The European Union has set aside funds from Multiannual Financial Framework (MFF) 2021-2027, with pots of over 1 billion euros available to all businesses and institutions of member states that submit projects. Considering the scope of the investment, the efficient allocation of these funds will be essential.
In this article, we’ll discuss the details, the implications of this ambitious project and how efficient allocation will be essential to maximising the benefits. It perhaps goes without saying that consultancy will be crucial to make sure this happens.
Table of Contents
Which European funds are most significant?
The MFF 2021-2027 comprises various pots of money, each targeted at specific industries, communities, and areas of interest. The European strategy for Community Funds, for instance, is focused on the modernisation, sustainability, and digital transformation of businesses and institutions. To achieve this, more than €1.82 trillion will be made available in the coming years to all businesses and institutions of EU Member States.
Spain is the country with the most significant allocation of funds alongside Italy. From the NEXT GEN funds alone, Spain will receive approximately €77.23 billion between 2021 and 2023 in non-repayable transfers and can access up to €67.3 billion in loans. This is in addition to the Structural Funds and the Common Agricultural Policy 2021–2027, which will provide another €79 billion euros.
The funds allocated to Spain represent 11% of the national GDP, equivalent to 5.5 times the annual public investment. This is a substantial opportunity for businesses and institutions all over the country.
At the European level, there are other funds within the Multiannual Financial Framework (MFF) 2021-2027 endowed with €1.07 billion. Notably among these are Erasmus+ for education, Horizon Europe for innovation, and Creative Europe for culture. Projects for these funds require submission in a Consortium format, a partnership model that commits various parties to the delivery of a specific project within a set timeframe, without stipulating the constraints or obligations that other traditional formats like the UTE (Unión Temporal de Empresas/Joint Ventures) have.
From our perspective, this is an agile and simple tool that allows different entities (both public and private) to collaborate and develop transformative projects, bound only by the obligations to meet the shared goal. This also promotes more efficient collaboration.
The MFF 21-27 is broken down into the following allocations:
- Single Market, Innovation and Digital: €132.8 billion (12.36%)
- Cohesion, Resilience and Values: €377.8 billion (35.16%)
- Natural Resources and Environment: €356.4 billion (33.17%)
- Migration and Border Management: €22.7 billion (2.11%)
- Security and Defence: €13.2 billion (1.23%)
- Neighbourhood and the World: €98.4 billion (9.16%)
- European Public Administration: €73.1 billion (6.80%)
The goal is to achieve a smarter, greener, carbon-free, more connected, more social Europe that is closer to its citizens. These projects are directly submitted in Brussels, in consortium (typically involving at least three EU member states) and in English through its technological platform.
Efficient allocation strategies: Navigating the European funding landscape
In the realm of European fund allocation, a critical question emerges: What are the different types of allocation strategies? This query drives our exploration into the diverse avenues available for businesses and institutions seeking funding from the substantial pool of resources designated by the European Union.
In Europe, over 3,600 opportunities for public aid are announced every year. Yet, historically only 9% of Spanish companies access them. Of this percentage, 80% are consistently the same companies, and it’s known that 30% of the projects go unrealised due to a lack of funding.
Approximately, 30% of the available European funds do not reach the beneficiaries in optimal conditions. This means that more than €1.8 billion do not strengthen the Spanish economy due to lack of awareness, non-application, or refunds. Indeed, hurdles like lack of knowledge, intricate tender processes, complex applications, upfront financing requirements, excessive bureaucracy, complicated stipulations, and a lack of specialists in submitting and executing projects in companies and institutions are issues we must address if we want these much-needed European funds to reach the market.
Which funds are most beneficial and simplest to process?
The linchpin of successful fund acquisition lies in understanding the core question: How do you achieve efficient allocation? It’s crucial to recognise that the speed and amount of funding can differ significantly based on the type of aid and its management conditions. Some funds, however, are faster to process, easier to manage, and offer more substantial financing than others. From our study and experience, the most appealing funds come from the Multiannual Financial Framework (MFF) 2021-2027 for several reasons:
- Their tenders are clear and well-defined.
- The processing requirements are simple and carried out digitally.
- They have no entry barriers, allowing any business or institution to apply.
- The funding percentages are higher than other public grants, beneficial for organisations with limited financial resources.
- They stick to established deadlines.
- They cover a broad range of objectives and thematic areas.
- They increase visibility in Europe.
- They allow cooperation with other key EU organisations.
- They usually pre-finance a project percentage to kickstart it.
