Question 1: Are you sufficiently informed about upcoming calls for proposals in a timely manner? What improvements would you suggest?

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1 The European League of Institutes of the Arts ELIA has experience with operational and project grants within the Culture Programme and the Lifelong Learning Programme, administered by the Executive Agency for Culture, Education and Youth. The answers have been developed together with Culture Action Europe. 1 - GRANTS Question 1: Are you sufficiently informed about upcoming calls for proposals in a timely manner? What improvements would you suggest? Culture Action Europe s members mainly apply for operational grants and project grants under the Culture Programme administered by the Executive Agency for Culture, Education and Youth The general appreciation is that the current system for publishing calls for proposals works well: Information (available on is seen as an easy tool accessible to all organisations. - The main area of improvement remains the need for an accurate calendar of upcoming calls. The agency should develop a systematic, easy-to-find and reliable issuing of forecasts, saying in advance (6-12 months, rolling if possible) what would be coming up, for every single Instrument and Programme (both geographic and thematic), where opportunities for financing for cultural actors is available (including programmes outside of the culture programme). Even though Culture Action Europe welcomes significant improvements in this matter during this last period with the online publication of annual action plans and annual work programmes, the following issues could still be improved: - The publication of draft annual action plans and annual work plan for thematic and geographic programmes on the Agency and DGEAC website would enable an equitable access to information for all potential applicants, in particular for those that are not based in Brussels or which do not have an easy access to Brussels-based networks and EU institutions. In addition, Culture Action Europe s members share the following comments: - We recommend to further extend the deadline between the release of the call for proposals and the deadline for submission of concept notes. A 3-month period is generally considered as ideal as it gives applicant organisations the time to arrange the proper consultations and workshops in the lead up to preparing a proposal. - European Commission s services should not be allowed to launch calls for proposals just before holiday seasons (Summer/Christmas). If this is done, the submission deadline should be extended accordingly so as to ensure equal treatment among potential applicants. - Co-financing and contributions in kind (Art. 109 FR and Art. 172 IR): EU grants must involve co-financing, sometime quite substantially. This obligation is often challenging for actors, in particular when there is no possibility to include contributions in kind like volunteer work as part of the project manager's own contribution.

2 Question 2: should the rules be more flexible on co-financing requirements taking into account the type of actions and project managers? How could in-kind contributions best be dealt with, while adhering to the non-profit principle? Culture Action Europe members strongly supports the need for more flexibility in cofinancing requirement. More flexibility is essential if the European Commission want to support all types of Actors, including local but also European organisations that may have less capacity in terms of fundraising. Securing co-financing becomes a burden for applicants, given each organisation may have different approaches, objectives, local grant regulations, time lines, etc. Several options could be jointly foreseen to tackle the issue of flexibility in co-financing requirement: - First, the possibility to renegotiate matching requirement later during the grant implementation within the maximum percentage share allowed in the guidelines of the call for proposals. The reduction of the co-financing percentage could be requested either at the beginning if it is possible to justify the difficulty of obtaining funding from other sources for a specific programme or country; or toward the end of the grant, if the grant beneficiary is able to demonstrate that it has done everything in its power (due diligence) to secure the full co-financing but was unable to do so. This scenario would not however mean an increase in absolute amount of the EC grant. - Secondly, the need to enlarge the situations where projects can be fully granted. The EC should define a rule for smaller organisations (both local and European), defined in terms of budget size, whereby 100% funding could be foreseen. For the time being, this option is very limited and usually foreseen for calls for proposals. - The third option is the possibility to give a monetary value to in-kind donations and/or in-kind contributions. - We request the possibility to give a monetary value to in-kind donations and/or in-kind contributions. Some are an inherent part of civil society organisations ways of operating, such as using expertise from different organisations which is provided free of charge to the grant application but is part of the staff costs of the organisation that employs the expert. Other examples of in-kind contributions that organisations often benefit from include: donations of equipments / goods, free technical expertise or free services offered by private companies, etc. This should be authorised according to a number of parameters. Question 3: Should the use of lump sums, flat rates become the norm rather than the exception? Should the rules allow for costs to be covered on the basis of expected outputs? If yes, can you provide concrete examples? In general we find the detailed prior requirements not adapted to the operational reality of organizations, or the reality of cultural co-operation projects. In particular we wish to draw attention to the following: - The flat-rate system has proven to be beneficial in many cases, but is too restrictive as a sole obligatory model. Detailed budgets are appropriate in many cases. - Output base budgeting is currently too narrowly defined. Requiring detailed projections on expected audiences for events, specifics on planned travel. This is more relevant in final reporting, rather than in the applications stage. Applicants frequently have to invent fictitious detail within budget headings travel costs are an example. The requirement to forecast destination, number of trips and mode of transport cannot be supplied reasonably. - In the case of events and performances, linking budget allocation to predicted attendance and actual attendance should not be applied. - Evaluation should be based on the qualitative outcomes as well as on other criteria - Application procedures should accommodate more flexible planning at the time of making the application. - Budget simplification should be based on standardized general headings, which allow for applicants to define expenditure in sub-headings with appropriate level of details and justifications from the applicant.

