The Grant Agreement (GA) stipulates that the coordinator is obliged to distribute the payments from the EU Commission/Funding Agency “without unjustified delay”. However, this applies only if the consortium partners have not agreed otherwise in the Consortium Agreement (CA).
For example, the CA may specify that individual beneficiaries receive a larger or smaller part of the pre-financing payment than corresponds to their share in the budget or that individual beneficiaries do not receive any pre-financing payment at all. The consortium partners also often agree on a "payment plan" for transferring the pre-financing payment in several instalments (i.e. a portion of the pre-financing payment will only be transferred after a specific period of time has elapsed and/or evidence of adequate work progress has been provided). If beneficiaries do not carry out their tasks as planned the further payments will be retained.
The CA often provides that the amounts paid to the individual beneficiaries may not exceed the share allocated to them in the current version of the budget (Please note: This share does not necessarily correspond to that stated in Annex 2 of the GA, since not all budget transfers require an amendment). Any surplus remaining at the time of the balance payment may be distributed among the beneficiaries who have spent more than their allocated share of the budget.
Most CAs stipulate that financial matters must be decided by a specially appointed body. It is also possible, however, to include a clause on how surplus should be allocated at the end of the project in the CA.
The following non-binding suggested wording for such an agreement has been kindly provided to us by Salzburg Research Forschungsgesellschaft:
A Party that spends more than its allocated share of the budget as set out in the Consortium Plan will be funded as follows:
- Funding in accordance with its duly eligible costs up to their allocated share of budget will be reimbursed in full.
- Funding in accordance with its duly eligible costs exceeding the allocated share of budget will be reimbursed proportionally on condition that such funds are available at the end of the project (e.g. budget not spent by other partners).
Such reimbursement will be calculated as follows:
a. If the total amount of budget overspending is lower than the total amount of budget not spent the individual budget overspendings will be funded in full.
b. If the total amount of budget overspending exceeds the total amount of budget not spent the redistribution will be calculated using the following formula: Total amount of budget not spent / total amount of budget overspending = percentage of individual budget overspending that will be paid to partner. Any other mode of calculation requires a majority decision of the General Assembly.
The CA may also contain a separate allocation key for the entire EU grant. This means that the allocation of the grant within the consortium is different from the costs declared by the individual beneficiaries and approved by the EU Commission/funding agency.
Since the consortium is given substantial flexibility in this respect, it is in the partners' own interest to accurately examine the financial provisions in the CA prior to signing.