- They require consortium participation with other European countries, enabling SMEs to submit more ambitious projects.
- They allow positioning and influence in policy and program design.
- They offer an extended deadline for project submission, until 2027.
We propose offering SMEs a unique methodology that addresses the entire European fund management process, overseen by a business consultant. Additionally, we provide public institutions with leadership in a European fund management office to enhance awareness and comprehension. This aims to ensure that both businesses and institutions submit projects.
How can we improve the system so that European funds reach their destination?
It is everyone’s responsibility to contribute to this objective given its importance for Spain. Therefore, adapting the Next Gen funds to the circumstances of the Spanish market, replicating the subsidy protocols of the European Union and European countries with higher executive capacity, and intensifying the efforts of business institutions in the dissemination and distribution of European funds are some of the measures we have recommended in various articles and proposals to the administrations.
It’s also crucial for SMEs to play a much more active role, investing more time and effort into developing efficient allocation strategies and capabilities that enable innovation, either by attracting transformative talent or through hiring specialised interim professional services that assist in transforming the business plan. This will lead to a greater ability to present winning projects and obtain financing.
Our innovative suggestion is to use technological platforms based on blockchain and artificial intelligence (AI) to automate all processes, create transparency, improve timelines, and reduce costs to allocate resources to other projects.
Blockchain is increasingly becoming a tool for project management, especially concerning transparency, security, cost reduction, and efficiency. One of its primary advantages is its ability to create an immutable and transparent record of transactions. With this technology, we can trace every step in the fund allocation process, ensuring data integrity and preventing manipulation.
Transparency and accountability are vital to ensuring that the funds are distributed fairly and equitably and that the cost savings associated with management free up resources for other projects. Notably, the creation of smart contracts which automate the execution of agreements between parties, including obligation fulfilment and funds transfer, is significant. These contracts can be set to release funds only when specific criteria are met, decreasing fraud risk and ensuring the funds are efficiently allocated for their intended purposes.
On the other hand, artificial intelligence (AI) offers the ability to analyse large amounts of data in real time, allowing officials responsible for fund management to make decisions based on accurate and up-to-date data. By identifying patterns and trends in data that wouldn’t be visible to humans, it helps prevent fraud and misuse of funds. It also reduces the time required to process applications and improves accuracy in evaluating financing requests, facilitating more efficient allocation.
Machine learning algorithms can analyse large amounts of historical data and learn to identify patterns and trends that indicate whether a project is viable and if it will meet the financing programme’s objectives. This can reduce the risk of financing projects that will not achieve their goals or that won’t meet the programme’s requirements. AI can continuously monitor the progress of projects and check if the established requirements in the financing programme are being met. If issues are spotted, AI can notify fund management officials, allowing them to take prompt action.
The combination of artificial intelligence and blockchain can have a significant impact on the efficient allocation of European funds due to their ability to improve effectiveness, transparency, process costs, and security.
An example in action
Therefore, we have presented a specific project in this regard, framed within the HORIZON EUROPE programme, Resilient Value Chains 2024, endowed with €5 million, aiming to distribute among SMEs that meet the established requirements, packages of €50,000 in non-repayable grants and provide them with advice on the fundamental axes set by Europe.
This platform, which we propose as a differentiating element, is based on techno compliance protocols that validate the entire bidding process and simplify it to facilitate access for all European SMEs and provide public administrations with an effective and efficient allocation tool they currently lack. Once again, technology helps to ensure that the 1.82 trillion euros are channelled into the European business fabric, mostly composed of SMEs.
Get the right consultancy and maximise gains
William George Ward once said, “Opportunities are like sunrises: if you wait too long, you’ll miss them.” There has never been a truer statement when it comes to European funding. Stakeholders at all levels in the value chain should access the consultancy they need to get the most out of the money available, whether it’s the lawmakers designing the funds to the citizens accessing them.
Consultants and interims with a wealth of experience internationally are registered and available on the Outvise network. For the in-depth expertise your institution or business needs, speak to one of our recruitment experts to connect you with a consultant. Alternatively, create a free account and explore the network with our AI-powered project matching tools.
Guillermo is an experienced professional skilled in public service, executive leadership, and entrepreneurship. He brings a strategic vision and a focus on generating sustainable value to companies, SMEs, CEOs, and entrepreneurs. With expertise in digital transformation and project management, he has collaborated successfully with Public Administrations and Institutions, contributing to valuable projects. Guillermo is known for driving transformative change and is a trusted advisor in facilitating innovation.
No comments yet
There are no comments on this post yet.