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About the Author: Ana Díaz

Innovation Consultant - Ana holds a Degree in Biotechnology from the Polytechnic University of Madrid (ES) and a MSc specialized in Industrial Biotechnology from the Autonomous University of Madrid (ES). In October 2022, Ana will continue its education in circular economy with a Master’s Degree in Circular Economy and Innovation at Valencian International University (VIU University). Before joining Innovarum, she has worked in different companies as an Innovation Consultant in the United Kingdom and Barcelona. Thanks to her education and international experience, she has developed great passion for innovation as a way to address current environmental challenges.

Lump sum funding aims to reduce administrative and financial errors, simplifying the funding programme and thus the financial reporting process by eliminating the need to report actual costs and eliminating ex-post financial audits. This programme is primarily targeted at small and start-up companies, as they often have no prior knowledge of EU fund management.

Compared to other Horizon Europe grants, the lump sum grant agreement and evaluation systems follow the same standard approach in the following aspects: evaluation criteria, payment scheme, pre-financing and reporting periods. However, there is one notable difference to note: lump sum funding focuses on the full completion of work packages.

The 3 main differences between lump sum and standard EU grants

  1. Financial Statements are generated automatically.
  2. There is no need to report actual costs, financial verifications, or audits.
  3. Payment schemes depend on the completion of the Work Package: at the end of the reporting period, those work packages that have been completed during the period will be declared. The periodic technical report shall duly justify this.

In short, the LUMP SUM programme focuses more on the technical content of the project and less on financial management compared to the standard Horizon Europe funding lines.

How to keep records on Lump Sum. Source: European Commission.

2 options in the lump sum funding structure

Option 1: The call proposal defines a fixed lump sum (Lump sum).

  • The requested budget must be equal to this fixed lump sum.
  • The budget requested in the proposal must be equal to this lump sum.
  • The proposal must duly justify the resources mobilised at this amount.

Option 2: the lump sum is defined in the proposal.

  • When establishing the amount, the participant is free to define the amount needed to carry out the project.
  • The amount chosen must be justified by the resources mobilised.

5 aspects to take into account when preparing a lump sum proposal

  1. Use the standard Horizon Europe proposal template (IA, RIA, CSA).
  2. A detailed breakdown of cost estimates (approximation of actual costs). In addition, it is important to note the need to attach a specific MS Excel template for the preparation of LUMP SUM proposals (available for download here).
  3. The breakdown of the amount will be automatically calculated through the use of the available Excel tool, and these amounts per beneficiary and per work package (WP) are the ones that will be included in the Grant Agreement.
  4. No change in the project design, except that work packages of long duration can be split over the reporting periods. In this way, the relevant activities can be paid for at the end of the reporting period.
  5. The cost estimates are used to automatically generate an overall budget breakdown per work package and per participant.

Key areas to understand the lump sum grant management system

  1. The fixed amount of the grant (Lump sum) is defined in the Lump sum Grant Agreement, following the breakdown of the amounts per beneficiary and work package (WP) included in Annex 2. The detailed cost estimate (Excel template) does not become part of the Grant Agreement in any case.
  2. The fixed amount of the grant (Lump sum) equals the maximum grant amount.
  3. Budget flexibility: the budget can be used in a flexible way if the project is implemented as agreed, as the distribution of the fixed grant amount is not visible to the European Commission. Budget transfers require a contract amendment to be drawn up if the consortium wishes this to be reflected in the Grant Agreement. In addition, budget transfer between work packages is possible if these work packages are not finalised.
  4. Payment schedule:
    1. Pre-financing (pre-financing): follows the same rules as other EU grants. The amount received is distributed by the project coordinator.
    2. Interim payments: the grant is paid per work package completed and approved in the report.
    3. Partial payments (not frequent): partial payment per partially completed work package.
  5. Interim reports and payments: at the end of the reporting period, it is necessary to declare which work packages have been completed during the reporting period, always supported by the technical report.
  6. The proposal will be evaluated by independent experts according to the standard evaluation criteria: excellence, impact, and implementation.

Example of payments based on Work Packages completion. Source: European Commission

For more information, current lump sum funding opportunities are available here.

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This article has been prepared by Ana Diaz, Innovarum´s Innovation Consultant.

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