In the non-profit sector, obtaining grants is of vital importance. Your association can apply for funds from a number of different sources, whether unconditionally or for specific projects. It's essential to understand who can award grants, what terms and procedures need to be followed, and what deadlines apply.
Grant application
Subsidies are vital to the smooth running of many associations. These financial aids can come from various administrative levels, such as municipal, departmental or regional councils, which are responsible for making the allocation decisions.
A grant is not given lightly. It is generally awarded following explicit and carefully considered deliberation.
Associations in receipt of a grant must take care to ensure that there are no conflicts of interest among the councillors making the decision. Councillors with links to your association could render the subsidy decision open to legal challenge. The involvement, even indirect, of an elected representative in the awarding of a grant to an organization in which he or she has an interest may constitute a criminal offence punishable by severe penalties. For example, the French Court of Cassation condemned a mayor who had influenced the awarding of a grant to an association in which he had considerable influence. This type of interference is considered to be an illegal taking of interests, punishable by severe penalties.
As far as timing is concerned, local authorities have up to two months to examine grant applications once they have received a complete file. If no response is received after this deadline, your association may consider the application refused.
Establishing and formalizing the grant
The formalization of a subsidy can take the form of a simple decision to award it, but it can also take the form of a written agreement, particularly in certain situations or for large amounts. The agreement determines the terms and conditions of the subsidy, and may sometimes be necessary for annual amounts in excess of €23,000.
For long-term projects, it is advisable to set up a multi-year agreement. Subject to the availability of funds, this can provide conditional funding for subsequent years, and generally offers visibility over four years.
Similarly, the grant may be paid in one or more instalments, sometimes with advance payments. However, a grant may be cancelled if it has been awarded illegally or if the related conditions have not been met.
Your association must not deviate from the purpose for which the grant was awarded. Failing this, the local authority that provided the funding has 5 years in which to demand repayment.
Good to know: a local authority can unilaterally modify or terminate a grant agreement if it is in the public interest to do so, but must compensate your association if it is not at fault.
Consequences of losing a subsidy
A reduction or withdrawal of a subsidy can have serious consequences for your association, potentially up to and including liquidation. This can legitimize difficult decisions, such as redundancies.