It is not in the interests of third sector organisations (TSOs) to enter into financial arrangements that are going to undermine them financially – perhaps even kill them off. Nor is it in the interest of public bodies to impose financial arrangements on a TSO that will undermine – perhaps fatally – that TSO’s ability to deliver the outcomes agreed in the financial agreement.
How can these responsibilities on public bodies and TSOs be delivered? Many issues already discussed in this guidance, such as the treatment of risk and the duration of financial agreements are highly relevant. In “Grant or procurement?” we looked at the use of grants to build capacity, which will normally contribute to sustainability.
But the first, and most relevant, issue is full cost recovery (FCR).
You also need to think about the transfer of funding and how and when this will take place – we call this the payment model.