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).
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.
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.
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.
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
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
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.
Complementary financing for research infrastructures
Science Park Potsdam Golm, Germany (Finalist RegioStars Award 2009)
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)
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
Last updated on: 2012-07-27