N5 – Module 4
Granted, granting, grants A giving of funds for a specific purpose. Grant usually implies that the giver is in a higher position, as one of authority, than the receiver and that he or she acts out of justice, mercy, or generosity.
Gildenhuys (1993:198) says that: “The primary objective of grants (from central to local or provincial) is to ensure that each government authority has sufficient financial means to supply a minimum level of public services without imposing a further tax burden on that specific community. The purpose is not to create absolute equality but rather to encourage each government authority to supply minimum basic services compared to those of other authorities at the same level.”
Should money be allocated to a local government body it is ordinarily channelled through the provincial government authority. For example, should money be given through a grant to a local authority near Bloemfontein for the purpose of a social project, the funds will pass from central government to the executive and administrative authority of the Free State and then to the local substructure.
Unconditional Grants This means that funds are allocated without any condition attached. The higher authority will allocate money and not expect the lower authority to explain how the funds are being spent. This type of grant is normally to balance the income and expenditure of a government authority – especially those with large financial needs and those in debt.
Conditional Grants These are given with specific conditions attached, as to the spending of the money. The conditions may be in the form of broad guidelines or specific prescriptions. There are two types of conditional grants: • Variable (changing) or unlimited conditional grants – with variable grants, the receiving government might find increasing pressure for funds because of changing negative externalities because the donor government does not know exactly how much the lower authority will need there exists a certain amount of uncertainty about how much they need to budget.
• Fixed or limited conditional grants – fixed limited grants are more common and are used to supply collective services countrywide, such as provincial libraries, on a uniform and regular basis. This grant is an instrument not only to lessen inequality but also to promote intergovernmental relations and co-operation. Because these are fixed they are easier to budget for.
Project Grants (aka Ad Hoc Grants) These are granted (given) for the funding of a specific capital project, such as a housing development, the construction of dams and roads, and also, for instance, water supply. They are given on an ad hoc basis (for this purpose) and only once. Conditional grants may also be for specific purposes, but can be over a long period of time, and may increase. Project grants are one specific amount, and for one purpose only. Most funds granted to communities through the RDP could be considered to be project grants. Obviously different regions compete by applying for these grants and the donor government needs to carefully consider which projects will benefit the most people. This is, perhaps, the best form of revenue sharing because the whole country benefits, and externalities or negative spill-overs are reduced. The granting of these therefore create a positive spill-over effect for the entire country.
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