Following the first competitive project selection in the current program period: what is hindering the participation of NGOs? (analysis)
A brief summary of this analysis can be found here.
The approval of projects under the first ‘grant’ procedure of the Education Program for the upcoming program period, ‘Promoting intercultural education through culture, science and sport’, has almost been finalized. The lists of approved projects for the first two deadlines have been published, and the projects submitted for the third (and last) deadline are undergoing evaluation. A few questions stand out, and these would probably apply not only to this procedure but also to other competitive project selection procedures, unless the Managing Authority and the Ministry of Finance make corresponding changes.
- Low interest in applying (the number of projects submitted barely covers or does not even cover the entire budget of the operation approved by the Monitoring Committee);
- the possibility of approving projects of low quality (directly linked to the previous one);
- the lack of a sufficient number of applications from kindergartens and a number of other features are already present in this first competition.
Particularly noteworthy is the low number of projects submitted by NGOs: Prima facie this is very unusual (especially in view of the limited number of options for NGOs and their pronounced interest in Erasmus, CERV and other programs managed by the European Commission) and, at the same time, fully expected in view of the major obstacles set at national level. These features were also evident from the low interest in the operations funded by the Education and Human Resources Development Program under the first call for Integrated Territorial Investments (ITIs). It is evident that there are systemic problems that will accompany most of the forthcoming “grant” procedures funded under the Education Program and the Human Resources Development Program. This may prove to be a serious challenge for the implementation of both programs. Even if it could be easily ‘compensated’ by allocating more resources to the so-called ‘systemic projects’ (i.e. large projects implemented by institutions, e.g. the Ministry of Education and Science), the probability remains that for the third programming period these programs will not contribute to the capacity development of civil society organisations and civil society as a whole. What is the reason for this and what can the Managing Authorities do?
‘Strengthening intercultural education through culture, science and sport’: What does the procedure show?
Operation BG05SFPR001-1.004 “Promoting intercultural education through culture, science and sport” was the first competitive selection procedure for projects under the Education Program 2021-2027. The total amount of the grant under the procedure is BGN 31 123 577, with three application deadlines. Schools, kindergartens, municipalities, NGOs were eligible to apply under the procedure. What are the results from the first and second deadlines?
- ‘Low’ interest from potential beneficiaries: when the competition was first announced, the interest was very high as expected – for years there had been no ‘grant schemes’ under the operational program. This interest quickly waned once potential applicants familiarized themselves with the conditions of the competition. Only 50 beneficiaries applied for the first deadline, of which 4 dropped out at the level of “administrative compliance” and all the remaining 46 were approved. In fact, the approved projects were only in the amount of half the value of the operation – BGN 17 542 012,60. There was even weaker interest in participation for the second deadline: 23 beneficiaries applied, 4 dropped out due to administrative non-compliance, 19 were approved for an amount of 7.4 million BGN. Information on the applicants for the third deadline (January 2025) has not yet been published, but it is unlikely that there will be a “breakthrough”, and the more immediate question is whether there are enough applications to exhaust the budget for the whole operation.
This is a ‘startling difference’ compared to the first programming period (2007-2013) when there were over 400 applications for similar operations. For example, the budget for the ‘Educational Integration…’ operation was doubled due to the high level of interest. Even in the second programming period (2014-2020), interest in the few announced grant procedures was significantly higher, especially before the Managing Authority and the Ministry of Finance introduced the restriction on the application of deminimis to NGO projects. The difference is equally striking when compared with competitive selection procedures for projects under the programs managed centrally by Brussels: for example, in most of the CERV competitions, the number of organizations applying is so high that the approval rate barely exceeds 6-7%.
2. The quality of some of the submitted projects is too controversial: in fact, this feature is directly linked to the previous one. All projects which passed the administrative compliance of the first and second final application deadlines were approved. Some of them were awarded only 55, 56, 57 points in the technical and financial evaluation. This is an insultingly low score, especially as compared to competitions centralized in Brussels, where often even 90 points are insufficient. I do not state that the latter option is desirable – it is normal for the percentage of approved projects to be sufficiently high not to discourage potential beneficiaries. But setting the barrier too low is equally undesirable;
3. It is noteworthy that there is a lack of applications/low number of applications from two groups of beneficiaries – kindergartens and NGOs. For the first two deadlines, the result showed:
| Beneficiaries | Submitted projects | Projects approved |
| municipalities | 38 | 36 |
| Schools | 25 | 21 |
| Kindergartens | 3 | 3 |
| NGOs | 6 | 4 |
| Local initiative groups | 1 | 1 |
The reasons for the ‘low interest’ for the two mentioned groups are probably quite different Kindergartens, especially those teaching children from vulnerable groups, have a comparatively small number of children. For example, the Order of the Minister of Education on the allocation of funds for work with vulnerable groups from 2024 shows that only 4 kindergartens have more than 300 children, and only one of them has more than 400. That is, the vast majority of kindergartens with concentrations of vulnerable groups (490) educate small numbers of children. Either a budget is allocated to them on a centralized principle by the respective municipality, or their delegated budget is low. In both cases, the possibility of applying under European programs (where “working capital” is also required while waiting for the verification of reported activities and costs). Not to mention that the capacity of kindergartens to manage projects is significantly lower than the capacity of schools, which have been applying delegated budgets since 2008.
