#In summary [1] How does the conditional grant work in the FENG grant funding competitions?

We begin by discussing one of the key innovations: the mechanism known as the conditional grant, which will be available for investment projects.

Conditional grant – a new form of support in the FENG program

By observing the evolution of EU funds, it becomes evident that there is a consistent shift away from providing grant support for traditional investment projects. Instead, there is a growing emphasis on promoting innovation and enhancing the competitiveness of enterprises through R&D efforts. The introduction of conditional grants in the FENG program aligns seamlessly with this ongoing trend.

 

How does the conditional grant work?

First and foremost, the conditional grant is specifically applicable to the Innovation Implementation module within the FENG program. This grant provides an opportunity under which funding can be obtained for the production infrastructure used to commercialize the outcomes of R&D work, such as new products, services, or processes in the market.

The conditional grant combines elements of non-repayable assistance with repayable aid. This represents a notable departure difference from the previous approach, where we exclusively encountered entirely non-refundable instruments, such as the POIR 3.2.1 Research for the Market competition.

The conditional grant mechanism entails the division of each awarded grant into two parts: a non-refundable portion and a reimbursable portion.

 

Summary

The introduction of the conditional subsidy mechanism clearly establishes the direction that EU funding for investment projects will take. Investment itself is no longer the sole objective. The primary focus now lies in achieving the desired effect, which is defined by successfully implementing innovation in the market and measured by the resulting revenue generated. Investment grants have acquired an additional role: aside from providing financial support, they also serve as incentives to facilitate effective commercialization, enhance sales activities, and consequently, enhance the financial performance of companies.

 

Practical Implementation of a Conditional Grant – An Example

To illustrate the mechanisms of the FENG Conditional Grant, let’s consider a hypothetical project that has been awarded a grant:

In the case of projects implemented by a large enterprise, a 30% subsidy is guaranteed to be non-refundable, while the remaining 70% may or may not be refundable. The reimbursement amount is contingent upon the revenue achieved.

 

Let’s consider an example of a subsidy amounting to PLN 10 million.

Out of this total, PLN 3 million is guaranteed to be non-refundable.

The remaining PLN 7 million is considered as the reimbursable portion and is used in the calculation to determine the reimbursement amount. This calculation involves using the ratio R, which is derived from the formula R = (total revenue / reimbursable portion * 100%) – 100%.

 

In a pessimistic scenario where the company fails to successfully implement the project, the maximum amount that may need to be returned is PLN 7 million. The amount that needs to be returned decreases as the company achieves higher revenue from implementation.

The rules regarding the conditional grant will be specified in the grant agreements, enabling entrepreneurs to understand how their revenue affects the reimbursement amount, allowing them to minimize it as much as possible.