EU 101: A brief explanation of the EU structure and what is important from a development standpoint.

My previous posting dealt with issues you would need to consider when considering entering the EU market for development funding.  This post is more of an overall review on the funding options within the EU structure.  Within the last 2 years, the European Union (EU) has gone though significant changes in its internal structure with the introduction of the High Commissioner and the European External Action Committee (EEAS).  This change caused some instability, as staff responsibilities and division mandates went through multiple overhauls, and for a least a year, staff did not know what tomorrow would bring.  This insecurity still remains somewhat as the EU institutions are working on a new financial framework for 2014-2020.

Under the new structure there are 4 important institutions critical to disbursement of development aid:

1. The Council of Ministers,
2. The European Parliament (EP),
3. The European Commission (EC) and
4. The newly formed European External Action Committee (EEAS).

Organizations unfamiliar with the EU often focus on the obvious European Commission, but please do not ignore the other 3 equally important, if not more important institutions regarding development policy.

The Council of the European Union is the principal decision making institution in the EU. It is often informally called the Council of Ministers or just the Council, the name used in the treaties; it is also called Consilium. It is the more powerful of the two legislative chambers, the other being the European Parliament. The Council sets the Treaties of the European Union: a set of international treaties between the Union’s member states that sets out the constitutional basis of the EU and sets the various Development policies.  Just to make it more complex, this Council should not be confused with the European Council (an assembly of EU heads of state or government), or confused with the Council of Europe (a non-EU organization of 47 states).

European Parliament (EP): The EP approves and allocates the budget, including that of development aid of the European Commission. The official office is in Strasbourg, (France), committees are held in Brussels (Belgium) and the secretariat is located in Luxembourg.

The European Commission proposes and implements the budget approved by the European Parliament, including the budget for Development and Cooperation (EuropeAid).  They decide where and how the funding should be spent.

Set up in 2010, The European External Action Committee (EEAS) is unique and independent from other EU institutions, formed by merger of the external relation departments of the Council and the European Commission. It also has its own independent budget. Depending in your area of interest, the EEAS may be very important to your outreach plan. Organizations focused in the areas of democracy, human rights and defense should emphasize EEAS within their EU outreach strategies. The EEAS manages general foreign relations, security and defense policies and controls the Situation Centre. However, although the EEAS can prepare initiatives, member states make the final policy decisions and the Commission also plays a part in technical implementation. The EEAS has desks dedicated to all the countries and regional organizations in the world, and specialized units for democracy, human rights and defense.

The EEAS has six geographical departments (directorate) headed by a managing director. The departments divide the world into: 1) Africa, 2) Asia, 3) Americas, 4) the Middle East and Southern Neighbourhood, 5) Russia, the Eastern Neighbourhood and the Western Balkans and 6) Global and Multilateral Affairs.

Where does Development program funding come from?

It is important to note that the EU institutions are working on a new financial framework 2014-2020.   Therefore the instruments below are subject to change.

Development aid is financed directly by the EU budget (70%) as part of the financial instruments for external action and also by the European Development Fund (EDF) (30%).

EuropeAid was formed on 1 January 2011 following the merger of what was formally known as AIDCO (program implementation) and DEV (policy & program design). EuropeAid has both geographic and thematic directorates and funding mechanisms that correspond. EuropeAid funding mechanisms are divided into geographic and thematic instruments

Geographic Instruments

• Development Cooperation Instrument (DCI)
• European Neighbourhood & Partnership Instrument (ENPI)
• European Development Fund (EDF)

Thematic Instruments

• Development Cooperation Instrument (DCI)
  • Environment and Sustainable Mgmt
  • Investing in People
  • Food Security
  • Migration & Asylum
  • Others
• Food facility
• Common foreign & security policy—
• Instrument for stability
• Democracy & Human Rights Instrument (EIDHR)
• Macroeconomic Assistance
• Nuclear Safety

The Development Cooperation Instrument (DCI) covers geographic, thematic and 18 ACP sugar protocol countries. It is currently the largest financial instrument under Budget of the European Union’s Heading 4 (Global Europe) with €2.9 billion in the 2012 budget. 

