How to combine the different instruments
Mixing EU funding sources: the rules of the game
The five EU funding sources (FP7, CIP, Structural Funds, EAFRD and EFF), when operating individually, provide significant support for research, development and innovation. However, their value can be further enhanced by combining them. How can this be done?
When considering how the funding sources can be combined, a clear distinction must be made between, on the one hand, co-financing, and, on the other hand, complementary financing.
Although the EU can in some circumstances provide 100% of the eligible costs of the financing for a programme or project, the general rule is that the beneficiary (whether a public authority, SME or research entity) also contributes to the cost. This is called co-financing. The Structural Funds, EAFRD, EFF, FP7 and CIP each have their specific rules on the required level of co-financing. The question arises whether an applicant, faced with the need to provide a contribution to a project under one of the instruments, could use funds it has received from one of the other instruments to cover the cost.
In the case of the applicant's contribution to a project financed with the Structural Funds, the answer is a definite no. Structural Funds must be co-financed by national and regional public and private funds. This means that funds received from another Community programme, like FP7 or CIP, cannot be used to provide the required national contribution to a Structural Funds programme and such action would indeed be illegal. The same prohibition applies in the other direction to the use of Structural Funds to cover the applicant's contribution to a project funded by FP7 or the CIP.
The provision of the Structural Funds Regulations for 2007-2013 that prohibits co-financing by another Community instrument is Article 54(5) of Council Regulation No. 1083/2006. Article 54(5) provides that "an expenditure co-financed by the Funds shall not receive assistance from another Community financial instrument".
In the case of FP7 or the CIP, using one of these funds to cover the cost of the applicant's contribution to a project under the other fund is in practical terms impossible, given the system of calls for proposals with specific subjects, eligibility and selection criteria.
However, funds from the European Investment Bank Group (EIB and EIF) can generally be used to finance the national or regional contribution to a project under FP7, CIP or the Structural Funds. The EIB will typically provide a loan whereas the EIF will typically provide either Venture Capital funds or a guarantee. Under the CIP certain restrictions may apply with a view to enhancing the value added of CIP funding. Finally, in all cases, the maximum level of public support for a project is subject to respect of the state aid rules and the maximum contribution rate for each of the complementary financing.
While co-financing the same project by different EU funds is either prohibited or not practically possible, it is possible to combine the resources of the Structural Funds, FP7 and CIP in a complementary way. This means using different funds for different actions (with separate cost statements/bills), which are carried out in a related or consecutive manner.
For instance, the preparatory phase (planning and design) of a research infrastructure project may be financed by FP7 and the construction by ERDF or EAFRD. After the construction, the use for research activities, including the training of researchers, may be supported by FP7, CIP, ERDF, EAFRD or ESF. This complementary financing is particularly interesting for the projects selected under ESFRI (European Strategic Forum for Research Infrastructure).
The same beneficiary can diversify the sources of funding, for unrelated or complementary activities, by applying for different projects to different EU funding sources (FP7, CIP, ERDF, EAFRD or ESF). The applications will be assessed on the basis of their own merit in accordance to the rules of each funding sources.
ERDF could support good projects identified by FP7 or CIP but not funded by these instruments due to insufficient resources. For instance, it could concern projects for improving research capacities in convergence and outermost regions pre-selected under the FP7 / Capacities programme / Research Potential initiative (RegPot).
Combined financing in the framework of networks, clusters and Science Parks
The different partners involved in the same network, cluster and Science Park, as well as the body coordinating such an entity, may be supported by different EU funding sources (FP7, CIP, ERDF, EAFRD or ESF). In this context, it is important to highlight that Science and technology parks, as well as business incubators, are important in facilitating innovation and stimulating regional development1.
Transfer of experience between networks, clusters and programmes
Experience capitalised in the framework of networks and clusters supported by one instrument can be transferred to networks and clusters funded by another instrument and to mainstream programmes supported by the Structural Funds. In this respect, projects including partners in different regions and countries such as those supported by the initiatives “Regions of Knowledge” (FP7) and “Regions for Economic Change” (ERDF, INTERREG IVC, Fast Track Networks) have an important role to play. This transfer of experience can help to build world-class centres for research and innovation.
No 'double financing'
What is double financing? It is a polite way to describe submitting the same item of expenditure (i.e. a specific cost) to different sources separately (either EU, national or regional) in order to obtain financial support from all of them. In other words, it is a fraudulent abuse of public money and clearly prohibited.
