Donor Contracts

Donor Contract / Agreement Presentation

Greg Martin

# Note: This is also in an Open Office format that plays on Power Point and is really designed for that mode to encourage discussion and assist in understanding. : The agreement examples are taken from an existing contract but it would be best if you used your own organisation or deleted CCBEN’s name

Donor Contract or Agreement What is it?

The legal rules or guidelines setting out the terms and conditions of a project or program. These rules or guidelines must be followed or usually penalties or conditions set out in the contract /agreement result.

What does it contain • • • • • • • • • •

Objective or aim of the project What is required and expected to be done, what can and cannot be done.

Who will do what and their responsibilities.

Dates of completion for individual parts of a project and a final completion date.

What reporting or monitoring is required.

Project Log or Baseline; Specific components or parts of the project along with their budgets How the program / project will be funded and the method and timing of payments.

What financial accounting or budgetary controls are required.

Any other conditions.

What happens if any of the conditions are not met (penalties).

Project Log or Baseline The project log or baseline sets out the required objective for a specific component /part of a project, the outcomes required, the time allocated and the specific budget and budget categories for that component.

NOTE: A donor normally does not grant money without some form of outcome required (It is a payment for goods and / or services as agreed upon in the contract or agreement).

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Major donors (e.g. AUSaid, AECID, EURO) are supported by taxpayers and or donors. E.g. an Australian citizen pays tax; part of that tax is allocated by the government to AUSaid who distributes it to various countries and projects.

A major donor will usually direct funds through a specialist NGO (e.g. health, agriculture or specific country or region) who will contract a local NGO to perform certain projects. An example would be AUSAid (Australian government donor) who direct funds through OXFAM to a local NGO to carry out a project. Another example is AECID --- FPSC--- CCBEN.

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Donor Contract / Agreement Presentation

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Greg Martin

At every stage there are strict accounting and outcome delivery standards and reporting which have to be met as per agreements signed. Taxpayers and donors expect their money to be used wisely and so on down the chain.

This means that the local representative or manager usually does not have total or final say and must follow the agreements, guidelines and conditions that the organisation they represent have agreed to.

Donor Strategic plans The agreement with a local NGO (e.g. CCBEN) is usually part of, or fits in to a much larger policy or strategic plan developed by the Major Donor. This policy or strategic plan may have a number of key principles or themes which are very important to the Major Donor for example poverty reduction in rural areas and equal opportunity for women that they will be continually looking to meet. Therefore if you are managing a project for this donor and start directing its resources to Phnom Penh city and employing only men then the donor will want to know why. It is a good idea therefore to be familiar with the overall strategic plan or direction of the major donors and NGO’s involved with your project.

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Donor Contract / Agreement Presentation

Greg Martin

Differences in cultures In a country such as Cambodia you will come across many different nationalities, Australian, Spanish and German etc. Each nationality have their own culture and ways of doing things. The following comments are not about what is right or wrong simply about the generally preferred way most Donors like to do things, and how to prevent any misunderstandings. Remember they will see the project from a business perspective.

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Donors do not want to hear everything is fine when it is not. Tell them and tell them early before it becomes a major problem.

They prefer direct questions and answers about the project Are usually time conscious. They want decisions, actions and meetings done quickly so be prepared.

Expect that if it is said it will be done; it will be done.

If a mistake is made, say so early and fix it quickly. Most donors (especially western) will forgive and forget quickly if this is followed. Alternatively if the opposite is done they will remember for a long time.

Respect and expect solutions not just problems.

Insist on transparency. In the near future there will be more focus on finance, governance issues and reporting by most major country donors and if not met NGO’s will not be used. An example is AUSaid will require all NGO’s that it deals with either directly or indirectly to have completed or be completing CCC’s good governance program.

Insist on clear and orderly financial reporting.

Insist on each dollar spent matching an outcome.

An Agreement­ Example of Main points.

(Taken from CCBEN / SUV / FPSC agreement dated Jan 2009) 1. Project Description 1.2 CCBEN will use the contribution according to the Project’s description and according to the budget....will be responsible for the effective execution of the project...

1.3 CCBEN will not deviate from the Project’s description...

2 Contributions...

2.2 CCBEN will open a exclusive bank account...all the interest generated will be reinvested in the project and will never be used to finance indirect costs...

2.3 AECID’s contribution....according to...

3 Reports 3.1 The date of the beginning of the Project...

3.2 CCBEN will send to FPSC ...6 monthly report...

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Donor Contract / Agreement Presentation

Greg Martin

4. Financial accounting and budgetary control 4.1 CCBEN is responsible...for the expenses made...

4.2 In any case, the expenses will have to adapt to the articles and quantities budgeted in the approved project, and to the activities and inputs ....in the description of the project and Base Line...

4.3 All expenses and hence all dates of justifying documents must be included in the projects implementation time...

4.6 ...All justifying documents should be numbered and ordered according to the budgetary items approved...

4.8...sets out what justifying information is needed...

4.9 ...if the payment is made in cash...

4.11 ...Annual and final reports...

A.4. Local Personnel A.4.1. Contractual Working Personnel a. Copy of work contract b. Copy of salary payments c. breakdown ...

4.15. If there were remaining funds after the finalisation of the Project, CCBEN should reimburse FPSC. 5. Audit and Evaluation 5.1 FPSC can carry out at any moment during the Project’s period of execution and after its finalisation an economical audit or an evaluation of the project....

6. Reimbursement of funds 6.1 CCBEN should reimburse the funds and interests generated in the following cases: a. Failure to carry out fully or partially activities or results as set out in the logic framework. b. Failure to comply with the financial justification duty c. Funding is achieved without meeting the requirements d. Failure to reach the objectives for which financing was granted e. If expenses are not made or are modified substantially without FPSC’s approval f. Failure to comply with grant’s conditioning terms 7. Final Conditions 7.1 ...CCBEN will incorporate in a visible way the official logos...

7.2 CCBEN will not transfer, whatever the circumstances, the implementation of the Project to another organisation.

DO’s and DON’TS Do’s 9 Do read the contract or agreement carefully and refer to it often 9 Do ask the donor contact person if you are unsure of anything 9 Do inform donor contact person if there have been any problems or changes that you think need to be made.

9 Do understand what the donor wishes to do and why (what is the strategic plan) 4

Donor Contract / Agreement Presentation

Greg Martin

9 Do understand that the donor usually has “bosses” too who require financial and program checks.

9 Do understand that independent auditors may be called in at any time to check any financial records and or program records.

9 Do understand that any breaches of contract / agreement may be investigated and breaches of law may be prosecuted (even in Cambodia). This may also lead to donors refusing to enter into future projects or programs.

Do Not

Do Not Change the conditions of any part of the project without permission from the donor Do not change any timelines as set out in the agreement / contract Do not leave it to the last minute to collate invoices Do not skip or change any items in the log without asking the donor representative.

Do not take money from donor funds and use it for other purposes other than what is designated in the log.

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