- Sakshar Law Associates
Understanding the Key Elements of the Grant & Donation Agreement
Updated: Sep 24, 2022
GRANTS AND DONATIONS
Grants, Contracts, Donations, and Cooperative Agreements are all different types of funding provided for accomplishment of various projects.
Grant can be defined according to the agreements made. These may vary from each other.
“Grant Agreement means a written document memorializing the terms and conditions of an Award granted pursuant to the Plan and shall incorporate the terms of the Plan.”
“Grant Agreement means an agreement between the Company and a Participant that sets forth the terms, conditions and limitations applicable to a Grant.”
Grant denotes a specific purpose. The grant may be available from a number of sources such as corporations or private organizations or the center or the state government. Grants are provided to fulfill a specified purpose, a definite outcome. It may be given to an organization, a group of people collectively or an individual.
Donations are a charitable gift that is given to any organization or cause. It can be in the form of cash, kind, property, or services. The two parties in a donation are Donor and Donee. Under Section 80G of the Income-tax Act, 1961, the government provides for tax benefits on the donations. Specific donations made towards relief funds and organizations can be considered as deductions.
ELEMENTS OF A GRANT AGREEMENT
Elements of a grant agreement vary from agreement to agreement. The requirements in an agreement are made according to the needs and the funding source. While major specific requirements may vary, most grant proposals require the following elements:
1. Title Page and Cover Letter – Naming the agreement.
2. Introduction/Abstract/Summary – A brief overview of the proposal agreement with information about the institution, its ability to complete the project, need, methods to be used and how those served will benefit. This is the first thing the reader sees, but it is written last.
3. Institutional Background – Describes the institution/ organization in terms of its location, demographics, mission, projects and other relevant details. This establishes its credibility.
4. Problem Statement/Needs Assessment – It documents the problem or need for the grant in respect to the provider and receiver.
5. Program Goals and Objectives – It marks the anticipated outcomes and benefits that are expected from the project.
6. Methods/Implementation Plan – Describes the activities that directly support the achievement of the objectives. A procedure and a timeline that is necessary to achieve the set objectives. It may also include a revocation plan if methods are adopted as per request of the provider.
7. Evaluation Plan – A process to keep in check. Presents a plan for determining the success of the project at interim points and at the end of the project.
8. Future Funding/Sustainability – Describes how expenses not supported by the grant will be covered and how the project effort will continue after the grant ends.
9. Grant period and payment schedule – For complex grants, the amount may be paid in installments for which the conditions need to be established in advance.
10. Budget – Identifies the costs to be met by the funding source and the methods used to determine costs.
11. Any other document required as per the needs of the arrangement.
ELEMENTS OF A DONATION AGREEMENT
A donation agreement establishes a proof of donation to an organization. It may also be referred to as a gift. A donation agreement specifies about the donor and the receiver, description and the intended use for the donation.
A few common elements in a donation agreement are:
i.) Purpose – of the donation.
ii.) Budget – the amount of the donation.
iii.) Terms of donation – the terms and conditions that has to be followed in order to maintain the donations.
iv.) Fund management – are to be specified as to prevent misuse of funds.
v.) Miscellaneous – additional terms that are to be added as per the needs of the parties.
vi.) Donations Inter Vivos – this depicts that these agreement can take place only between living people.
REQUIREMENTS FOR DONATIONS/GRANTS:
i.) Similar to any contractual requirements,
ii.) Offer and acceptance must be present between the parties
iii.) The parties should have the legal capacity to provide and accept the donation/grant
iv.) A donation/grant must be legal and feasible
v.) A donation/grant must be identified or identifiable
GRANT AND DONATION
Grants and donation may seem similar but they vary as grants are meant to be more rigid than donations. Grants are issued for fulfilling a specific purpose while donations are more flexible than grants. A donation can be used to support a nonprofit’s programs, services, or operating expenses. It is less common for a donation to have strict restrictions as to how the funds can be used.
Reninkuntla Rajamma v. K. Sarwanamma, 17 July, 2014, Supreme Court of India
“The Court held that a gift made by registered instrument duly executed by or on behalf of the donor and attested by at least two witnesses is valid, if the same is accepted by or on behalf of the done. Such acceptance must, however, be made during the lifetime of the donor and while he is still capable of making an acceptance.”
Naramadaben Maganlal Thakker v. Pranivandas Maganlal Thakker and others, 10 September, 1996, Supreme Court of India
“A conditional gift with no recital of acceptance and no evidence in proof of acceptance, where possession remains with the donor as long as he is alive, does not become complete during the lifetime of the donor. When a gift is incomplete and title remains with the donor the deed of gift might be canceled”
Atmaram Sakharam Kalkye v. Vaman Janardan Kashelikar on 17 October, 1924 Bombay High Court
“while in the case of an agreement to make a gift, the intending donor may withdraw it at his will except in the rare cases where an agreement to make a gift is made in favour of a near relation out of love or affection and it has been registered, as provided in Section 25 of the Indian Contract Act, 1872. Even in that case the agreement, according to the view I take of the law, may be terminated by the donor at his pleasure at any time before it is registered.”
Anisha Begum v. Zahid Ahmed, 2022, Delhi High Court
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