This is the third article within the dedicated lump sum model article series in the Horizon Europe programme. If you haven’t yet done so, we invite you to head over to the 1st introductory article that explains what lump sum is all about, how to prepare a lump sum budget, how it is executed, and the model’s benefits and added values. Then, check out the 2nd article of the series, which details some of the critical issues within the model that you should be aware of.
In this present article, we take on the most frequently asked questions we receive regarding the lump sum model. Be sure to refer back to this article from time to time, as we’ll be updating it with more incoming questions. As well, if you have a question that we did not address below, write to us here and we’ll do our best to address it.
Lump Sum FAQ’s
Q: Can I use a lump sum budget in any Horizon Europe grant application?
A: No. Whether the budget is in the form of lump sum or actual costs is dictated by the EC and noted in the topic/grant description.
Q: Do Lump sum grants apply to all types of organizations?
A: Yes, they do.
Q: What do I need in order to prepare a lump sum grant budget request?
A: In lump sum grant applications, it is mandatory to include a detailed budget estimation using the template provided by the EC. There is no equivalent to that in the regular ‘Actual costs’ model. See more details in the first article.
Q: Are we required to have periodic financial reports in lump sum projects?
A: Yes. The reporting mechanism is the same as in other Horizon Europe grants. The financial reports structure is slightly different.
Q: Is the payment schedule different in a lump sum project?
A: No, but you should note that interim payments reimburse the eligible lump sum contributions claimed only for completed work packages implemented during the respective reporting periods.
Q: Can the EC ask for a financial audit of a lump sum grant?
A: The EC conveys messages saying that since actual costs are not reported in lump sum projects, financial audits will not be conducted. However, the dedicated Lump Sum Grant Agreement still includes the option of financial audits, like any other project under Horizon Europe, and are subject to the same audit rules. See more about this topic in our second Lump sum article.
Q: If we are funded by a lump sum grant, do we need to keep track of invoices, fill in time sheets of the employees or keep any other documents like in the ‘Actual costs’ model?
A: The EC’s answer to that is No. However, you should note the following: Lump sum beneficiaries are required to keep a so-called “adequate” level of records (presented officially in contrast to the ‘Actual costs’ model requirements). While the EC presents this as a more relaxed approach (for lump sum grants), to some extent it seems that these differences are only semantical, and we do recommend extra caution in that respect. See more about this topic in our second Lump sum article.
Q: Is the actual use (execution) of the lump sum budget visible to the EC?
A: The answer is no, but one should note that a financial audit may be implemented in these grants like in any other Horizon Europe grants. In the case of a financial audit, the budget utilization might be thoroughly checked. Read more about that in the second article.
Q: Is there budget flexibility in lump sum grants? Can we transfer budget between budget categories, work packages and/or beneficiaries during the project’s execution?
A: The answer is yes, but it may not be as simple as expected. On the one hand, lump sum projects benefit from relatively high flexibility, as the actual budget utilization is not transparent to the EC. Meaning, since actual costs are not reported, the EC does not care how you are going to use the budget, as long as the work plan is executed properly. This is applicable mainly for budget transfers between budget categories, and to some extent between partners. Things become more complex and less flexible when the required budget transfer involves changes of budget allocations to work packages. These cases require a mandatory contract amendment, which is subject to some limiting terms. Compared to the ‘actual costs’ model (which normally does not require contract amendments for most budget changes), it might be that flexibility in lump sum grants is actually more limited, to the extent of being rigid. See more about this topic in our second Lump sum article.
Q: Can affiliated entities charge lump sum costs in these lump sum projects?
A: Yes, like any beneficiary.
Q: What about associated entities? Can they benefit from these lump sum charges?
A: No, like in any other Horizon Europe grant.
Q: Can subcontracting be implemented using lump sum costs?
A: Yes, it can be considered as part of the lump sum project’s budget, and it complies with all the other rules of lump sum budget management.
We hope the above answers help to clarify some issues within the lump sum model. Again should you have any further questions, we invite you to reach out to us and we will be happy to assist you on your path to funding success.