Thus, the Financial Regulation (Council Regulation (EC, Euratom) No 1605/2002) states at Article 111 that in no circumstance shall the same costs be financed twice by the EU budget.
Scenarios for complementary financing
Opportunities for complementary financing may arise in a number of different circumstances.
- Separate but related activities or parts of a project can be funded at the same time by the Structural Funds, EAFRD, EFF, FP7 and the CIP.
Examples of complementary financing for related activities
- A region is involved in the development of a major research infrastructure (e.g. a synchrotron). Under the Research Infrastructures action of the FP7 Capacities Specific Programme, the project receives funding for the design phase or for certain preparatory work (legal, technical, etc). However, FP7 cannot finance the actual construction of the facility. This is where the Structural Funds can step in. If the region is eligible for the Convergence Objective or for the Regional Competitiveness and Employment or for the European Territorial Co-operation objective, the Structural Funds can provide support for the construction and fitting out of the facility under the category of expenditure “R&D infrastructure and centres of competence in a specific technology”.
- A university is engaged in upgrading the skills of its staff, with transnational actions (such as international fellowships) covered by the People Programme of FP7 while the European Social Fund under the Structural Funds at the same time supports advanced training within the region.
- An SME may be receiving support for an innovative business project in the form of a loan guaranteed by a financial intermediary approved under CIP’s SME Guarantee Facility, while other related but distinct activities, for example training to up-grade the skills of the staff to be able to develop and implement the new business idea, can be in receipt of Structural Funds (under the European Social Fund).
- An activity could first be supported by FP7 or the CIP, and its follow-up later by the Structural Funds or EAFRD, or the other way round. Equally, the different funding sources may support different phases of the development of a technology over time, starting from basic research, to applied research, to demonstration or to pre-competitive market introduction.
- Structural Funds, EAFRD or EFF first, followed by FP7 or CIP
It is often the case that funding is available to a research organisation or company under the Structural Funds in order to take the first tentative steps in research or in developing an innovative technology or product. The conditions for granting such funding are usually generous and flexible, especially in the least-developed regions. This allows the research organisation or company to grow to the point where it can enter the more competitive environment of FP7 for research activities and the development of technology or the CIP for broader innovative activities.
Examples of support under the Structural Funds being followed by FP7 or CIP
FP7 or CIP first, followed by Structural Funds
- A research organisation in the domain of biotechnology has received funding from an Operational Programme under the Structural Funds. This has allowed the development of a new research idea in which research organisations in other countries have expressed interest. The area of activity is covered by a forthcoming call for proposals under the Cooperation Specific Programme of FP7. The research organisation leads a consortium that successfully applies for funding under the call. The research and development results of the FP7 project lead to a business idea and trigger the creation of a company. This start-up company can benefit from the CIP through loan guarantees or grants for pilot and market replication projects. It can also benefit from the CIP by receiving business support services delivered by the Enterprise Europe Network.
- During a first stage, an SME is in receipt of grant funding under a business support priority of a Structural Funds programme in its region. In a second stage, it is interested in accessing other financial instruments such as venture capital for the further development of its activities. It applies for an investment by a Venture Capital Fund funded in part by CIP’s High Growth and Innovative SME Facility. The Venture Capital Fund analyse its case, and decided to invest on this company. The SMEs agrees and receives funding from this source.
It may be that, during the lifetime of an FP7 or CIP project, funding needs are identified in order to continue the activity. However, there is no guarantee that a further application for funding under FP7 or the CIP would be possible, as there may be no relevant call open, or successful, given the very competitive nature of the process. However, if a Structural Funds Operational Programme in the region covers the research, technology or innovation in question, it may be able to provide the necessary funding to sustain the activity.
Examples of support under FP7 or CIP being followed by the Structural Funds
- A research organisation in the domain of road transport forms part of a transnational consortium that has implemented a project under FP7. The research organisation has further research ideas arising from the project that it wishes to pursue itself. The region in which it is located is eligible for an Operational Programme under the Structural Funds in the domain of transport that includes a measure for the promotion of transport research. The research organisation applies for and secures funding for the related project under the Operational Programme.
- An SME forms part of a consortium that has received funding through the Research for SMEs action under the FP7 Capacities Specific Programme. This has provided it with support to outsource certain research needs, and receive training for its own staff. As a result, it is now ready to undertake future research activities itself. It successfully applies for funding for capital expenditure to build its research capacity under the research and business priorities of a Structural Funds Operational Programme in its region or for assistance under the JEREMIE facility (see Annex 3).
