NRL chief executive Dave Smith is set to announce one of the most significant changes to the way clubs are funded. A raft of incentives and penalties are to be introduced.

Under the changes, each club will receive an annual  "participation payment" of $7.5 million to cover base costs such as player contracts but could lose up to $1 million in funding if they do not comply with minimum requirements, which may include having female representation on their board.

However, clubs will be able to earn additional funding if they achieve "stretch" targets that will be set each year in areas such as membership, attendance figures, merchandise and  sponsorship.

Smith said the minimum requirements and revenue targets would vary for each club but were designed to lift performance across the NRL.

It is also the first time that clubs could potentially receive different amounts of funding from the NRL.

"We have come up with a mechanism to make sure the strong get stronger and everyone rises," Smith said.. "Whether you are one of our stronger clubs or a club that is working in a smaller market, this funding model can be tailored to make sure you get something out of it and everyone gets better.

"What we are talking about here is a funding model that is going to create a sustainable set of clubs and it is going to be the mechanism to grow the game.

"For the first time it is designed to reward strong performance and penalise under-performance through a mixture of incentivisation and a component that is at risk if the clubs don't meet minimum standards."

Coming into effect from November 1, the new funding model also includes a growth fund to encourage clubs to propose innovative ideas and direct assistance funding for those who find themselves struggling financially.

However, Smith made it clear there would be strict conditions on any assistance funding provided by the NRL.

"Where a club makes a request for any direct assistance it will be very transparent in the NRL's balance sheets because we are using the NRL's capital. It will be very prescriptive, there will be conditions and milestones and it will be designed not just to get clubs back on their own two feet but to make sure they are positioned for growth in the future," he said.

Smith said the club participation payment would start at $7.5 million and increase in line with the salary cap, which is set to rise by $210,000 a season for the next two years.

"It is linked to the salary caps which recognise the core fixed costs for the clubs, which is mostly player payment," he said.

However, clubs will be required to meet minimum standards in areas such as governance, reporting obligations to the NRL, implementing a business plan and strategy, commercialisation and media obligations.

Those that don't risk losing up to $1 million from their participation payment.

"We will be looking for independent boards and we want to improve skills and competencies on those boards," Smith said. "We will be looking increasingly to see females on the board but we will work through it with all the clubs given their various starting points to make sure we are very clear about where we are trying to aim and what our expectations are.

"We are not out to catch the 101km/h speeding tickets, that is not what this is about. But there is an at risk component and where the right behaviours aren't being demonstrated then very clearly we will have a mechanism to reinforce the point that we want minimum standards."

The NRL also recognises that the likes of Cronulla could not meet the same revenue targets as Brisbane and will tailor the incentive goals differently for each club.

"There are millions of dollars of potential incentive payments across the clubs," Smith said.

"In effect we will set stretch targets against the business plan and when the clubs meet those stretch targets there is the potential for incentive payments."