How to…

In our September article, we made sure you know all about EU policies and EU programmes, about grants and procurements. We also briefly structured the key steps to a successfully EU funded project. This time, we aim to look a bit closer to what is it that a consultant on EU funding should know and be able to tell you upfront and how much it could set you back.  

What will a consultant know, that you don’t?

They will save you tens of hours of digging through the bureaucracy of the EU funding mechanisms.”

They will mainly know where to look for the specific type of funding that can serve your project or business. Furthermore, they will speak the language and be able to translate your idea or business plan into a potentially winning case. Equally important, they will know policy priorities and where to look for previous winning projects, so they can build a relevant case for you. Simply put, they will save you tens of hours of digging through the bureaucracy of the EU funding mechanisms.

Google displays about 368,000 results if you search for “Horizon 2020 calls”. Quite general of a search, indeed. It gets to only 233,000 results when you narrow it down and try to be a bit more specific, and you look for “Horizon 2020 ICT 2015”. So what do you do, if you are looking for EU funding for your ICT project for the year to come? A consultant will sit down with you and thoroughly look through the specifications of our project, will be able to direct you to the specific budgeting lines and evaluate together with you the compatibilities between your intended project outcome and the specific objectives of an EU funded action.

The Horizon 2020 Work Programme 2014-2015 on Information and Communication Technologies announced 39 calls for proposals in spring 2014. Each of these calls addresses a specific ICT sector challenge, has a pre-defined scope, sets a clear expected impact and funds particular types of action. Left alone, one could easily invest days just in pinpointing the one suitable call for proposals.

Consultancy fees and costs structures

Usually, the hourly rate gravitates around 50 euros excluding VAT.”

It is the usual practice that an EU funding consultant will either work on hourly-basis or on commission. The first option may be preferred: in collaboration with the client, the consultant will decide on the number of hours required to prepare a complete proposal, with a margin of five hours plus or minus on average.

Usually, the hourly rate gravitates around 50 euros excluding VAT. As a second option, a consultant may charge a minimum number of hours for the preparation and submission of a proposal as an upfront fixed fee, which usually amounts to the equivalent of 10 hours or 500 euros excluding VAT. Upon winning, a commission in between 5 per cent to 20 per cent is charged depending on the total budget applied for and on the experience of the consultant.

What is the alternative?

You must plan at least a six-month period before the submission deadline for the research work.”

You are always free to invest resources in building the in-house competencies you need instead. The Internet is a seemingly infinite source of information, and you can learn by doing. Yet, since you most probably won’t have a full-time dedicated employee to do the job, you must plan at least a six-month period before the submission deadline for the research work and the preparation of the project application. And you have to be ready to allocate full days to the consultation of hundreds of pages documents, from calls or procurement specifications to financial guidelines to technical specifications.

Once you have synthetised the objectives, exclusions criteria and winning criteria alike, you will be able to go back to your project idea to restructure and reframe it in line with the specific objectives identified.

Throughout the process, you may want to discuss with peers in your communities who have been through the exercise of developing an EU project, and make use of EU funds dedicated platforms such as welcomeurope.

Preparing an application for an EU-funded project is a complex job. You either have the time to invest in acquiring, structuring and digesting the necessary knowledge, or you have the money to pay a consultant to assist you through the process towards submitting a potentially successful application. Either way, it is an investment you will have to make if you want to be in the running at all. 

About the author:

Madalina Serban is a mid-career switcher, an NGO founder and an aspiring social business owner. Born in Romania, she lived, worked and studied in Bucharest, Vienna and Brussels. She left her corporate international career in digital marketing in 2011 in Vienna, started her own individual coursework in social development in Kathmandu, Nepal and back to Europe she completed a master in European Studies in Brussels in 2012. She is currently working as an EU Funding consultant within the social entrepreneurship sector in Vienna.

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How to…

We have already explored how to approach EU funding (read our article here) and shed light on the support from the SME Instrument initiative (read more here). So in the third part of our EU funding series, we aim to give you an understanding for the financial contribution one should expect from the Commission, who in the end owns the results of a project and what are the procedures and legal forms whendifferentiating between grants and procurements.

The common definitions

 While a company can be awarded a 10,000 euros grant for software development, a hospital can allocate substantial budget for the procurement of medical supplies.”

A grant is known to be an amount of money given to a person or an organisation, especially by a government, for a specific purpose. Procurement, on the other hand, means the process of getting supplies. While a company can be awarded a 10,000 euros grant for software development, a hospital can allocate substantial budget for the procurement of medical supplies. Moreover, those two options for support from the EU differ from each other in terms of objectives. So, grants contribute to the implementation of an EU programme and public contracts or procurements ensure the operations of EU institutions or programmes. 

How much of your work will be financed?

If you are applying for a grant or procurement you might also wonder how much of your project will actually be financed. In the case of support from the EU, the financial contribution principle defines the actual amount of money you will get out of a contract with the Commission.

In this context, the co-financing principle applies for grants. This means, the direct contribution from the EU budget to the funding of a specific project is only up to a predefined ceiling of usually 70 – 80 per cent of the total costs. The difference of 20 – 30 per cent is to be supported by the project initiator, be it a single organisation or a consortium of partners, from its own budget or through third party contributions. When you are looking for a procurement, the contract will be closed on an agreed price of purchase that is usually based on a best value for money principle.

Can you make profit?

The non-profit vs. for-profit principle is another differentiator between grants and public contracts. One is not allowed to make any profit upon the money received through a grant – its purpose is only to cover the actual costs of the implementation of a project, for example, personnel costs or renting of workspaces. This is not the case with procurements. Here, the company or organisation who is selling its services or work to the Commission is allowed to make profit, just like in any commercial agreement.

