the GST exempt funds must be:

  • Transferred outside New Zealand, and
  • Transferred to an overseas organisation that is operating overseas at the time the payment is received by them, and
  • Used to acquire goods or servicesoutside New Zealand.

1 These headings are not Aid Modalities, nor are they matched to specific types of Funding Arrangement.