Plans for lump sum funding move forward amid scepticism

Disagreements persist over the use of lump sum funding in Horizon Europe, as the European Commission gears up for broader implementation over the next couple of years.

At a meeting organised by the European Parliament’s panel for the future of science and technology (STOA), Horizon Europe rapporteur Christian Ehler MEP debated the pros and cons of lump sum funding, with policymakers in the Commission. Meanwhile, research stakeholders continue to call for caution and a slower rollout of the new system.

The Commission began a pilot of lump sum funding four years ago in an effort to cut red tape in EU research funding programmes. Instead of disbursing the money based on costs incurred, paying lump sums allows the Commission to pull together various costs under work packages that do not require detailed financial reporting, such as time sheets, travel invoices and pay slips.

In a report published last year, the Commission analysed 500 lump sum grants and concluded this approach “works in practice and is fit for wider use”. However, research associations have warned that most projects included in the Commission’s analysis are still in progress, meaning the full impact of lump sum funding remains unclear.

STOA commissioned its own study on the pilot from Research Institutes Sweden (RISE). That found the lump sum system is popular among beneficiaries. “We tend to agree very much with the study made by the Commission that lump sum meets the primary objective of increased focus on scientific and technical content and less focus on financial management,” said Adam Edström of RISE.

Speaking at the STOA event today, Peter Härtwich, head of unit for Horizon Europe implementation at the Commission’s research directorate, said the Commission is getting ready to gradually implement lump sum payments. The Commission is also preparing detailed guidance and an exemption in the lump sum pilot that will enable consortia to go over the 45-page limit on the length of proposals imposed in Horizon Europe. “We start with a number of topics in the 2022 work programme and then we will roll it out in bigger numbers in the 2023-24 work programme,” Härtwich said.

Edström said in addition to improved guidelines and lifting page limit exemptions, the Commission should be more flexible when assessing the completion of work packages for each project. If a work package is judged to be 80% fulfilled, there should be an 80% reimbursement, rather than no reimbursement until 100% is completed.

Edström also warned that both the RISE and the Commission surveys should be taken with a grain of salt, because replies are based on limited experience of implementing a project on a lump sum funding basis. “Those experiences were only partial because none of the projects have been finished,” said Edström.

This view was echoed by Laura Keustermans, senior policy officer at the League of European Research Universities (LERU) who said it’s too early to say whether lump sums will work. “Even though our members have experience with the lump sum pilot, these experiences are still quite limited,” she said.

Widen participation

The Commission’s intentions with the lump sum pilot are twofold.

First, it wants to reduce bureaucracy in the research programme and encourage researchers to spend more time on research, rather than filling out expense forms and time sheets. This would have the extra benefit of attracting applications from institutions with less experience the workings of Horizon projects, so the Commission can give out grants beyond its regular ‘clients’.

But for research organisations with more experience with EU programmes, which submit several projects every year say, the lump sum system would increase their workload, as most paperwork needs to be completed during the application and grant preparation phases.

“Unfortunately, we don't win all the projects that we apply for,” said Dorte Dalsgaard, a financial expert at the European Association of Research and Technology Organisations (EARTO). “I think therefore it's very important that the workload and the detail planning of these projects are not moved on too early in the process.”

But the Commission has to take into account the full spectrum of Horizon beneficiaries. Härtwich said most Horizon Europe grant recipients are likely to participate only once. “You represent organisations that are the frequent participants, the few big universities and research organisations, but we have 42,000 individual organisations participating in [the previous R&D programme] Horizon 2020, so the vast majority are the ones who do not profit from continuity, but from more simplification,” said Härtwich.

For the Commission, another motive to implement lump sums has to do with its own internal struggles over how to ensure all the research funding available is spent more efficiently. The research directorate is being pressured by colleagues in the budget department and by the European Court of Auditors to reduce the error rate in the EU framework programme for research and innovation, which is currently around 4% of the entire budget.

“The budget authority and all the others tell us that this is still not acceptable. So we have to do something,” said Härtwich.

In Ehler’s view, lump sums may deduce the error rate, but rules should be improved without limiting the success of the programme. “The crucial question is if and how lump sums influence the implementation of the project,” he said.