5.5 Direct funding to LA
Why putting direct funding of LA at the center of smart projects?
There are three main reasons smart projects put direct funding of LAs at the centre of their interventions:
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Direct financial support is the entry way for building the capacities of all actors at the sub-national level of governance.
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Direct funding to LAs allows the project to serve as a laboratory for innovation.
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Direct funding to LAs may help restore the link between LA autonomous action and accountability.
How channelling direct funding to LA?
There are three main options for directly channelling financial resources to LAs when using project approaches:
Call for
The call for proposals process is either managed directly by the EU delegation or by the private firm in charge of the PIIF, following an international tender and operating through programme estimates |
Direct grants
These grants are coordinated through the managing entity receiving the EU grant using a sub-grant system that allows for direct funding of LAs. |
Co-financing
When the EU delegates management of its funds to an international organisation, that entity can use its own procedures to provide direct funding to LAs. |
Each channel has pros and cons, but the latter two methods of direct award hold greater potential for supporting DLGTD than the call for proposals approach. The call for proposals is the EU “default” procedure, direct award grants can only be applied under specific circumstances and upon request of a derogation (justified by a crisis situation or a specific local context).
Whatever channel is used, however, EU delegations need to avoid creating parallel systems. Direct funding to LAs should be coordinated to the greatest extent possible through the existing local public finance system.
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