NGO FPA

Financing Modalities

Depending on the category of the subject and the type of the Action to be financed, the Financial Regulation sets different working methods, known as “financing or budget management modalities”. At this regard, we can distinguish:

  • Direct / Indirect management modalities;
  • Co-Financing - Multi-donor / full financing modalities.


Direct and Indirect Management

When the Commission implements the action using the direct management modality, it directly performs all the budget-implementation tasks. In this case, ECHO defines the procedures to be used and signs and manages the contracts with the organizations receiving the grants.

Otherwise, the Commission may decide to use the indirect management modality by entrusting budget-implementation tasks to a UN Agency or to an International Organisation. In this case, the entrusted organisation becomes a Commission delegatee and has the responsibility of implementing EU resources through the launch of calls for tenders and calls for proposals, it can award contracts and grants, carry out payments, etc.

In order to become a delegatee, the interested IO /UN Agency should pass through the so called Pillars Review, an ex ante assessment involving the following areas:

- Internal control
- Accounting
- External Audit
- Award of Grants
- Procurement
- Financial Instruments
- Sub-delegation

Whether UN/IOs are entrusted of budget implementation tasks, they must respect the Principle of Equivalence. This means they have to guarantee the same level of protection of EU financial interests that the Commission would guarantee if it were implementing the tasks by itself, following its own rules and procedures.


Co-financing/Multi-donor and Full financing

When establishing the rate of financing for the Action, the Commission takes into account the urgency of the Action, the availability of other donors and any other relevant circumstances, having due regard to the respect of the core humanitarian principles. On the basis of these considerations, the Commission may decide to finance the Action in part or in full. The defined amount will be reported in the Article 3.2 of the Specific Grant Agreement

partial financing

In this case, the action is financed by several donors and/or financed partially by the partner's own funds. All the funds are pooled together in a way that the source of funding for a specific activity is not identifiable (funds are not earmarked).

This financing modality is defined, as Co-Financing, whether the Action is implemented by the NGOs Partners and, as Multidonor, whether the signatory of the contract is a UN/IOs.

The funds that contribute to the action are listed in the section 10.3 of the Single Form and in case of contributions from other donors, more details have to be provided in the section 10.6.

Please note that contributions in-kind made by other donors (such as volunteers, goods, equipment received for free) may not be considered as co-financing.

Full financing (the exception)

ECHO may finance the entire cost of the action in presence of one of the following circumstances:

- the Action is urgent;
- there is no availability of other donors ;
- the Action is considered as a priority by ECHO

In case of request for full financing, the Partner must be able to duly justify the reasons in section 10.4. of the Single Form.


Pre-financing

RELATED FAQs

To know more, see also the FAQs nr. 5

As a general rule, 30 calendar days following the entry into force of the Agreement, ECHO will pay a first pre-financing equivalent to the 80% of the total amount of its contribution.

In case ECHO is late with the payment, the rule concerning the late payment interest will apply.

Different pre-financing rates can be applied by ECHO taking into account the specificities of the action, e.g.:

  • the duration of the action;
  • the difficult operating contexts, where there is a risk that the Action can be suspended or terminated (in order to allow the re-allocation of the un-spent amounts);
  • the past performance of the partner in similar contexts;
  • in case of partners with a financial threshold to limit the risks incurred by ECHO.

In these cases, ECHO may provide 50% (followed by a second pre-financing payment amounting to 30%) or a different configuration.

In general, the partner is informed directly with the Agreement at the Article 5. Furthermore, the partner is informed of its risk assessment status in APPEL, and thus may expect that in case of a high risk rating the level of pre-financing may be adjusted.

Further pre-financing request

When the pre-financing rate at contracting stage is not 80%, the partner can request a second pre-financing as soon as it is in position to declare that 70% of the amount received with the first pre-financing has been consumed.

The additional pre-financing request can be done in APPEL from the section “upload pre-financing request”; from here, the partner should download the template for the second pre-financing request. Once the request has been completed it has to be uploaded it in the same APPEL section and can be submitted to ECHO (here you can find more information).

The Commission will pay the new pre-financing instalment within 30 calendar days from the date of receipt of the request for a further pre-financing payment.

Interests generated by pre-financing

Please note that the partners do not have to reimburse the interest generated by the pre-financing. It can keep the interest and pledge to use them for humanitarian aid purpose.

flow of communication concernig the payments

Here you can find a table summarizing the flow of communication concernig the payments of the Action