Who owns the results of your EU funded project?

Concerning grants, the beneficiary of the financial support is also the owner of the results of a specific project or action. Take, for example, a research project. The final study belongs to the organisation or the group of partners who have been working on its delivery.

In the case of procurements, on the other hand, the European Commission is the owner of the outcomes; be they a website as an outcome of a service contract, or an office building as a result of construction works.

And how do you get to learn of these all?

The legal form … between the beneficiary and the European Commission is the grant agreement, respectively the procurement contract.”

The procedure is the way in which the two funding opportunities are made known to the public. While in the case of grants there is a call for proposals, public contracts will be made known through a call for tenders. These are full information packages on the objectives of the actions and technical specifications of the products or services, the conditions of participation such as the eligibility rules, the co-financing rate, the estimated budget, the evaluation criteria and the modalities for submission. The legal form which then concludes the agreement between the beneficiary and the European Commission is the grant agreement, respectively the procurement contract. Drafts of both are made available for consultation.

Dealing with concrete examples will give you an even closer insight into the different options for EU funding. So, taking a look at theH2020 call for proposals opened for SMEs until this December will not only give you an understanding for the scope of the initiatives but may also help you to decide which option is for you. 

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How to…

EU funding About the author Madalina Serban is a mid-career switcher, an NGO founder and an aspiring social business owner. Born in Romania, she lived, worked and studied in Bucharest, Vienna and Brussels. She left her corporate international career in digital marketing in 2011 andstarted her own individual coursework in social development in Kathmandu, Nepal. Back to Europe she completed a master in European Studies in Brussels in 2012. She is currently working as an EU Funding consultant within the social entrepreneurship sector in Vienna.

As part of the Horizon 2020 programme and starting in 2014, the European Commission is hand-picking potentially disruptive businesses to invest in and support as part of the SME Instrument. Your business could receive up to 2.5 million euros in funding, world-class business support and mentorship.

Who is the SME Instrument for?

The aim of the SME Instrument is to fill the gaps in funding for early-stage, research and innovation SMEs and accelerating the exploitation of innovations. High growth, highly innovative SMEs with global ambitions that want to disrupt the established value networks and existing markets. You should be driven, actively investing in innovation, and looking to grow. And you should have been established for a while. Startups are included, but the SME instrument is not meant as a company creation vehicle or instrument, but rather supports the growth of companies with innovative ideas with European or global potential.

It’s a good sign if your company is based in an innovation hub, has received grants,VC funding, or innovation-related tax benefits, or won an innovation prize in the last 2 years.

Is your company an SME, by the European Commission’s definition in practice?  

The first step to qualifying as an SME is to be considered as an enterprise. According to the EC’s new SME definition in practice, an enterprise is “any entity engaged in an economic activity, irrespective of its legal form”.

Therefore, the self-employed, family firms, partnerships and associations regularly engaged in an economic activity may be considered as enterprises. It is the economic activity that is the determining factor, not the legal form. The scope of the new SME definition is clearly marked out by being formally included in the Commission’s recommendation concerning the definition of micro, small and medium-sized enterprises.

How does the SME Instrument work?

The instrument is implemented through three phases, with up to 2.5 million euros in funding and a coaching and mentoring service for enterprises. Participants can apply to Phase 1 with a view to applying to Phase 2 at a later date, or apply directly to Phase 2. Applications are evaluated independently from phase to phase, therefore to be successfully selected in Phase 2, a company does not need to need to have completed Phase 1.

The instrument is implemented through three phases. Participants can apply to Phase 1 with a view to applying to Phase 2 at a later date, or apply directly to Phase 2.”

In Phase 1 – Idea to Concept, a feasibility study shall be developed verifying the technological as well as economic viability of an innovation idea (product, process, services), with considerable novelty to the sector in which it is presented. The activities could, for example, comprise risk assessment, market study, user involvement or Intellectual Property (IP) management. Proposals should contain an initial business plan (around 10 pages) based on the proposed concept. The European Union will provide 50,000 euros in funding. Projects should last around 6 months.

In Phase 2 – Concept to Market Maturity, innovation projects that demonstrate high potential in terms of company competitiveness and growth underpinned by a strategic business plan will be supported. Activities should focus on demonstration, testing, prototyping, piloting and scaling-up and aim to bring an innovation concept to industrial readiness and maturity for market introduction. They may also include some research.

Proposals will be based on a more developed business plan (around 30 pages). Particular attention must be paid to IP protection and ownership; applicants will have to present convincing measures to ensure the possibility of commercial exploitation (‘freedom to operate’). The EU aims to contribute between 0.5 million euros and 2.5 million euros. Projects should last between 12 and 24 months.

In addition, in Phase 3 – Prepare for Market Launch, SMEs will receive extensive support, training, mentorship and facilitating access to risk finance as the project is further polished into a marketable product. Additional support and networking opportunities will be provided by Enterprise Europe Network (EEN). The EU will not provide additional direct funding in this phase.

Your first point of contact? The National Contact Point.

National Contact Points (NCPs) are national structures established and financed by governments, which give personalized support on the spot and in applicants’ own languages. It is good to set a meeting with one NCP representative in your country as soon as you are considering applying for funding through the SME Instrument. 

The first winners of 2014 were announced on 18 September. 155 SMEs from 21 countries will each receive 50,000 euros to finance feasibility studies for their projects and with this first round, valuable learning will be made available for the future development of the program.

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