ERDFi will only contribute a maximum of 50% of eligible expenditurei. The remaining amount (Match Fundingi) has to come from other sources. The exact proportion will depend on several factors, including the type of activity, but generally speaking the funds will meet between 5% and 50% of project costs. Match funding for European grants made through Objective 2i can come form a wide variety of sources, these could include
- Funding through national schemes, including Government programmes and funds
- Grants from statutory bodies, such as local authorities
- Contributions from the voluntary sector, including donations from charities and trusts
- Contributions from the private sector
- Loans from organisations such as the European Investment Bank
Private match funds are defined as any money originating from private enterprise.
A public match funder is any organisation which directly or indirectly receives over 50% of its core funding from central or local government or levies raised by Industrial Training Organisations (NTO’s) for training purposes. Non-profit making organisations, whether incorporated or unincorporated, and registered with the Charity Commission can supply public match fundingi. A minimum of 5% public sector match funding is required for ERDF projects.
Match Funding from the Voluntary and Community Sector
It has traditionally been the case that match funding from the voluntary and community sector for ERDF projects has been designated as private. This was on the basis that the funds for voluntary and community organisations did not come from central or local Government. However, this has caused difficulties in at least one programme, particularly under the Community Economic Development Measures, where there has been limited private sector match funding for ERDF in the financial table, affecting the flow of projects.
It is normally Government Accounting practice that voluntary and community sector contributions are counted as private sector, as they do not flow through a Government body. However, for the purposes of match funding for European projects, the European Commission give Member States discretion to designate it as public or private.
It has been proposed that in future, voluntary sector contributions to ERDF projects from non-profit making organisations registered with the Charity Commission should be designated as public sector match funding. In the interests of financial consistency, it would not be appropriate to make it optional for voluntary and community sector contributions to be designated as public or private. The effective date for implementation of this policy change is 1 December 2004. Any voluntary and community sector contributions to projects approved before this date will have to remain as private sector match funding.
It is also worth noting that match funding does not just have to be in the form of financial contributions. It can also include donations in-kind, such as contributions in the form of unpaid voluntary work provided by a private person or a body, the supply of raw materials, the supply of land, real estate and long term equipment, transport and accommodation. In-kind contributions are an acceptable alternative to monetary contributions towards project costs. In-kind match fundingi can come from both public and private sources, for example volunteer time is classed as private match fundingi in-kind, the donation of government owned office space would be public match funding in-kind.
Match funding criteria differs for each priorityi and measure – please refer to the SPDi and Programme Complement. Both public and private match funding are eligible, dependent on criteria.
Please note that for Priority 2 private sector funds are not eligible for match funding on the basis that the private sector will not participate in areas targeted by Priority 2.
ERDF Intervention Rates
Regulations governing the use of Structural Fundsi give a limit to the maximum amount of grant that a project can be awarded. This maximum is called the intervention rate. There are different intervention rates for different types of project as summarised in the table below.
ERDF support is provided at the minimum rate necessary to ensure that the project is carried out. In addition, maximum grant rates have been established for different categories of project expenditure. These are set out fully in Chapter 12 (12.6.2) of the North West Objective 2 Single Programming Document.
Calculating the Grant Rate
The grant rate is calculated as a percentage of total eligible expenditure (direct contributions from public, semi-public and private organisations) irrespective of the total cost of the project. In general, the maximum grant rate for eligible expenditure is 50%. However, capital investments (particularly those with revenue generating capacity) or direct aid scheme are only eligible at lower grant rates. Under most measures it is expected that there is at least parity between ERDF and other public funding.
ERDF Guidance note on Contributions in kind
* Opening para 40 of Council Regulation (EC) 1260/1999 describes substantial revenue generation as revenue exceeding 25% of the total project costs. Since it does not set a time span for this it seems reasonable that realistic assumptions can be made on a case by case basis.
** Article 28(3) of the above regulation describes other forms of finance other than direct assistance as: repayable assistance, an interest rate subsidy, a guarantee, an equity holding, a venture capital holding or another form of finance.
|No||Type of Project||ERDF
|1||Maximum for any project under any circumstances||50%|
|2||Infrastructure (capital) projects generating substantial net revenue*||25%|
|2a||These rates may be increased for forms of finance other than direct assistance**||+10%|
|3||All other infrastructure (capital) projects||50%|
|4||Direct investment in SMEs||15%|
|4a||These rates may be increased for forms of finance other than direct assistance**||+10%|
|5||Technical Assistancei for projects carried out at the Commission’s initiative||100%|
|6||Other Technical Assistance||50%|