The Strategy Design
What is the minimum content of the LDS ?
Financial plan of the strategy
Money matters
Marjorie Deroi from the French Managing Authority (and LsC) points out the need for LDS managers to properly understand their financial responsibilities
Financial Plan
The financial plan would normally address three main elements:
- The proposed overall budget for the LDS.
- A description of the sources from which LAG activities are to be funded i.e.
- the EAFRD and any other CSF funds1 together with their national public co-financing;
- funding which the LAG or project promoters themselves have to raise and which are neither CSF nor national public co-financing.
- The financial tables for the LDS profiling the expected expenditure from all sources over the full period of the programme and specifically including the LAG running and animation costs.
Proposed budget
In preparing the LDS it is important that the LAG be pragmatic and bear in mind the likely overall scale of the available budget including EU, national public co-finance and available match funding. In order to maintain stakeholders’ commitment it is important to avoid being overambitious and artificially raising expectations. LDS proposals should therefore be realistic and proportionate to the available LEADER budget (whether derived from the MA or on the basis of informed assumptions) and the local ability to match fund. Where the LAG selection and budgetary allocation is a competitive process based on the quality of the LDS a realistic and robust budget projection is essential.
Funding sources
EU Funding
After 2013 there will be two major options for the EU funding of LDS:
- A Member State/region can decide to support strategies funded by one fund only
- A Member States can decide to use the opportunities provided for CLLD and offer a flexible support that can combine funding from several Funds into a single strategy in an integrated way.
When multiple Funds are possible the choice to opt for a strategy funded by one or several Funds will be made by the LAGs themselves. This should take into account the broader scope of possibilities opened by the integration of funding but also the higher level of complexity in the implementation of this type of strategy.
National Co-finance
Normal practice is that EU Funds made available to LAGs will be co-financed by a national public contribution at a rate specified in the relevant Regulation.
Match Funding
Approaches to raising match funding and the levels that may be anticipated will vary considerably by Member State and RDP. Funds in addition to EAFRD and national public co-financing will be required to support project and LAG implementation costs. These may come from local public sources or from private sources.
LAGs should identify potential sources of match funding and incorporate estimates in the LDS funding tables. The anticipated average intervention rate should be specified. These funding estimates should be justified in the accompanying text and, where possible, by formal commitments on the part of funding partners (whilst accepting that in some cases much of the match funding will come forward on a project-by-project basis). The experience of the financial crisis effects in the current programing period suggest that some form of sensitivity analysis of the effects of any shortfall may be worthwhile.
It is important to note that any public co-finance or match funding at whatever level contributes to the total permissible public contribution which must not exceed the maximum level of public aid intensity as set out in the RDR2.
Keep lines of communication open
Marjorie Deroi from the French Managing Authority (and LsC) talks about the importance for a successful LDS of maintaining an on-going dialogue between LEADER groups and funding authorities.
Running and animation costs
LAGs, when drafting their Local Development Strategies, should be able to express their preference as regards the lead Fund to support animation and running costs where a Member State/region decides to apply this simplification option.
Financial tables
Managing authorities are likely to provide pro-forma financial tables to be completed in conjunction with the LDS; these will be consistent with their programme(s) level financial tables. The following guidance sets out some common considerations which are likely to arise.
A profile of expected expenditure, allocated by year (at least) over the programme period should be prepared. This should be done on the basis of a best estimate of LAG and project development activity, and LAG staffing, administration and running costs. Best practice would suggest that you should prepare a draft operational budget for the programming period as the basis for estimating LAG staffing, animation, administration and running costs. N.b. this specific profile is likely to see higher costs in the early years and must be managed so that this is no greater than 25% by the end of the programming period.
Internal or external factors that might affect the funding profile over the years should be identified and addressed. An internal factor in the early years might be higher costs associated with capacity building and developing project activity, peaks in project submissions may occur e.g. due to periodic calls for applications or publicity actions. There may then be specific considerations in later years associated with preparing for programme closure or succession. External factors might, for example, include opportunities for complementary activities around other programmes or events, all these factors suggest that a flat profile dividing funds equally between periods is unrealistic.
The LDS implementation arrangements should then clearly set out the main financial management responsibilities, financial circuits and lines of accountability.
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1In the case of multi-fund strategies the financial plan should include the planned allocation of each EU fund.
2ref maximum rates governed by the Rural Development Regulation EC 2011/0282 (COD)