Callaghan Innovation's new R&D grants criteria includes clause to protect reputation

Callaghan Innovation, the government's research and development funding agency, has changed its eligibility criteria including a new clause stating that applicants must not bring the organisation's R&D grants programme "into disrepute."

Callaghan didn't immediately detail what would trigger the "disrepute" clause, one of a list of changes that take effect from Monday.

The application process is also to be streamlined following criticism from small to medium sized companies that it is too complex and difficult. Other changes exclude state-owned entities from grant eligibility.

Among other changes, companies applying for a project grant – typically small to medium-sized enterprise – can't simultaneously receive a three-year growth grant. The new terms of project grants also require R&D to be done in New Zealand to be an eligible cost, except in limited cases. Callaghan will determine eligibility on the basis of the benefits to New Zealand and whether similar expertise or facilities are available here.

The change follows criticism of overseas-owned companies getting R&D grants. That hasn't changed for growth grants, provided the R&D is done in New Zealand.

The clawback provisions, introduced last year, remain, with Callaghan embroiled in legal action against Auckland publishing company Trends Publishing for revoking its growth grant. Callaghan is also taking action against two other grant recipients relating to ownership changes.

During the Trends court action last week, the Auckland company alleged changes were made to a redacted Deloitte report on its grant, which criticised Callaghan's terms governing the scheme as ambiguous.

The funding rate for project grants has also been changed to 40% for the first $800,000 and then 20% for the rest, from the previous 30-50% of funding. Businesses that already have a growth grant will be topped up to a maximum 20%. The funding for growth grants remains unchanged at 20% of R&D spend, to a maximum of $5 million per year.

More types of businesses will be able to access grants through the eligibility criteria being broadened, including a number of Maori entities. Those becoming eligible include limited partnerships, Maori incorporations and trusts, a trust established on behalf of Maori claimants under the Treaty of Waitangi, Maori statutory bodies, and businesses controlled by one or more of these entities.

The grant application process has also been improved to eliminate duplication and make clearer what reporting is required.

The changes, along with more internal efficiency, should help reduce the processing time for grants and the need to go back to businesses for extra information.

In a BusinessDesk survey of grant recipients, one company that didn't want to be identified described Callaghan's application process as "slow, inefficient, badly-managed, and unaccountable."

Lance Wiggs, founding director of the Punakaiki Fund and a grant adviser, said he had been frustrated by seeing good companies rejected for grants, with the process "feeling like a lottery."

A one-week moratorium is being applied to new grant applications while the changes are applied and new forms rolled out.

Callaghan handed out $135 million in the year to June, with 85 companies getting three-year growth grants, the main component of its R&D grants scheme. It also awarded 302 project grants, at an average of 40% cover for their R&D spend, at a total cost of just over $25 million.

(BusinessDesk)

BusinessDesk receives funding to help cover the commercialisation of innovation from Callaghan Innovation.