With grants, the applicant often defines the volume of work. Pi is required to do his best and has greater freedom to adapt the project and the result, as there is no legally binding obligation to achieve results. The payment method is also more flexible, often with a drawdown system. On the other hand, a contract is a compulsory agreement between the buyer and the seller, goods or services to be provided for remuneration. The scale of the work is quite inflexible. There are frequent reporting obligations and payments are based on delivery items and milestones. However, the advantage of a contract is that there is often an integrated customer. Moreover, classified work is performed in the form of contracts and not grants. So what is the downside of having the government as a customer? First of all, if you don`t perform, you can find another provider. Funding agreements are usually set at one year, but contracts can be broken due to poor performance. There may also be additional requirements for public service contracts, including demonstrable liability insurance, documented prior experience, including customer references, and possible security exemptions for employees, to name a few. The Federal Grant and Cooperative Agreement Act of 1977 distinguished between purchase contracts, often simply in the form of contracts, and grants and cooperation contracts. We will not discuss cooperation agreements here, but we will focus our discussion exclusively on contracts and subsidies.
At the same time, development cooperation should not be a business. Focusing solely on the results and responsibility for possible organizational failures does not consider the type of development cooperation to be anything other than a business. Contracting is much more risky than accepting a grant and therefore excludes many small organizations that do not have the safety net for such projects. At first I asked if it makes a difference, whether income is a grant or a contract, and in my next blog, I`ll look at some detailed examples that show that it can make a difference and that the numbers can be significant. If you want to enter into a contract, it is best to do so in the case of partnerships with other NGOs. The administrative structure required to succeed in this type of regulation is very complex. If you don`t have first-person experience, you should take someone on board to do so. In this way, you can also share the high risk associated with contracts.
In most of our articles on this page, we talk about how you can write a proposal for a scholarship. However, over the past decade, some bilateral donors have moved away from subsidies. They are increasingly helping in the form of contracts. But what does this really mean and what are the differences between a grant and a contract? Find out everything you need to know in this article. If you apply for financing, you are not selling your services, but adapt your business idea to the needs of the funder. You don`t create a request; They simply meet an existing need. Ah, and tender for the markets has the opportunity to dream of all contracts: the permanent offer or the conservation agreement.