
Opinion
10th Framework Programme
Industrial policy boosted by investment in innovation

Susana Garayoa
Head of Institutional Relations in Brussels
European projects
A model that challenges efficiency and flexibility
EU Finance Knowledge Area Leader
In the vast universe of European public funding, few transformations have been as significant—and controversial—as the introduction of the lump sum model. This payment system provides a pre-defined grant amount, based on an initial budget estimate, in exchange for carrying out specific technical activities. Though its name may seem unfamiliar to many, this system is set to redefine the relationship between European institutions and the beneficiaries of flagship programmes like Horizon Europe or the Innovation Fund. By addressing the budgeting issues of previous R&D framework programmes, caused by the reimbursement-based funding of real costs, the lump sum aims to revolutionise the way innovation is financed. This shift has sparked intense debate about its meaning and real impact. For some, it represents a solution to the historical bureaucratic inefficiencies and lack of experience in managing European funds, while others see it as an additional hurdle, especially for small and medium-sized enterprises (SMEs).
Lump sum-based funding represents nothing less than a change in the rules of the game. Instead of requiring beneficiaries to account for every cent spent—through invoices, payrolls, and contracts, an exhaustive and often tedious exercise—the focus shifts to delivering specific, predefined results in the form of milestones or work packages. This paradigm shift places attention where it truly matters: on what is achieved, rather than how funds are spent. For a European Union rightly focused on efficiency and impact, the lump sum appears, at first glance, to be the administrative panacea: less paperwork, fewer audits, and more results.
However, this model did not emerge overnight. In the final years of Horizon 2020, the European Commission began piloting lump sum projects. The inherent bureaucracy of real-cost funding programmes had become the proverbial elephant in the room: endless hours spent justifying expenditures, uncertainty over administrative errors, and audits that often hindered rather than helped. Although functional, the system was exhausting for both beneficiaries and the institutions tasked with oversight. Brussels recognised the need for change, and the lump sum emerged as the great promise of simplification.
Simplification, however, does not mean lowering the bar. On the contrary, the lump sum has brought with it a much greater demand for meticulous planning. While beneficiaries previously had some leeway to introduce budgetary modifications on the go and justify delays with a degree of flexibility, the room for manoeuvre is now far narrower. From the outset, beneficiaries must precisely define their work packages and project milestones, and provide estimates that closely reflect the actual costs of each category—both for each beneficiary (and any affiliated entity, if applicable) and for each work package. These estimates must align with the beneficiaries’ standard practices, be reasonable and not excessive, clearly justified, and necessary for the proposed activities. Each stage of the plan must be realistic, achievable, and justifiable, as payments depend strictly on their completion.
Cost estimates also enable the creation of a detailed breakdown of lump sum shares per work package and per participant. Excellence in execution is no longer enough; excellence in planning, perfectly aligned with the estimated costs and proposed activities, is now equally critical. This not only facilitates the achievement of milestones but also enhances project value by ensuring that every resource is used efficiently and effectively.
This higher level of demand presents a significant challenge for small businesses and startups, which have historically been major beneficiaries of European funds. While these organisations are often agile and innovative, they frequently lack the human resources and expertise needed to structure such detailed proposals. Poor initial planning can leave companies with no room to manoeuvre, even if they excel in execution but failed to anticipate real-world risks and obstacles. For these organisations, the lump sum is not just an alternative system but an additional barrier that could limit access to funding.
The case of the Innovation Fund is a prime example. This programme, one of the pillars of the European Green Deal, allocates billions of euros to projects aimed at decarbonisation and clean technologies. Here, where projects are extraordinarily large and complex, the lump sum faces its greatest test. Europe’s energy transition demands an unprecedented level of innovation but also flawless execution. In this context, the success of milestone-based funding will depend on clear rules of the game, flexibility when necessary, and adequate support for beneficiaries.
It is no coincidence that the lump sum has sparked scepticism. Critics fear that the lack of flexibility in result-based funding could penalise projects that, while technically sound, encounter unforeseen difficulties. In research and innovation, obstacles are not the exception but the norm. An unexpected technical problem, regulatory changes, or the emergence of a market competitor can necessitate on-the-fly adjustments to the work plan. The risk with the lump sum is that any deviation might jeopardise not only the project’s success but also its funding.
And yet, the future seems set. The European Commission has firmly embraced this model, and all indications are that it will play an increasingly prominent role in R&D&I funding programmes. The logic is hard to refute: if Europe wants to be more efficient, it must measure success by the results achieved, not by the meticulousness with which expenses are justified.
The challenge now lies in finding balance. The lump sum cannot become a tool that excludes less experienced organisations or penalises the flexibility essential to such a dynamic process as innovation. The solution partially lies in strengthening support for beneficiaries. Companies need assistance in structuring strong proposals, anticipating risks, and defining achievable milestones. In this regard, the role of specialised consultancies like Zabala Innovation and funding bodies themselves will be critical to democratising access to funding.
In the long term, the lump sum has the potential to transform the relationship between Europe and its innovators. If successfully implemented, it can reduce bureaucracy, free up resources, and enable beneficiaries to focus on what truly matters: innovation. The road, however, will not be easy. It will require adjustments, flexibility, and above all, trust that this system can deliver on its promise. Because ultimately, the goal has not changed: Europe needs projects capable of addressing the great challenges of today and tomorrow. If the lump sum is the tool to achieve this more efficiently, then so be it.
Brussels Office
EU Finance Knowledge Area Leader
Opinion
10th Framework Programme
Susana Garayoa
Head of Institutional Relations in Brussels
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Opinion
10th Framework Programme
Susana Garayoa
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