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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.
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.
The terms and conditions of funding set out the obligations of the locally trusted organisation. This document outlines:
The terms and conditions of funding should be signed by a person responsible for making agreements on behalf of the the organisation, such as a senior officer, director or trustee, and then returned to us. This confirms that the organisation has agreed to them, and we will only transfer funding once they have been received. The terms and conditions of funding are fixed and can only be altered by Local Trust.
The payment schedule is attached to the offer letter. It sets out the amount of funding and when payments will be made, according to the budget and schedule agreed by your partnership in your plan. 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 (see below).
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.
Once we have agreed to fund your plan and its budget, you can usually fund any of the activities at any time during the plan. You don’t need to let us know for example, if you decide to use funding from payment one for an activity or expense in year two.
The only exception is if there is a condition on a payment that relates to a project. For example, we may ask to see a business plan before we release payment 3 funding to buy a community hub. In this case you shouldn’t use earlier funds if the condition hasn’t been met.
But we need to agree a variation where you would like to make a big change to the way you use your budget, for example: if a project won’t continue, a large chunk of funds will be moved between budgets or payments, or a full budget re-jig is needed.
As per the terms and conditions of grant, you must confirm this variation with us before you use the funds differently. In this case we ask you to:
Or, if the change will only impact your underspend (payments already been made to you) we can’t change your payment schedule or budget, but we’ll make a note of it against your grant. You can reflect this in your next spend report.
If you have are unsure about what a ‘major’ change is, or whether a variation is needed, please give the funding team a call.
If a Big Local partnership needs funding above the total amount of the current grant agreement, please send us a proposal via Big Local Community (our funding management system) at least four weeks before the funding is needed. This will go through an assessment and will become a separate grant. We’ll ask you to fill out regular spend reports for this grant too.
If a Big Local partnership wants more time to spend the current grant funding they can request an extension of up to six months. We will ask you to:
In exceptional cases where the Partnership needs to extend a grant by longer than six months please contact the funding team.
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.
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:
We have different funding agreements for grants and social investments.
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.