Summary of "Lump Sum Funding in Horizon Europe: How does it work? How to write a proposal? (16 May 2024)"

Summary of the Webinar: “Lump Sum Funding in Horizon Europe: How does it work? How to write a proposal?” (16 May 2024)

Main Ideas and Concepts

1. Introduction to Lump Sum Funding in Horizon Europe

Lump sum (lumsum) funding simplifies grant management by removing the need for detailed cost reporting and financial documentation.
Introduced in 2018 through pilot projects, it is now increasingly adopted in Horizon Europe.
The approach aims to reduce financial errors, ease administrative burden, and shift focus from financial management to research and innovation content.
Particularly beneficial for small and new beneficiaries with limited administrative capacity.

2. Key Principles of Lump Sum Funding

Similar to traditional grants but with fewer financial reporting requirements.
No obligation to report actual costs or keep invoices, timesheets, or other financial documents.
Payments are based on the completion of work packages rather than incurred costs.
Two types of lump sum funding:
- Type 1: Fixed lump sum defined in the work program (e.g., ERC Proof of Concept).
- Type 2: Budget defined by applicants, justified in the proposal, and evaluated before award (most common).

3. Proposal Preparation

Use the standard Horizon Europe application form.
Include a detailed budget table (Excel) as an annex, specifying estimated costs per cost category and work package.
Estimates must be reasonable, justified, and compliant with eligibility rules but need not be exact.
The budget table automatically calculates the lump sum amount, including indirect costs and funding rates.
Work package design is critical since payments are linked to their completion.
- Splitting long-duration work packages (e.g., project management) into smaller parts aligned with reporting periods can improve cash flow.
Reporting periods typically last 18 months; the number depends on project duration.

4. Evaluation Process

Evaluated on Excellence, Impact, and Implementation criteria.
The detailed budget table is assessed under Implementation, focusing on reasonableness and justification rather than exact amounts.
Experts use a dashboard showing personnel cost benchmarks by country and organization type to assess budget reasonableness.
Costs above the 80th percentile require explicit justification in the budget table comments.
Budget corrections after evaluation do not affect proposal scores unless the budget is fundamentally flawed.

5. Grant Preparation and Management

A dedicated model Grant Agreement for lump sum grants exists, similar to actual cost grants but without articles on actual costs.
Non-negotiable principle applies: lump sum amounts cannot be increased after evaluation but may be decreased if justified.
The lump sum is broken down by work package and partner in the financial annex.
Flexibility within the consortium on how to use the lump sum internally; the Commission does not monitor internal distributions.
Payment schedule mirrors actual cost grants: pre-financing, interim payments after reporting periods, and final payment.
Payments are triggered by acceptance of completed work packages.
Partial completion of work packages can be declared only at the end of the project, with payments adjusted accordingly.

6. Reporting and Controls

Technical reporting follows standard Horizon Europe templates but excludes cost/resource reporting.
Project officers verify completion of work packages based on technical reports.
Financial controls and audits on costs do not apply to lump sum grants.
Ex-post controls focus on technical implementation and compliance with non-financial obligations (IPR, ethics, open science).
Beneficiaries must keep technical documentation proving proper implementation but not financial documents like invoices or timesheets.
Amendments to the grant are possible, especially to adjust work packages or budgets, but completed work packages cannot be amended.

7. Practical Experience from Guest Speakers

Three guests shared positive experiences with lump sum funding in Horizon 2020 and Horizon Europe projects.
Initial concerns about the new scheme were alleviated by its flexibility, reduced administrative burden, and good communication with project officers.
Emphasis on careful partner selection and clear consortium agreements due to dependency on successful completion of work packages.
Proposal preparation requires more detailed forward planning, especially on budget and work package design.
Internal project management is more efficient, with less focus on financial administration and more on delivery and collaboration.
Amendments are common, mainly to reschedule tasks or update budgets; early communication with project officers is crucial.
Projects completed under lump sum funding have mostly received full payments, indicating low financial risk.

8. Common Questions and Clarifications

Equipment costs should be allocated to the work package where used most; splitting costs across packages is discouraged but can be explained in comments.
If one partner fails to complete tasks, the work package cannot be declared complete; partial completion or amendments can redistribute tasks and funding.
Budget transfers between work packages or partners require amendments only if reflected in the grant agreement; internal distribution is flexible.
Personnel costs exceeding dashboard benchmarks must be justified, e.g., due to inflation or senior staff needs.
Reporting periods are typically 18 months; the number depends on project duration and is finalized during grant preparation.
Liability is similar to actual cost grants; partners are liable up to their share of the budget.
No audit costs need to be budgeted for lump sum projects as no financial audits occur.
Controls focus on technical implementation; no financial audits or controls on costs are conducted.
Partial completion payments reduce lump sum proportionally across partners unless clear responsibility is assigned.
Pre-financing and payment ceilings operate as in traditional grants (max 90% paid before final payment).
Small organizations benefit significantly from lump sum funding due to reduced administrative complexity.

9. Additional Resources

Dedicated lump sum page on the Funding & Tenders Portal.
Video tutorials explaining lump sum principles, budget table completion, and dashboard use.
Detailed guidance documents and FAQs available online.
Research inquiry service for further questions.

10. Outlook

The European Commission plans to increase lump sum funding gradually, targeting up to 50% of call budgets by the end of Horizon Europe.
Ongoing monitoring and a follow-up study are planned to evaluate lump sum implementation and impact.
More ex-post technical reviews will be introduced to ensure proper implementation without financial audits.

Methodology / Instructions for Writing a Lump Sum Proposal and Managing the Grant

Proposal Writing

Use the standard Horizon Europe application form.
Prepare a detailed budget table (Excel) with cost estimates per cost category, work package, and participant.
Justify costs clearly, especially if above personnel cost benchmarks.
Design work packages thoughtfully to align with reporting periods and payment schedule.
Consider splitting long-duration work packages to improve interim cash flow.
Plan reporting periods (usually 18 months) based on project duration.

During Grant Management

Deliver work packages as planned; payments are linked to their completion.
Submit technical reports confirming work package completion.
Communicate early with project officers about delays or needed amendments.
Amend the grant if necessary to reschedule tasks, update budgets, or reallocate work.
Keep technical documentation proving implementation; no need to keep financial documents.
Declare partial completion of work packages only at project end if needed.
Internal budget distribution is flexible; no need to report on cost allocation within the consortium.

Handling Issues

If a partner fails to deliver, try to resolve via amendment reallocating tasks and funds.
If work packages are incomplete at interim reporting, payments are postponed.
Justify any deviations or higher costs clearly in budget comments.
Use available resources and guidance materials to support proposal preparation and management.

Speakers and Sources Featured

UL Gel – Head of Sector, European Commission, Horizon Europe simplification processes (main presenter).
Andrea Kikos – European Commission colleague, webinar moderator and co-host.
Guest Speakers:
- Yana Deti – Professor, National Technical University of Athens; coordinator of Horizon 2020 lump sum project “Tumor Leaf Node on a Chip”.
- Maria Cayala – Project Manager, Arena Consulting, Belgium; involved in several lump sum projects including “Pintat 2”.
- Helena Dean – Project Manager, Western Development Commission, Ireland; coordinator of Horizon Europe lump sum project “Spectra”.

This summary captures the key points, practical advice, and experiences shared during the webinar on lump sum funding under Horizon Europe, providing a comprehensive understanding for applicants and beneficiaries.