Yass Valley Council's Community Grants program and the new John Williams Annual Grant will be managed by an external agency in the next round of applications.
Councillors were divided on the motion that will allow the Foundation for Rural and Regional Renewal (FRRR) to administer the grants for the next five years.
However, the vote was six to three at the council's ordinary meeting on March 27, with Cr Abbey, Burgess, Furry, Harker, McManus and Reid in favour and Frost, Jones and Turner against.
Those who voted in favour of the council partnering with FRRR focused on cost and time savings.
The last round of grant applications cost the council $9,000 in staff time, whereas FRRR will charge around five per cent of the grants distributed, the council report said.
However, in the meeting, the council's directors told councillors it cost $12,000 in staff time.
Cr Furry and Reid said councillors spent a lot of time debating previous grant applications and FRRR would act as an independent auditor.
On the other side, Cr Frost argued councillors were closer to the community than FRRR and so the applications should be assessed by them.
"It's almost a motion of no confidence in ourselves. We're saying we can't administer money for our own community," Cr Frost said.
The new John Williams Annual Grant is a bequest of $122,421.20 left by the late John Lewis Williams to be used for the benefit of young people in Yass.
Cr Jones was concerned that FRRR wouldn't provide support for young people in the criteria process.
"This is a great grant, but will a youth group be able to match it and set parameters if a significant project came up?" Cr Jones said.
The council's directors said a councillor workshop would be held to set the criteria for FRRR to assess applicants with.
The new Community Grants policy is open for public consultation until April 29. Other changes include a $4,000 cap on the grants based on the average grant applied for last year and the introduction of a Local Heritage Grants Policy.
The policy will be adopted if no significant submissions are received by the council.
- Visit yassvalley.nsw.gov.au/our-council/public-consultation.