The power of grants in building community resilience

The power of grants

Grants are one of the key ways in which governments seek to address public policy challenges and deliver value for their citizens and, on an annual basis, governments around Australia spend tens of billions of dollars on grants.

As a key tool in the public policy armoury of governments, grants are used as a response to a broad range of complex and challenging issues: from responding to the needs of vulnerable children, families and communities; to managing the impacts of climate change; from supporting infrastructure projects to dealing with the immediate and devastating impacts of natural disasters.

Despite the large amount spent on grants, and the complexity of the public policy challenges faced, grant management remains a relatively unsophisticated area of public administration.

Various efforts have been made by governments and departments to centralise, streamline, standardise and improve grant administration, with some positive impact – and yet external reviews of grant programs around the country reveal a consistent set of criticisms:

the costs of administration of grants are high both for government and for recipients of grants. While administration costs vary depending on the scale and complexity of the grant program, it is not unusual for the cost of administration on the government side to exceed 10% of the value of the grant program; and for costs of administration on the grant recipient side to also exceed 10%.
the outcomes achieved through grant programs are often unclear – audit office reports and external evaluation of grants programs frequently find it difficult to evidence the impact of those grant programs
the integrity of decision-making regarding successful grants applicants has sometimes been called in to question.

So why is now the time to focus on improving grant management?

Our public policy environment
is more complex than ever before

The challenges posed by climate change influenced by natural hazards alone is enough to highlight that the world is becoming increasingly complex, ambiguous and uncertain.

But our most recent lived experience has shown us that this is happening in more ways than we could have possibly imagined. COVID-19 and rising geopolitical tensions are two examples of acute shocks and chronic stresses that have impacted our economies and societies. Even before this and despite (until then) two decades of uninterrupted economic growth, there remained significant disadvantage in Australian society with some children, families and communities experiencing complex and entrenched disadvantage.

There are unprecedented challenges facing Australia that are directly related to the health, safety and wellbeing of our nation. Challenges such as these will continue to test our governments, industries, corporations and communities well into the future. It is more important than ever for governments to be prepared to respond to changes and challenges in an efficient, timely and effective manner, so assistance is provided to the people and places where and when they need it.

Over recent decades governments have been challenged by a declining revenue base and escalating costs as our population ages. The pandemic has also resulted in a surge in government spending, but the structural budget position will need to be addressed over the coming years, placing a greater scrutiny than ever before of the value being delivered through government programs – grant programs will not be immune from that.

It will be more important than ever to reduce grant administration costs and for agencies to clearly articulate the positive outcomes of the grants.

There is a greater focus and expectation from the public that grants will be managed with integrity. Questions over the process of grant selection through recent inquiries means there is intense scrutiny on government to make sure that funds are being allocated fairly and have had the intended impact.

Impact

As with all areas of public policy, there is an increasing focus on the impact or outcomes delivered through public spending. A focus on outcomes, measurement of impact and an ability to understand this in near real time has become increasingly important. This focus has to start with the grant design process, feature as part of grant selection, be built in to data and reporting requirements, and be accessible to grant administrators, policy owners and grant recipients in a digestible form to support improved decision-making. This focus on outcomes and impact needs to consider both short term or immediate indicators of performance that can support tactical changes in approach to grant administration, as well as longer term indicators built from slower moving data at cohort or population level to support longer term policy decisions.

So what is required to be
able to respond?

We need a clearer and more consistent approach to design, selection, establishment, management, acquittal and evaluation of grants underpinned by fit for purpose technology which provides an uplift in:

efficiency through use of automation
integrity through the application of risk tools
visibility of performance by drawing on internal and external data sources
ability to visualise performance at the level of an individual grant milestone, through to grant program and grant portfolio levels.

Imagine a world where:

You are supported to manage your portfolio with automated workflows; dynamic risk assessments and dashboards that enable you to understand the performance of the grants and programs you are responsible for.

You could rapidly come to terms with total agency spend in a particular local area; or with a particular grant recipient; and could draw on a broad range of internal and external data to support the budget process.

You have real time alerts about the financial performance of your grant programs – how you are tracking against appropriation rules and the impacts of the most recent reporting round on projected cash-flows. You can simply visualise performance by grant recipient, geography or grant program and report accurately up the line or through to a Minister’s Office with confidence about the accuracy of the data.

You have automatic notification of your milestone reporting requirements, you can easily identify outcomes based on the data you have collected, you can be notified when a new grant opportunity you may be eligible for is released and you can see the progress of the grant application you have submitted.

Considering the vast challenge at hand, KPMG is committed to the continued support of our Public Sector clients in navigating the complexity of this landscape. Our commitment is reflected in the investments we have made in new capability to advise our clients on the best action to take, manage their end to end grants processes and additionally our technology solution may enable public sector clients to drive the importance of transparency and efficiency.

The expectations of citizens coupled with that of the increasing scrutiny of the distribution of funds demand that we turn our focus to a long-term sustainable commitment in becoming a genuinely resilient nation. We need to be capable of navigating these crises with competence, confidence, courage, compassion. Now more than ever government agencies have a responsibility to be responsive in rolling out targeted grants to those who need it most, without compromising on integrity.