Renegotiating a grant contract

[Fiona Davidson]

Grants often need to be renegotiated part way through a project. Below I outline some of the key steps I take when renegotiating a grant contract.

1.       Don’t talk to the donor immediately

I have done this before and lived to regret it. I have phoned donors before to discuss the issues that have arisen and put them in a difficult situation. People working at donor agencies are just employees, just like me, and want to protect their positions and budgets just like any department within any organization in the world. Phoning a donor and saying “errrmm, the project is totally off course and we might not spend all the money” will cause worry. What they need and want is a justifiable explanation and solution that can help them in justifying why things are as they are and how it will be sorted out. Do, of course, tell the donor quickly, but make sure you’re fully prepared when you do call.

2.       Be fully aware of what has been reported to the donor

Re-read any reports on the project or email exchanges with the donor to fully understand what has been communicated and when. This will frame the future exchanges with the donor. It’s always important to report honestly to donors but many organizations emit the negative from reports.

If the donor got a report a month ago saying everything was perfect, or even worse, finished ahead of schedule (yes, I’ve experienced this!) then the renegotiation will be very very different.

If you have submitted a risk analysis to the donor and one of the risks has turned it to a reality then it’s great to highlight this, as it shows how strong the risk analysis conducted was.

3.       Be clear about why the issues have arisen

Before discussing with the donor it is important to know why now is the time that the issues have reached a critical stage is. Think through why renegotiation could not have happened three months ago. Maybe it’s because of politics, weather, staff changes or other issues. Understand the situation clearly.

4.       Be clear about what the different solutions are

Go to the donor with a few different solutions outlined but clearly identify which one you believe is the best solution. Think through for each solution what the impact will be on programmatic outputs, timeframe, reporting, expenditure rates and future risk management. Whatever the solution is ensure that it spends out the donor grant 100%. One of the biggest issues for donor agencies is the number of grants that end without spending all of the funding.

5.       Don’t forget the beneficiaries

Often when it comes to grant renegotiations all the hard work that went it to ensuring that the original programme design was participatory goes out the window. Someone (like me) sits in their office and tries to brainstorm what the best solution is for the donor and for their organization. Go to partner organizations and the people that your project is aiming to benefit and discuss the solutions with them.

6.       Sell it for the donor

Repackage the solutions with the donor’s priorities, strategy and work style in mind. If it’s a gender programme that’s gone off course and the gender budgets are being slashed, then maybe discuss how you can spender quicker (so the donors annual budget is more likely to look fully spent) rather than asking for longer to spend.

7.       Proactively discuss what the organization has learned from this experience…

Highlight to the donor what processes and/or systems will be put in place to ensure that the same situation won’t be repeated (or be honest that it might happen again) both during the life of the current grant in question but also for future grants. I think that being proactive and openly discussing this with donors will help build confidence for the future. This will also highlight that your organization is a learning organization.

Do you take any other steps when renegotiation a grant? I’d love to hear other people’s strategies for how to do this successfully!

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