3 Costs coverage based on the expected outputs is not a realistic option either. It exposes the grant beneficiaries to major disallowances if the objectives are not achieved, which is sometimes subjective and open to interpretation, and often hard to measure in arts projects. Performance based agreements are not realistic in particular if one considers: - the success of an action is not the arithmetical sum of the degree of achievement of individual outputs/results; - costs at the proposal stage are estimations and modifications can occur; - what would happen if actual outputs are higher than the expected ones. Question 4: Should the rules strictly adhere to the non-profit principle or should there be room for some flexibility in this matter? Do you have examples of good practices from other public authorities? Culture Action Europe would plead for introducing flexibility in the non profit principle. It is widely accepted that grant beneficiaries should not make a profit from EU funding. However, some flexibility should be introduced to allow any income generated by the grant activities to be used to the benefit of the grant itself. The majority of applicants for culture grants are by definition not-for-profit organisations, so do not make any profit as such. - In the case of multi-annual framework programme, organizations could be permitted to transfer of any surplus from one year to another. This is common practice in many national public authorities cf. The Scottish Executive. This could be with limited flexibility of 10% per year. - Organisations should have the capacity to build up cashflow reserves, especially as many operational grants arrive late during the course of the year. - Many national regulations require organizations to keep sufficient reserves for social costs in the case of winding up or redundancies organizations should be permitted to accrue sufficient surplus to be in order with national regulatory requirements. - Capacity to declare surplus in line with the financial rules of the country where the applicant is based should be allowed if the surplus generated can be demonstrated as coming from outside the eligible budget or from other incomes. - Interest paid on loans taken out to cover cashflow shortfalls should be included in eligible costs. Net interest accrued/paid should be eligible. - Organisations should be permitted to accrue surplus in the case that income from non EU sources and activities can be generated. - Please refer to the letter addressed to the Executive Agency for Culture and Education, attached outlining cultural organizations position on the non profit rule Question 5: What, in your view, would be the appropriate amount for low and very low value grants? - It s important to maintain a very low threshold for very low grants especially when considering potential applicants from third countries. - We recommend that flexibility on low grants be maintained with a threshold of 40,000

4 Question 6: How could the rules on operating grants be more flexible? In which way? What are your views on the duration of framework partnership agreements? - The non-profit rule is prohibitive to flexible organizational development and diversification of funding sources. - The so-called degressivity rule does not take into account long-term sustainability of organizations or the long-term relationships many NGOs have with the European Union institutions. - Grant recipients of multi-annual funding should have the possibility to apply for a renewal of the framework agreement where applicable in the year preceding the final year of the grant. For example, an organization funded in 2008, 2009 and 2010 should be able to apply for repeat funding at the end of 2009 for the period This is particularly important as decisions on grants are rarely published until the operational year of the grant has begun. This creates a high level of operational instability for organizations. Question 7: Can you give concrete examples and types of actions where the strict limitation on cascading grants became an obstacle for achieving the goal of your action? - Cultural organizations would welcome the possibility to re-distribute grant money in the form of travel grants, prizes, residencies etc., according to transparent and good governance criteria. 2 - THE COMMISSION'S HANDLING OF FINANCIAL FILES Question 8: From your experience, what alternative solutions could be proposed for prefinancing payments while safeguarding tax payers' money? - Assessments of financial capacity are designed to approve candidates eligibility for grants. If a candidate passes financial capacity criteria then no additional guarantees should be required. Question 9: What mechanism, other than pre-financing guarantee, could be explored while ensuring adequate protection of community funds? While Culture Action Europe understands the need to protect community funds, the required bank guarantees are very expensive and represent a significant administrative workload. Culture Action Europe would like to propose the following solutions on the current problem caused by bank guarantee requirements: - Remove the requirement of bank guarantee in all cases and introduce bi-annual or quarterly payments in advance - If the requirement of bank guarantee is to be maintained, then increase the thresholds significantly to at least 200,000 euros. - As DG ECHO s approach, classify (potential) beneficiaries as low, medium or high risks and request bank guarantees only for beneficiaries with certain risk profiles. - Capacity for third parties to stand, as guarantors should be made more accessible. More generally speaking, looking at the cost of bank guarantees versus risk, there is a strong opinion in NGOs community that bank guarantees are largely a waste of valuable funds, which simply feed banks who assume minimal risk. EC could consider assuming risk. In practice we do not have experience of a bank every offering a guarantee to a funded organisation except against the deposit of an equivalent amount in a blocked account, therefore rendering the guarantee unnecessary. Question 10: Based on your experience, do you think current thresholds are still adequate or should they be increased, and why? - Culture Action Europe has no experience in this area

5 Question 11: How could the application procedure for both grants and contracts be further improved? The application procedure has generally speaking improved over the last few years. The twostep procedure, such as used in EuropeAid (PADOR) first the concept note and then the complete call, could be introduced. - We support the establishment of a register of previously approved organizations. Criteria should be established on basic organizational information and financial information that can be held on a central non-public register. - Whilst the development of online applications somewhat facilitates the process, this has not improved the quality of the questions applicants are required to answer. Point 12: Other issues we would like to put forward Late payment of grants remains the main issue for many respondents. - EC should pay automatically interests for late payment rather than the beneficiary having to request it. - The design of the budget form is confusing. On the one hand, the budget headings refer to types of costs, (travel, personnel etc.), on the other they refer to activities (conferences, seminars). Therefore it is in some cases not clear which costs to put where (e.g. travel costs of experts at conferences.) We propose that the budget headings only refer to types of costs, not to activities. If there is the definite need to know what a specific activity would cost, this could be requested as additional information. - The application forms, guidelines and budget forms are often not consistent. Sometimes reference numbers are incorrect and information is even contradictory. In some cases there have even been calculation errors in the electronic forms provided. We understand that certain questions have to be answered at different places to enable the Commission to check the consistency of an application. However we request that duplicated questions be avoided as far as possible and that contradictions are strictly eliminated.