Research managers deliver early verdict on Horizon lump sum funding

There’s little concrete evidence of the extent to which lump sum grants are changing the EU research funding landscape but last October 68 research managers got together to discuss how it’s all going. Their preliminary conclusions published in March mirror many of the much-repeated worries about lump sums, adding weight to the anecdotal accounts of problems that have been encountered.

Lump sum funding is a new way of handing out EU research grants that is rapidly replacing traditional real-cost reporting in the €95.5 billion Horizon Europe research programme.

Beneficiaries get the funding if they deliver on the project’s promises without having to report back on each euro spent. This reduces bureaucratic overheads, and crucially, allows the European Commission to reduce high error rates in EU spending on research.

The approach was trialled a few years back but since then, there’s been little assessment how the wider roll out in Horizon Europe is going. Many research organisations were sceptical about it, as reported by Science|Business.

The new report offers the perspective of 68 research managers from 50 organisations, brought together by IGLO, the association of Brussels-based Horizon Europe liaison offices which aims to make it easier for researchers on the ground to access EU funding.

The view from the sharp end of lump funding

First, the workload in the application stage has increased, with the Commission asking for a detailed spending plan. But it’s not just needing a more detailed plan for a project at an earlier stage that is the issue. Everyone is more cautious, which leads to longer discussions, requiring more time to be spent in meetings before the funding is even secured. This places extra burden on coordinators in particular, who usually don’t have much time to spare.

The good news is that research managers who have experience with multiple lump sum projects report that some of the additional workload decreases over time, especially as more organisations learn how to manage lump sum funding.

But this increased cautiousness is impacting the shape of projects. Participants are trying to limit their dependency on project partners to make sure getting paid doesn’t depend on a partner they don’t fully trust. This has led to projects being split up into more smaller, easier to manage work packages that involve fewer organisations. This trend is especially true for the more ‘horizontal’ activities such as project communication and management.

Research managers are worried this goes against the core objective of the EU’s research programme, which prides itself on funding big, collaborative, multidisciplinary projects.

There are potential administrative issues. “The increased number of smaller work packages is also seen as a potential drawback for the financial aspects of projects since it could reduce budget flexibility and therefore complicate budget shifts,” the report says.

The Commission isn’t keen on the increased number of work packages and some applicants have been asked to reduce the number of work packages in their proposal.

The good news is that applicants are less likely to overpromise and are more careful when dividing up tasks between partners. While the majority of research managers confirmed there is a trend to pick better known partners for projects, there was no consensus on whether this makes it difficult for newcomers to join their first Horizon Europe projects.

In terms of budgeting, reactions varied. Some research managers reported no change in how they decide budgets, while some have become more careful, and others have had to change the way they work internally, taking a more centralised approach to budgeting.

In addition, applicants are concerned about inflation, rising wages, and that part of the  implementation costs of a project will not be covered if something goes wrong. Layered on top of this is the uncertainty that comes with being paid for each work package as a group, rather than as individual beneficiaries.

Lump sum funding leaves too much in the gift of the Commission, and some have been burnt, according to the report. “During the grant agreement preparation phase, some participants reported enquiries from the Commission [asking them] to justify certain cost items that eventually led to budget cuts that had to be accepted only by individual participants. These were mainly projects from the first lump sum calls for proposals in Horizon 2020 and, in some cases, the cuts were not justified from the participants' point of view,” the report says.

However, there was a positive response on the implications for financial reporting. Of the 68 research managers, 30 had completed at least one reporting period on their project and rated the much-simplified financial process very positively.

But despite this, many have had to continue to keep detailed financial records. For the most part, this is because participants have national and organisational rules that require reporting. “Only very few institutions make concessions when it comes to timesheets and do not require their scientists to keep such documents,” the report says.

Moreover, the financial simplicity appears to come at the expense of more complex technical reporting. This is described as “more extensive and detailed,” with the Commission asking more questions on deliverables and milestones. The participants noted the increased difficulty led to a greater need for communication between different departments of their institutions. Some even adapted their internal reporting progress in line with the new rules.

At the same time, monitoring is more important than ever. Getting finance for an entire work package now depends on all partners doing their work. Trust is sometimes low, leading to increased monitoring of progress. This again places a bigger burden on the coordinator.

Projects have dealt with this in different ways. Some introduced additional internal reporting systems. Others increased the number of meetings to keep track of what everyone is doing.

To date, there’s little evidence of things going wrong but the report says, “The participants consider dealing with non-performing or poorly performing partners as one of the greatest challenges in lump sum projects.”

There’s also scepticism about budget transfers and amendments, with fears of higher administrative efforts and less willingness among partners to redistribute any unused budget.

Lastly, communication from the European Commission wasn’t great in the beginning. The report says it is improving now, but many research managers still want to see more guidance on the division of work packages, budget calculations and monitoring.

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