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Funding agreements for Big Local plans

July 2015

A funding agreement is a document that sets out the terms on which we fund an organisation with Big Local money, on your behalf. We send funding agreements to your locally trusted organisation(s) once we have endorsed your proposal or plan.

A funding agreement includes the offer letter, the terms and conditions of funding and a payment schedule. It should be read together with your endorsed Big Local plan. The agreement is sent to your locally trusted organisation, with a copy to your Big Local rep and to the chair of your Big Local partnership. 

This document explains in more detail what the process involves, with additional information for various types of funding.

Contribution to support grant administration and partnership running costs

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We (Local Trust) provide a contribution towards grant administration and partnership running costs. This is in addition to the area’s £1m. This contribution recognises that a locally trusted organisation has additional financial management responsibilities. 

The contribution is calculated as 5% of the total drawn down for plan funding. It is transferred when the locally trusted organisation draws down plan funding, as per the payment schedule, on behalf of the Big Local area. If a locally trusted organisation needs to return an amount of funding to us - for example, when there is an underspend - then the 5% for this amount must also be returned. 

You can have more than one locally trusted organisation and each can receive the contribution if they are providing partnership support and/or grant administration.

Payment schedules

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The payment schedule is attached to the offer letter. It sets out the funding associated with activities and/or themes within the Big Local plan, and times when payments will be made. We will send a spend report to your locally trusted organisation every six months which will reflect these payment schedules.

The locally trusted organisation and Big Local partnership can manage the budget locally, but where you want to make significant changes to your payment schedule, you need to let us know so we can consider a variation.

Terms and conditions of funding

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The terms and conditions of funding are fixed and cannot be altered. This document outlines:

  • The relationship between the locally trusted organisation and Local Trust as to Big Local funding
  • The relationship between the partnership and the locally trusted organisation
  • The responsibilities of the locally trusted organisation in holding and managing Big Local funding, which include:
    • using the funding only for the purposes of Big Local, as laid out in the Big Local plan
    • ensuring the funding is spent appropriately and keeping accurate financial records
    • reporting to the partnership and Local Trust on expenditure
    • seeking the agreement of the partnership and Local Trust for variations to the use of the grant
    • making sure insurance, safeguarding checks, conflicts of interest and other procedures are in place
  • What Big Local funding cannot be used for, including:
    • the costs of putting together your proposal
    • activities that happen or start before the grant is confirmed
    • expenses you commit to before Local Trust confirms the grant
    • salaries of existing staff for activities they undertake as part of their normal employment that are not related to the programme
    • items that mainly benefit individuals (for example equipment that is not shared)
    • political or religious activities
    • projects or activities which the state has a legal obligation to provide
    • VAT you can recover
    • general running costs not associated with the delivery of Big Local.

A person responsible for the organisation, such as a senior officer, director or trustee, must sign and return the terms and conditions of funding to us. This is confirmation that the organisation agrees to the terms and conditions of funding. We will only transfer funding once we have received the signed terms and conditions.

Offer letters

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Every funding agreement includes an offer letter. This sets out the period of the funding agreement (start and end dates), and the amount of Big Local funding that is committed to the organisation on behalf of the area. 

Locally trusted organisations should keep a copy of the offer letter, as it forms part of the funding agreement and includes information about next steps. These may include us asking you for more information to release further funding.

Additional funding

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If a Big Local partnership wants to draw down funding in addition to what is in the funding agreement, you will need to send us a proposal via Big Local Community (our funding management system) at least four weeks before the funding is needed.

Retrospective funding

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Retrospective funding relates to expenses that are committed, or activities that happen or start, before Local Trust confirms the funding. Our rules against retrospective funding are set out in our funding guidance and in the terms and conditions with locally trusted organisations.

This prohibits Local Trust from giving retrospective funding to locally trusted organisations. It means that locally trusted organisations should pay only for things that are covered by the endorsed proposal or plan, within the total funding amount agreed, and within the overall timeline as stated in the offer letter from Local Trust. Variations to activities, funding and timelines can be agreed by contacting us. 

This is good grant-making practice, helping us ensure that the planned activities and expenditure contribute to the Big Local outcomes.

Does the partnership put funding or other agreements in place?

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We (Local Trust) have funding agreements in place with every locally trusted organisation. These locally trusted organisations then put in place appropriate agreements with third-party organisations or individuals. These agreements are legally binding.

As Big Local partnerships are not legal entities, partnerships are not in a position to put legally binding agreements into place. The legal agreements should exist between Local Trust and the locally trusted organisation, and between the locally trusted organisation and third-party organisations or individuals.

Many Big Local areas agree terms of references, or something similar, with their locally trusted organisation. These outline the relationship between the two. But, although we recommend something like this so as to have an open and mutual agreement about what is expected from both sides, such terms of reference are not legally binding.

Funding agreements related to social investments

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When your Big Local partnership wants to make a social investment to a credit union or Community Development Finance Institute (CDFI), we will create an appropriate funding agreement that sets out: 

  • the objectives of the social investment (loan or corporate deposit) and grant (if applicable)
  • the term, which is the time period the social investment is made for
  • the relationship between the locally trusted organisation and Local Trust in relation to Big Local funding and reporting requirements
  • the relationship between the partnership and the locally trusted organisation.

We have different funding agreements for grants and social investments.

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