This page is part of our decision support tool.

What is it for?

Financial relationships between TSOs and government bodies are not as good as they should be. The government’s financial principles in this area are sound. But the gap between these principles and the practical task of designing and operating a funding model that is good for a particular set of circumstances is too large. Often working to tight time scales, officials in government bodies may rely on their organisation’s customs and practices. But these vary widely across government bodies, and for no compelling reason. As a result, public money is being wasted on funding arrangements that are not fit for purpose.

For several years, Government has been committed to an approach to financial relationships with TSOs which takes account of their special characteristics. This approach was first set out in 1998, when the Compact on relations between government and the voluntary and community sector was published. This has since been developed and revised, particularly in the Compact Code on Funding and Procurement [Footnote 1] which was reissued in March 2005.

We recognise that there are many complex, interdependent issues to take into account. This decision support tool (DST) provides practical support for ‘real-life’ decisions about the design of appropriate funding models. It will help you ensure your programme is effective, economical and efficient.

Who is it for?

This DST is for officials in central government departments, non-departmental public bodies and agencies in England. You should use it if you have to make, or advise on, decisions relating to the delivery of programmes which involve financial relationships between government bodies and a TSO. We expect that it will be of use both to senior officials such as the Senior Responsible Owner (SRO) [Footnote 2] of a project or programme, and to staff responsible for programme implementation.

Although the DST has been designed for officials in central government bodies in England, it may also be useful to those in other parts of the UK, in local government and in other public bodies such as Primary Care Trusts.
We hope that TSOs may also wish to use it to seek clarification from public funding bodies.

When should you use it?

You should use this DST before making the decision on which funding channel (grant, grant-in-aid or procurement) to use and before starting the process of grant making or procurement.

How has it been developed?

The DST has been developed by the National Audit Office working in partnership with the Office for Public Management (OPM), an independent not-for-profit company. Its content has been reviewed by an expert advisory panel including representatives from government and the third sector. Potential users have ‘road-tested’the DST in practical workshops and the findings from these tests have been incorporated into the final version.


This DST is designed to offer general support to officials in government bodies. It does not replace those bodies’ own financial guidance or relevant guidance produced by central departments, notably HM Treasury, the Office of Government Commerce and the Treasury Solicitor.

Legal issues are only covered in general terms. This DST is not intended as a substitute for legal advice, which should be sought by a funder in any area of doubt, on a case-by-case basis.


  1. References to the Compact and the Code are provided at the end of this DST.
  2. The Office of Government Commerce can provide guidance on the role and responsibilities of the SRO, available on the OGC website at

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