The European Neighbourhood Partnership Instrument covers counties that border Europe from the Mediterranean to Eastern Europe including Russia.  The budget for 2012 is €2.3 billion.

The European Development Fund (EDF) is the main instrument for European Union (EU) aid for development cooperation in Africa, the Caribbean, and Pacific (ACP Group) countries and the Overseas Countries and Territories (OCT). Funding is provided by voluntary donations by EU member states. The EDF is subject to its own financial rules and procedures, and is managed by the European Commission (EC) and the European Investment Bank.  On average the EDF has EUR 3.78 billion annually available.

How are decisions made?

Per the 2007 – 2013 Framework, programs are implemented on the basis of thematic strategy papers and annual action programmes.  Programs are set by each country and region through Strategy Papers that are set every 5 years or so.  These National and Regional Indicative programs define development policy. The Annual Action Programmes (AAP) define the framework and description of the operations to be financed.  Written tenders for EU funding should correspond to Strategy Papers and AAPs.

Also important to note is that management of most EC external aid has been devolved to Delegations in the field.  This is often called deconcentration.  Therefore, country delegations have more say in the management of funds, they can launch country-specific calls for proposals and sign, manage and monitor grants and contracts.  However, they may not have the final decision on spending: Brussels may still be involved.

Avoiding the myriad of directorates and decision-makers in Brussels is not an option: a multi-prong approach is recommended if you want to approach the European Union for potential funds in the future.   This topic will be covered in Part 3 of this series.

European Union Funding

As a development manager at a US-based international NGO, one of the constant issues faced was how to diversify funds: get away from USAID-dependence and attract non-US funding.   Due to the politically sensitive work, and high-dollar programs, I did not focus too much time on foundation opportunities.  Rather, I looked abroad, at other bilateral funding agencies such as UK’s DfID, Sweden’s SIDA and of course the big elephant, the European Union’s Development and Cooperation – EuropeAid.

I will lay out a few things in this series:

European Funding does not come overnight, and the complexity of the financial system, reporting and eligibility issues would put many suitors off.  There are some questions you must ask yourself and be able to answer, before you apply for grants or contracts from an entity that your business is not necessarily prepared for.

Do you plan to have a EU-based office or will this be a US-based organization?

There are many different rules regarding eligibility for EU funds if you are a US organization, or if you have an office located within the EU.  Suffice to say a stand-alone EU registered organization has a lot more opportunities, as funding is still very much restricted to EU registered organizations or organizations from the beneficiary country.  Things are changing somewhat, and more global calls for proposals are available than even 3 years ago.

Do your contracts & finance teams understand the regulations for EU bids, and do you have the financial capacity to “supplement” EU funding?

Generally, EU overhead rates are a lot lower than what the US Gov will accept.  For example, the max management cost for EU is 7% of the total EU contribution.

You may also need to set up a fund to supplement EU programs, as most EU programs will withhold 20% of 1st year funding, and 10% total funds are paid after final report is accepted.  Donor may require advance/co-funding of a project.

Knowledge on compliance, regulations, and mechanisms with EU regulations to be able to accept EU funding is vital.  The last thing you want is to apply for funding, and then not be able to accept their terms or reporting requirements.

Your team will need to inform those in your organization that look for funding in the field so that they are full aware of the opportunities and caveats of approaching the EU.

The Practical Guide should be the bible for all contractual issues.

Deal with sticky issues head on.

Some decisions will need to be made between your finance, contracts & HR divisions:

• Daily rates for staff, do you have different rates for different donors? Lower overhead rates and daily employee rates for tender may be necessary for a different market.
• Policy decisions on indirect costs i.e. danger-pay for non-USG funded programs.  What happens when they are different for EU and US funded programs.
• West Bank /Gaza and Palestinian territories.  Be careful about the US restrictions on working with some groups within the region.   Even if it is with different funders, the US may deny funding of other programs if it deems you non-compliant.
• Hiring and benefit packages within EC standards
• Even such mundane issues like the required DOB and social status in EU CV templates can cause headaches for your HR team.

