---
description: >-
  This is a subsection of the fundraising lexicon developed as part of the GFMD
  MediaDev fundraising guide.
---

# Contracts & agreements

For the full [**fundraising lexicon**]() (A-Z) go to

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## Service contract

The EU, in particular, makes a clear distinction between “service contracts” which are based on prescriptive [**Terms of Reference**](../call-for-proposals-terms-of-reference#terms-of-reference) and “[**grant contracts**](#grant-contract)” which give applicants greater freedom to present diverse ideas under broad thematic headings.&#x20;

In service contracts, the relationship between the [**Contracting Authority**](../stakeholders#contracting-authority) and the implementing organisation is different. Delivery is more closely controlled and formal sign-off is required for most activities and related expenditure.&#x20;

[**Key performance indicators**](../application-forms#key-performance-indicators) are established by the donor and monitored by the donor’s project manager.&#x20;

A significant part of the budget for EU service contracts (usually the lion’s share) is based on an agreed number of working days each of which carries a loaded [**fee rate**](../budgets#fees-based-budget) (meaning that the rate covers the actual costs of the individual concerned as well as a management fee). The remainder of the budget is based on actual costs ([**incidental expenditure**](../budgets#incidental-expenditure)) which are calculated separately.

## Grant contract

#### Grants generally have a different budget structure to [service contracts](#service-contract) and are based on ideas submitted by the applicants in response to published guidelines.&#x20;

As a rule, they are allocated through formal [**calls for proposals**](../call-for-proposals-terms-of-reference#call-for-proposals) but some donors allocate grants on an ad hoc basis and manage programmes that accept applications throughout the year.&#x20;

Grant contracts are managed by the grantee who is required to report back to the donor according to a structured schedule but who can make decisions regarding implementation and [**expenditure**](../budgets#expenditure-verification) without referring to the donor provided that agreed parameters are observed.

## Supplies contract

Members of the media development community rarely apply for supply contracts that relate to the provision of equipment or the development of infrastructure for beneficiaries in third countries.&#x20;

Supplies contracts can form part of a wider [**service contract**](#service-contract).

## Framework contract

#### Increasingly, major donors have channelled funding through **framework contracts which are essentially lists of preferred suppliers.**&#x20;

Implementing organisations can apply for framework contracts individually or as part of a [**consortium**](../stakeholders#consortium) (in the EU, the latter approach is more common).&#x20;

Once the list of contractors has been determined, ad hoc opportunities are channelled through the framework contract and the preselected organisations or [consortia](../stakeholders#consortium) can decide whether or not to bid for them.&#x20;

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These opportunities are not open to organisations outside the framework. Application procedures are usually simplified and lead-times are often very tight.
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