Moisés Jomarrón de la Cerda
Berlin Office

Technology-driven businesses in Europe are offered a large number of attractive government incentives that help accelerate innovation activities. Horizon 2020, the EU R&D Framework Programme, provides €80bn in funding for innovation purposes alone.

However, engaging in European public funded R&D activities implies the observance of certain administrative rules. These rules are specific to each funding instrument but some general principles can be drawn. Observing these rules are key to a long-term success story with public funding.

Purchasing of materials & equipment

  1. In many public funding schemes, the funding authority only covers costs which occur after approval of funding. This means that equipment purchased before the official start of the funded project will not be reimbursed even if it is used after the start date. Here, the date defined in official grant funding agreements is the reference to be observed as the official start date. The date of purchase would be the one indicated in the commissioning respective invoice.
  2. The company-related data (legal entity, address, VAT number, tax number) that appears in the invoice/receipt must match the funding recipient to be reimbursed. Otherwise the funding recipient might run the risk of claiming ineligible costs. Having the exact legal entity on the letterhead is therefore essential for a successful claim of funding.

Paperwork/documentation

  1. To be effectively reimbursed within most European funding schemes, grantees must present proof of the expenses incurred during the project.  This proof includes but is not limited to original invoices, receipts, pay sheets, and time sheets. Lack of proof may make expenses ineligible for reimbursement.
  2. If post-project audits turn up gaps in the documentation, funding may have to be returned by the recipient. Some funding programmes request to keep documentation available for audits up to 5 years or more after the end of the project. Having the documentation in place after the end of the project is therefore essential. Administrative debriefings and audit simulations are useful instruments to be on the safe side.

 Changes to Budget and / or Scope

  1. Overspending: Only in very rare cases the funding agency may agree to increase funding. However, it is more likely that the recipient will be forced to absorb any extra cost compared to the initial budget planning. Effective funding rates will decrease in relation to real costs.
  2. Underspending: In case of small deviations, funding will be drawn down in reduced instalments. With larger deviations, the funding agency may request explanation of the deviation. When major changes to the budget are foreseen during a running project, grantees should approach the funding agency actively to realize changes for re-allocating the budget to other budget headings or other partners in the consortium. Budget plans should not be changed unilaterally. Some funding programmes establish maximum amounts of transfer allowed among budget headings without previous authorisation; i.e. unauthorised budget restructuring can lead to unreimbursed expenditures!
  3. If the project execution deviates from the project plan or budget without the expressed approval of the funding agency the costs related to this work may not be funded. Recipient shall notify the funding agency upfront whenever a change to the project plan or budget is intended. Adjustments can be negotiated. This is also the case if the project consortium changes when one member becomes unavailable or withdraw their participation in the project.

Going after public funding has numerous advantages. It can pave the way for a technology to reach the market earlier or with better timing. It can contribute to free valuable resources to be invested in other activities. However, solid preparation and dedicated grant management are keys to a long-term success story. Following the rules and tips above will help to ensure the maximum amount of granted funding. Working with specialized consultants in grant management is highly recommended to provide long-term insights that help avoid traps and pitfalls during a project lifetime and beyond.