“Lump Sum Funding” is a new, simplified funding instrument that builds on the experience of the “Lump Sum Funding Pilot” under Horizon 2020 and is being used more extensively in Horizon Europe.
What “lump sum” means
In Lump Sum projects, the costs of Beneficiaries are no longer reimbursed based on financial (i.e. cost) reporting, but rather covered by a lump sum payment fixed in advance.
The EU Commission provides for two options (with type 1b being the more common), either the lump sum is:
- fixed by the Commission in the call text, and consortia describe in their proposals which activities they will carry out for this pre-fixed amount (= type 1a); or
- defined by the applicants themselves in their proposal and later fixed in the Grant Agreement (GA) (= type 1b).
How Lump Sum funded projects differ from actual costs funded projects
The lump sum payment reduces the administrative burden, as no financial reporting, record-keeping for costs, or financial audits are required. The focus is on the scientific-technical implementation of the project, since the lump sum payment is conditional on the proper completion of the respective work packages in accordance with the Grant Agreement (GA).
Partial completion of work packages is generally not sufficient for payment, but see “Common questions” below.
In Annex 2 of the GA (PDF) the shares of the lump sum per work package and per Beneficiary (and any “affiliated entities”) are specified. This also defines the maximum amount of liability of each Beneficiary after the final payment.
Considerations during proposal preparation phase
Particular attention should be paid to the structure of a single work package, as this determines the payment of the lump sum shares. The number of work packages should be appropriate and comprehensible with regard to the project. Horizontal, long-running work packages (e.g. for coordination/management or for dissemination/exploitation) can be split across reporting periods into several work packages.
The standard proposal template for Horizon Europe is used, but for lump sum applications there is a higher page limit (50 pages instead of the standard 45 pages for RIA/IA projects; 33 pages instead of the standard 30 pages for CSA projects).
Type 1b: To define and justify the lump sum amount, a budget table, either an Excel file completed and submitted as an annex to Part B or directly into the F&TP as part of Part A must be completed.
This budget table is used to calculate the lump sum amount based on the estimated actual costs. Only the breakdown of lump sum shares per Beneficiary and per work package is included in Annex 2 of the Grant Agreement (i.e. the detailed budget table in the proposal will not become part of the Grant Agreement).
Considerations during reporting
The standard reporting template is used at the appropriate reporting period.
Only work packages declared as “completed” in the reporting period are considered by the EU Commission for payment of the respective share of the lump sum. Completion of a work package is based on the full implementation of the activities in that work package according to the project description (Annex 1 of the Grant Agreement) (i.e. a successful outcome is not necessarily required).
Work packages that are not fully completed may be completed in subsequent reporting periods. In the final report, partially completed work packages may be reported (partial acceptance is at the discretion of the EU Commission).
There is no financial reporting for lump sum funded projects. A simplified “Financial Statement” is automatically generated in the Funding & Tenders Portal and submitted to the EU Commission.
Common questions
Are there any differences in project evaluation?
Answer: The evaluation criteria for lump sum projects are identical to the standard criteria (excellence, impact, implementation). The cost estimate/budget table is assessed as part of the criterion “implementation”. If the estimated costs are deemed inappropriate, the evaluators may propose an appropriate budget reduction in the “Evaluation Summary Report”.
What happens if costs change after grant signature?
Answer: As soon as the lump sum is fixed in the Grant Agreement, the EU Commission will not question any later cost changes (e.g. for goods and services).
Will lump sum shares be paid for partially completed work packages?
Answer: According to articles 22.3.3 and 22.3.4 of the Grant Agreement, in principle, only fully completed work packages trigger payment by the EU Commission. However, during the final payment, the EU Commission may decide on a case-by-case basis to accept partial payment for work packages that were not fully completed.
Are budget transfers possible during the project implementation?
Answer: Yes, but in Lump Sum projects, budget transfers always require an amendment to the Grant Agreement. Additionally, budget transfers between work packages are subject to two conditions:
- The budget transfer must not affect work packages already completed and declared, AND
- the budget transfer must be justified by the technical project implementation.
Are there any checks/audits by the EU Commission?
Answer: Yes, but no financial audits. There still might be checks related to the proper implementation of the project (e.g. technical checks) and compliance with other non-financial obligations in the Grant Agreement (e.g. IPR, dissemination).
Which supporting documents are required?
Answer: Documents related to the technical project implementation, to publications/prototypes/deliverables, to the implementation of work by the Beneficiaries (Who did what?), and other documents proving compliance with the Grant Agreement (Annex 1). NOT REQUIRED are e.g. time records, payslips or contracts, description of the depreciation practice, invoices or other documents proving the actual costs incurred.
Presentations and documents of the EU Commission:
Website of the EU Commission with information and guidelines
Online Manual of the EU Commission about Reporting
Lump Sum Funding: How does it work? How to write a proposal? (presentations & recording)
Lump Sum Funding: What do I need to know? – A Guide for Participants (PDF presentation)
How to manage your lump sum grants – proposal submission, evaluation and grant management (guide)
Lump Sum Funding: How to evaluate lump sum proposals: