1. Financial Support to Third Parties
PRAG Grants
Partnership-forum DEVCO R3/B6

2. Article 137 FR
1. Where implementation of an action or a work programme requires financial support to be given to third parties, the beneficiary may give such financial support provided that the following conditions are met:
(a) before awarding the grant, the authorising officer responsible has verified that the beneficiary offers adequate guarantees as regards the recovery of amounts due to the Commission;
(b) the conditions for the giving of such support are strictly defined in the grant decision or agreement between the beneficiary and the Commission, in order to avoid the exercise of discretion by the beneficiary;
(c) the amounts concerned are small, except where the financial support is the primary aim of the action.
2. Each grant decision or agreement shall provide expressly for the Commission and the Court of Auditors to exercise their powers of control, concerning documents premises and information, including that stored on electronic media, over all third parties who have received Union funds.
3. The Commission shall be empowered to adopt delegated acts in accordance with Article 210 concerning detailed rules on implementation contracts and financial support to third parties.
Implementation contracts and financial support to third parties
Focus on point a)
If the action requires financial support to be given to third parties, it may be given on condition that:
before awarding the grant, the contracting authority has verified that the grant beneficiary offers appropriate guarantees as regards the recovery of amounts due to the European Commission. This is due to the fact that the grant beneficiaries remain financially responsible vis-à-vis the contracting
authority for the correct use of the financial support.

3. Article 210 RAP
Provided the objectives or results to be obtained are sufficiently detailed in the conditions referred to in Article 137(1) of the Financial Regulation, the margin of discretion may only be considered to be exhausted if the grant decision or agreement also specifies the following:
(a) the maximum amount of financial support that can be paid to a third party which
shall not exceed EUR , save where the financial support is the primary aim
of the action, and the criteria for determining the exact amount;
(b) the different types of activity that may receive such financial support, on the basis of a fixed list;
(c) the definition of the persons or categories of persons which may receive such
financial support and the criteria to give it.

4. PRAG
i) the objectives and results to be obtained with the financial support
ii) the different types of activities eligible for financial support, on the basis of a fixed list
iii) the types of persons or categories of persons which may receive financial support
iv) the criteria for selecting these entities and giving the financial support
v) the criteria for determining the exact amount of financial support for each third entity
vi) the maximum amount which may be given
FR 137 b) Set of conditions for giving such support. These conditions need to be strictly defined in the grant contract to avoid the exercise of discretion by the grant beneficiary.
ii) Where no specific activities are supported (e.g. unconditional cash transfers to refugees to support their living or to human right defenders to support their work in general) this must also be specified. In this case, the grant beneficiary does not have to demonstrate that the financial support has been used
by the recipients of financial support for a specific purpose.
iii)As basic acts usually do not foresee restrictions on nationality and origin regarding the recipients of financial support the contracting authority has to include any such restrictions in the guidelines for applicants.
iv)Where the contracting authority wants to ensure that the beneficiary complies with certain principles and/or procedures justified by the specifics of a call (e.g. where large amounts will be redistributed through calls for proposals), this should be set forth in the guidelines for applicants. For example, the guidelines could foresee that, when launching calls for proposals for the award of financial support, beneficiaries may use their own procedures provided these procedures comply with the principles of proportionality, sound financial management, equal treatment and non-discrimination, ensure transparency with adequate publication of calls for proposals and prevent conflict of interests throughout the entire award procedure.
v) Where the contracting authority wants to ensure that the financial support should be based e.g. on costs actually incurred or comply with the no-profit-principle this needs to be specified in the guidelines for applicants.

5. 10.6 GC – FS in the Description of the action
10.6. The Description of the Action, in conformity with the relevant instructions given in this regard by the Contracting Authority, shall define the types of entities eligible for financial support and include a fixed list with the types of activity which may be eligible for financial support. The criteria for the selection of the third parties recipient of this financial support, including the criteria for determining its exact amount, shall also be specified.
GC particularly relevant art 10.6 and 10.7.
Relevant article in the SC:
If financial support is provided for in the guidelines for applicants:
[7.1.x Financial support to third parties may only be awarded in compliance with the conditions set in the Guidelines for applicants and in accordance with the criteria and conditions laid down in the Description of the Action in Annex I].
Possible additional template to be added as Annex in the Guidelines for Applicants to make sure the required conditions and details of FS are extensively developed (for example additional requirement that costs shall be actual costs incurred).
Difference between FS to third parties in a grant in direct management and indirect management (budget tasks implementation and therefore more criteria need to be met).

6. Art 10.7 of the GC Reporting
10.7. The Coordinator shall provide in its report to the Contracting Authority a comprehensive and detailed report on the award and implementation of any financial support given. These reports should provide, amongst other, information on the award procedures, on the identities of the recipient of financial support, the amount granted, the results achieved, the problems encountered and solutions found, the activities carried out as well as a timetable of the activities which still need to be carried out.

7. 3. How to implement a grant contract
Quiz FTP
True or False

8. 3. How to implement a grant contract
Question No. 1
A sub-grant is the only possible form of financial support to third parties.
true
false

9. Explanation FS can take various forms:
3. How to implement a grant contract
Explanation
FS can take various forms:
- sub-grant with (or without) award procedures
- unconditional or conditional cash transfers (e.g. to refugees)
- FR: prizes (following a contest), not used by DEVCO so far

10. 3. How to implement a grant contract
Question No. 2
The conditions for the giving of financial support must be strictly defined in the grant contract in order to avoid the exercise of discretion by the beneficiaries. The margin of discretion is deemed exhausted if the grant contract specifies the maximum amount of financial support and types of activities that may receive financial support.
true
false

11. Explanation The grant contract must generally specify:
3. How to implement a grant contract
Explanation
The grant contract must generally specify:
- the objectives and results to be obtained with FS
- the different types of activities that may receive FS, on the basis of a fixed list
- the definition of the persons or categories of persons which may receive FS
- the criteria for selecting the entities and for giving FS
- the maximum amount of FS per third party
- and the criteria for determining the exact amount

12. 3. How to implement a grant contract
Question No.3
Affiliated entities may provide financial support to third parties just like beneficiaries.
true
false

13. 3. How to implement a grant contract
Explanation
Affiliated entities participate in the design and implementation of the action: the costs they incur, including the implementation of contracts and FSTP may be eligible, if they comply with rules that apply to the beneficiary under the Grant Contract .
NOTE: Affiliated entities must satisfy the same eligibility criteria as the lead applicant and co-applicant
(PRAG 6.1.2)

14. 3. How to implement a grant contract
Question No. 4
The maximum amount of financial support that may be awarded by each beneficiary is €.
true
false

15. 3. How to implement a grant contract
Explanation
The maximum amount of FS that can be paid to a third party or several third parties shall not exceed €, save where the financial support is the primary aim of the action

16. 3. How to implement a grant contract
Question No. 5
A third party may receive more than € of financial support if the support is allocated to several "sub-grants".
true
false

17. 3. How to implement a grant contract
Explanation
- The maximum amount applies to the total FS that a third party receives under a grant
- May also be restricted to below €
- If above €: applicant has demonstrated beforehand that FS is one of the primary aims of the Action and CA accepts (or not)
- Only under old EDF FS could not be primary aim

18. 3. How to implement a grant contract
Question No. 6
Financial support to third parties is by default not subject to the rules of nationality of the underlying basic act.
true
false

19. 3. How to implement a grant contract
Explanation
The only restrictions (if any) applying to the recipients of FS are those expressly set forth in the guidelines for applicants and/or in the grant contract (Annex IV does not apply!)
FS not necessarily allowed for all calls

20. 3. How to implement a grant contract
Question No. 7
Funds that have been misused by a third party are eligible as long as the beneficiary has used best efforts to recover from the third party.
true
false

21. 3. How to implement a grant contract
Explanation
For FS, beneficiaries are fully responsible for the implementation of the action in compliance with the grant contract. If the conditions set out in the grant contract for FS are not fulfilled, the corresponding costs incurred by the beneficiaries will not be eligible.
Beneficiary does not have to recover if funds are misused, simply not eligible.

22. 3. How to implement a grant contract
Question No. 8
Before awarding the grant, the authorising officer responsible has to check that the beneficiary offers adequate guarantees as regards the recovery of amounts due to the contracting authority.
true
false

23. 3. How to implement a grant contract
Explanation
As the contracting authority will recover funds that have been unduly paid from the beneficiary, the RAO has to check if the beneficiary provides the necessary financial capacity

24. 3. How to implement a grant contract
Question No. 9
Recipients have to keep the documents necessary to demonstrate that costs incurred by them comply with the cost eligibility criteria set forth in the general conditions of the standard grant contract (Article 14 GC).
true
false

25. Explanation - No rule on record keeping for recipients of FS
3. How to implement a grant contract
Explanation
- No rule on record keeping for recipients of FS
- Required documents: case by case basis
Applicants may be invited in the Guidelines for applicants to propose the necessary documents to be kept to demonstrate that the requirements for financial support set forth in the contract have been respected.
e.g. have the supported activities taken place? do the recipients fall within the proposed categories? have the recipients been chosen in line with the agreed award procedures? Have the visibility obligations been complied with?

26. Explanation (2)
- Art GC: beneficiaries have to make sure that Art. 3, ,6 and 16 GC also apply to recipients (where relevant)
- Not all the rules valid for grants automatically apply to FS to third parties (for example art 14) therefore where the contracting authority wants to ensure that the financial support should be based e.g. on costs actually incurred or comply with the no-profit-principle this needs to be specified in the guidelines for applicants
PRAG (section 6.9.2) includes additional information!