With full knowledge of EU regulations, a clear communications plan for your development and field staff, and a flexible organizational policy and financial system, EU funding can be obtainable.

Oct 5^th was World Teachers’ day.  As influencers, counselors, educators and tormentors, teachers played a huge role in my life.  Here is a quick synopsis from my Irish country primary school.

Sr. Olivia, my first teacher in “babies” class in primary school.  That term wasn’t meant to be derogatory as I can imagine it would be perceived now.  Sr. Olivia loved to sing, she was funny, made faces in the classroom doors and was beloved by everyone.  She made going to school enjoyable and interesting.   I was 4 yrs old.

Sr. Albert.  I remember when she broke a ruler on my friend Patrica’s hand.  She had an aggressive streak, and then lost her voice and became a bit of a diva with her microphone and speaker system in the classroom.

Sr. Consilio: more of a strict teacher.  God forbid you got the answers wrong.  But she did smile from time to time.

Mrs. Leahy:  Everyone outside of her class feared her, but she treated everyone fairly and won the respect and admiration of her class.  She was my last teacher in Primary school.

I know many teachers, some are in primary & secondary schools, others are in university or special ed.  One thing in common is that they are all extremely committed to the kids in their class.  The other commonality is that their financial reward is paltry in comparison to their influence in a young person’s life.  UNESCO celebrates this year’s World Teachers’ day by taking a stand for teachers: raising awareness of the the crucial role teachers play in building the future.

While the effectiveness of foreign aid remains up for debate, the United States recently has continued to pump around $36 billion in aid to other countries each year.  With the presidential election around the corner, Devex has a very good article on the differences of Democrats and Republicans on US Foreign Aid.

The Republican camp:

• U.S. foreign aid should serve U.S. national interests and also be based on the principles of the Millennium Challenge Corp.  Very close to Pres. Bush’s foreign policy of the early 2000’s.
• Spending would be limited.The global gag rule would be reinstated.
• Continued support for PEPFAR.
• Streamline U.S. food aid programming.
• Climate Change: absolutely not on the agenda.
• Focus on faith-based groups, not LGBT support.

The Democratic camp:

• Promote global development remains in the U.S. national interest.
• Postponed the $50 billion target but continue to increase foreign aid funds.
• Support family planning.
• Support PEPFAR and other health initiatives.
• Continue Feed the Future initiative.
• Continue support on global response to climate change.
• Promote gay rights worldwide.

Of course in the aftermath of the election, the current support for foreign aid could change: budgetary pressures, VP influences (Ryan) and future international crises all play a part.

From Devex: “Where they stand: Democrats and Republicans on U.S. foreign aid”. By Lorenzo Piccio on 10 September 2012

International Literacy Day, Sept 8^th

Literacy is a well-used indicator to measure the state of a country’s education levels.  There are many different institutions that gather data on literacy and there are many different definitions.

• UNESCO Institute for Statistics (UIS) is responsible for monitoring international literacy targets associated with Education for All (EFA) and the Millennium Development Goals (MDGs).  According to new data released by the UIS, literacy rates for adults and youth continue to rise. Women and girls are gaining ground, however they stillmake up more than 60% of the global illiterate population.
• The 2011 UN Human Development Report used literacy rates for its global development index. The figures from the report represent a mixture of data collected by the UNESCO Institute for Statistics, national self-reported data, and the UNDP’s global projection models. Counties in the African continent are noticeably prominent in the lowest rankings.
• Here in the US, the National Center for Educational Statistics released a National Assessment of Adult Literacy report in 2003. According to this report, the national direct estimates of adults lacking Basic Prose Literacy Skills (BPLS) are just over 14 percent.

Literacy is more than a basic reading ability, but rather an indication of how we use written information to function in society. Strong literacy skills are closely linked to the probability of having a good job, decent earnings, and access to training opportunities. Literacy is a human right, a tool of personal empowerment and a means for social and human development.  It brings asustainability to development and promise for the future.