Winning a grant or securing some funding for your business is an exciting achievement that provides financial support to research and develop your product, services or ideas. But before the excitement wears off, you receive a lengthy grant agreement, which you must read and sign before a set deadline. Grant agreements can be complex and contain obligations that may impact how you perform research or product development. This article outlines some of the key legal and commercial issues you should know when reviewing your grant agreement.
What is a Grant Agreement?
The purpose of your grant agreement is to outline both your (the Grantee) and the Grantor’s obligations and expectations. Since your business is promising to develop a product, perform specific research, or commit to a project in exchange for funds, there are several issues that you need to address with the Grantor, such as:
- What happens if we fail to meet deadlines?
- How does a Grantor know what is happening throughout the duration of the Grant?
- How does either party know whether the project is on track?
- What can I use my funding for?
Notably, there are key issues you should consider when reviewing your grant agreement, including:
- how and when you can use the money;
- reporting obligations and key performance indicators (KPIs);
- monitoring requirements;
- attributions and acknowledgements; and
- consequences if you fail to meet a KPI.
Ultimately, a grant agreement is still a contract containing typical legal concerns like liabilities and indemnities, insurance considerations, and how and when you can engage with a subcontractor.
The following sections explore key issues you should pay attention to in your grant agreement.
How and When Can I Use the Grant Money?
Your grant agreement will have a total grant amount (‘grant money’) that your business can spend under specific conditions.
For example, your grant agreement may set a schedule for how and when you use your grant money throughout your engagement with the Grantor. It is often difficult to request changes or amendments to a grant agreement. Accordingly, the schedule of how and when you receive the grant money is a key point you should check and discuss with the Grantor to ensure you can perform your work.
Alongside this expenditure schedule, your grant agreement should also define what you can or cannot use your grant money on. For example, the agreement might permit you to use your grant money to:
- fund any research;
- source specific materials; or
- cover the salaries of your team members.
Additionally, your Grantor may specify that you cannot use the grant money for administrative purposes or travel expenses.
Continue reading this article below the formReporting Obligations and Key Performance Indicators
The grant agreement will also include the Key Performance Indicators (KPIs) and reporting obligations, allowing you and the grantor to track the progress and effectiveness of the funded activities.
To track your performance, grant agreements will provide detailed reporting mechanisms that you should review and follow throughout the duration of the agreement. The reporting mechanism may include:
- progress or knowledge-sharing reports (where you must document the work you have done and the achievements you have made. This may include information about your findings or innovative developments);
- evaluation reports (where you provide a forecast on how you are tracking alongside your predicted timelines or evaluate your actual performance against expectations or KPIs);
- audit reports;
- expenditure reports (which explain how you have been using the grant money); or
- end of project reports (which document and reflect on the project upon completion).
Alongside the types of report you are expected to deliver, your Grantor may further specify:
- the formatting of the report;
- key questions you should answer or content you must provide (e.g. results of experiments); or
- how long you must retain records.
Vitally, you should familiarise yourself with any consequences or protocols associated with failing to deliver a satisfactory report, explaining why you are over-budget or failed to meet KPIs.
Monitoring Requirements
Alongside your reporting obligations, your Grantor may have the right to monitor and inspect your work. You should review your grant agreement and be aware of access and inspection rights. This clause might allow your Grantor the right to access your premises. As part of your Grantor’s access and inspection rights, consider whether there are safety protocols you may need to implement and provide your Grantor. You may also need to consider whether the Grantor should provide you with prior written notice about their intention to visit your premises. Indeed, there may be safety concerns for unannounced visits. Likewise, you may need to produce certain documentation or ensure key team members are available on-site.
Additionally, review your contract for monitoring requirements. These are broader than access and inspection rights involving your Grantor’s oversight of your work. Your Grantor’s monitoring requirements may involve organising key dates to observe your work, reviewing and discussing any progress reports you deliver or a scheduled meeting to discuss the overall progress of your project. Unlike access and inspection rights (typically once-off occurrences), your Grantor’s monitoring rights will be structured and ongoing.
This Board Reporting Toolkit can help you meet your compliance needs, by explaining your obligations as a director and providing you with a series of tools and templates to ensure you can correctly undertake your key obligations.
Attributions and Acknowledgements
As you are being funded to perform research, develop a product or service or any other form of work, your Grantor may include clauses around how you can publicise your work and whether you should attribute or acknowledge your Grantor’s contributions. You should review your grant agreement for any of these requirements. Alternatively, the Grantor may provide that they would like communication from you before any attributions or acknowledgements. In that case, ensure you check in with the Grantor ahead of time.
For example, your Grantor may request that:
- their contributions remain confidential;
- you notify the Grantor of any publications, articles or media releases and allow their input;
- you request prior written approval and instructions before making any publications, articles or media releases;
- you follow specific formatting, language or logos for any attributions or acknowledgements of the Grantor’s contributions (e.g. “This research was supported by a grant from [insert Grantor name].”); or
- they can be present at any publicity event and require a specific amount of notice or briefing ahead of the event.
What Happens if You Fail to Meet KPIs?
Understandably, your project, research or work may not always go according to plan. You could encounter issues including:
- falling behind schedule;
- your hypotheses being proven wrong;
- being over budget; or
- falling out with a team member or partner.
The table below outlines some examples of protocols or consequences.
| Protocol | Description |
| Additional reporting requirements | Be aware of how and who you should notify the Grantor and any notification timelines. |
| Replacement of team members/partners | If your team members, partners or key contractors wish to exit the arrangement, your Grantor may request some documentation evaluating and explaining the reason for their departure. Further, you may be required to provide a replacement within a set time frame and explain your reasons for selecting the replacement. |
| Notification requirements | In some instances (such as a major delay in your project or where you are replacing a team member), the Grantor may request you suspend your work or reduce the scope of your work. You should be aware of any negotiations involving reducing the scope of work, any requirements you need to satisfy to re-commence work in the event of a suspension or any repayments you may need to make due to a suspension or reduction of scope. |
| Grantor may suspend, reduce the scope or expect you remedy the fault within a certain timeline | In some instances (such as a major delay in your project or where you are replacing a team member), the Grantor may request you suspend your work or reduce the scope of your work. You should also be aware of the following: + negotiations involving reducing the scope of work; + any requirements you need to satisfy to re-commence work in the event of a suspension; or + repayments you may need to make due to a suspension or reduction of scope. |
| Termination of the grant agreement | Some major issues may give rise to the Grantor’s right to terminate the agreement. Pay attention to any consequences of termination (e.g. repayment of grant money). |
Key Takeaways
Winning a grant is an exciting moment and involves a huge congratulations. Your excitement should not be waylaid by lengthy and complex contracts like a grant agreement. Of course, understand the project or activities you are performing as well as other commercial terms in your agreement. Aside from key commercial terms, pay attention to the following when you review your grant agreement:
- how and when you can use the money;
- reporting obligations and key performance indicators (KPIs);
- monitoring requirements;
- attributions and acknowledgements; and
- consequences if you fail to meet a KPI.
As your grant agreement is a contract, there will be other legal issues to consider. For legal advice on your grant agreement, our experienced contract lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
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