How to identify and seize an opportunity for complementary funding
If you have received, or intend to apply for, funding under FP7 or the CIP and you wish to find out about opportunities for complementary funding in your region under the Structural Funds, EAFRD or EFF, you simply consult the Operational Programmes for which the region is eligible. If these programmes support the same type of activity as your FP7 or CIP project, you may be able to seek complementary funding according to the programme rules.
If however you have received, or intend to apply for, funding under the Structural Funds, EAFRD or EFF and you wish to find out about opportunities for complementary funding in your region under the CIP or FP7, the situation is different. This is because there are no fixed FP7 or CIP allocations per region.
The appropriate course of action then is to examine the current funding opportunities under these instruments and apply according to the rules for participation. It needs to be recognised however that, even if the CIP or FP7 can fund the same type of activity as your Structural Funds, Rural Development or EFF project, it will not always be the case that a complementary funding opportunity will exist through a call for proposals at a particular moment.
Some practical examples of combining funding2
Complementary financing for research infrastructures
Science Park Potsdam Golm, Germany (Finalist RegioStars Award 2009)
- Since the mid-1990s, the Science Park at Golm on the outskirts of Potsdam has developed into the largest and most important science and research centre in Brandenburg. Originally the site of Potsdam University, Golm now hosts three Max Planck Institutes, two Fraunhofer Gesellschaft Institutes, a business incubation centre(GO:IN) and many innovative enterprises.
- GO:IN, which opened in 2007, provides ideal start-up conditions for new entrepreneurs with services such as conference rooms, joint marketing and coaching. In 2008, it housed 28 enterprises.
- ERDF contribution: EUR 74.3 million
- More than 1.300 scientists are working at the science park and the various university institutes have a total of 7.000 students. Many joint research projects have been funded under FP5, 6 and 7.
- More information: http://www.wisspark.de/
Transfer of experience between networks, clusters and programmes
Ireland: Resourcing Information and Technology Transfer in the Border, Midland and Western Region - a Regional Programme of Innovative Actions (2006-2008)
- The programme was aimed at strengthening small business interaction with the higher education sector and helping owner managers develop their businesses through tailored mentoring and management assistance.
- Through the provision of research vouchers, 23 small firms across the region were able to access specialist research and knowledge services from colleges which allowed them to progress to the next stage of their business growth plans.
- The business mentoring initiative for winners targeted small firms which had emerged from the Campus/Incubation environment as well as SMEs with high value added export potential. Small specialist firms received strategic business planning, management and marketing supports under the scheme.
- These initiatives are being mainstreamed by the Irish Government and FP7 has been identified as a possible vehicle to further stimulate the positive results obtained.
- ERDF funding: EUR 1,108,233
- More information: www.bmwassembly.ie
CLOE (Fast Track Network INTERREG IVC) to Clusterpast (FP7-Regions of Knowledge project, lead partner Lyon, France), to the European Cluster Observatory (CIP project) and to the mainstream programmes of the Structural Funds
- The CLOE network “Clusters Linked Over Europe” was one the first Fast Track Networks under the “Regions for Economic Change” initiative, created to speed up the transfer of good practice from pilot projects to large scale Structural Fund Operational Programmes. CLOE has become the hub for over 25 local networks across Europe and has produced a Cluster Management Guide for regional authorities and cluster managers, identifying good practice, and methods, tools and processes for setting up and managing clusters in regions.
- The Clusterplast network, created by some CLOE partners, is an inter-cluster initiative funded under the Regions of Knowledge action (FP7) to target the future challenges for the polymer converting industry. It was set up under a Joint Action Plan (JAP) designed to promote synergy between local and regional authorities, businesses and research organisations from the 6 European regions involved. The JAP will support technology-led development in the regions, encouraging innovation through collaboration between RTD centres and companies, stimulating new enterprises, attracting new investment through various varied initiatives and coordinating activities to ensure consistent use of public and private funding.
- One output from the Clusterplast project will be the provision of a large information set for the European Cluster Observatory (CIP project). A majority of the common activities defined in the Clusterplast JAP could be eligible under the mainstream programmes of the Structural Funds.
- More information: http://www.clusterforum.org, http://www.clusterobservatory.eu, http://www.clusterplast.eu
1 EESC CCMI/072 (July2010), ‘Technology, Industrial innovation and Science Parks’.
2 Source: Document accompanying the Commission Communication on Regional Policy contributing to smart growth in Europe 2020, SEC(2010)1183
(πηγή: Εuropean Commission)