The situation with NGOs is substantially different, as are the reasons for their non-participation.
NGOs: a guide to the barriers to their participation
Consciously or not, the Managing Authorities of the ESF co-financed programs, as well as the Ministry of Finance, have in the last few years (especially in the last two programming periods, the current and the previous one) established themselves as innovators (even at EU level) in creating obstacles to the participation of NGOs in the use of EU funds.
At the European level, it is the European Social Fund, which by definition invests in people, which supports the participation of civil society organizations. I, and many other colleagues, have repeatedly criticized the ESF for the relatively low percentage of investment in NGO capacity: in particular, against the background of the European Economic Area (EEA) Financial Mechanism and the Swiss contribution. However, one of the strengths of the ESF Regulation is the prominent place it gives to CSOs (in the last two programming periods their position has been similar to that of social partners – trade unions and employers) and the opportunities it provides for investment in this capacity, as well as for equal participation of NGOs in the use of ESF funds. The big ‘problem’ is that these opportunities are not compulsory, but are mandated by the Governing Bodies. It is unlikely that officials in the European Commission could have imagined how ‘creative’ their national counterparts in the 27 Member States can be in utilizing and especially in not utilizing the opportunities provided.
I would like to point out that CSOs in Bulgaria are no different than those in other member states and have an objective interest in applying with projects that are relevant to their objectives. The ‘lack of interest’ in ‘Strengthening intercultural education…’ and in other competitive project selection procedures is not due to lack of capacity or lack of interest. As mentioned above, there was such an interest during the first program period and at the beginning of the second program period, and it was high. Even at present, a lot of Bulgarian organizations apply in the competitions announced under the centralized (Brussels-managed) programs of the European Commission, despite the huge competition.
In recent years, CERV has also funded ‘re-grant’ through Bulgarian operators (Open Society Institute, Bulgarian Fund for Women, FRGI), and there has been an extremely high interest on the part of Bulgarian NGOs. The same applies to the competitions announced under the EEA Financial Mechanism and the Swiss contribution.
It may seem paradoxical, but it is a fact: NGOs are looking for opportunities to apply for projects, but they are not taking advantage of the Education Program (and the HRDP). Why is that so, and who are the barriers to civic participation?
Deminimis: how civic participation is restricted due to lack of political courage
We have repeatedly explained how serious an obstacle the application of the ‘state aid/ deminimis’ regime is for CSOs. During the first programming period, it was not implemented. In the second period, the OPSESG (Operational Program ‘Science and Education for Smart Growth’) initially did not apply it, but after 2018 began to impose a deminimis regime on NGO projects. This is a barrier that limits the participation of large and medium-sized organizations. It allows an organization to implement a project of up to EUR 200 000 (currently EUR 300,000) within 3 years. Given that this is even less than the upper limit of an OPSESG/Education Program and HRDP project, the latter means that an organization can implement a project for 3 years.
The State aid regime is imposed by the European Commission solely to prevent interference in purely economic activities and to avoid distortion of the economic market. At EU level, education projects are not subject to this regime. In Bulgaria, this regime is applied extremely restrictively even with respect to activities that are not economic and for which there is no market. As a result, the participation of civil society organizations in the use of EU funds is effectively limited: it is enough for an organization to win a project worth BGN 391 000 (currently BGN 585 000) and then not be able to apply for another project or be a partner in one for three years. As there are not many operational organizations, this limitation leads to the failure of entire competitive project selection procedures due to the lack of a sufficient number of applicants.
Obviously, there is no market for activities such as prevention of early marriages, campaigning in the most marginalized groups, etc. The application of “deminimis” to them is absurd, but has been a fact since the second program period.
As a participant in the Monitoring Committee of OPSESG and currently of the Education Program, I have repeatedly raised this issue. The representatives of the European Commission in the Committee have always taken the position that the imposition of a state aid regime on projects for vulnerable groups (for which there is obviously no market) is completely unjustified and the other member states have found a way to avoid it. The problem is that, ultimately, the responsibility lies with the Governing Bodies and they should not expect a “letter from Brussels” with specific instructions. Besides the Managing Authorities, the Ministry of Finance, which participates in all Monitoring Committees, agrees on all the Election Operation Criteria and has always insisted on the application of ‘state aid’, has a say in the decision. Ultimately, it is also the responsibility of the politicians – ministers and deputy prime ministers – who have the power to impose this regime on an operation.
The lack of political courage to take responsibility for such an important issue that limits citizen participation is obvious. There is probably a minimal risk that the funds of an operation that does not implement deminimis will not be verified, but this very limited risk is worth taking – both to secure NGO participation and to avoid the failure of entire procedures. The easiest solution is to apply deminimis to all grant procedures: this is safe, though inefficient. The politicians in charge of the use of European funds act like the plumber who, in order to stop the water on floor X, stops the water on the whole block. That way there are no leaks, even though there is no water…
In the current programming period, the managing authority of the Education Program has started to apply a more elegant approach: it defines as deminimis not the full values of the projects, but only those costs that are for the staff and operational costs of the respective NGO, while all other funds used after a transparent and competitive selection procedure for contractors are not considered state aid. Thus, most of the expenditure on individual projects is not construed as deminimis. The solution is not universal, since it avoids the politically bold interpretation that in the operations in question there is no market and no market distortion. It is also not used by the HRDP and other programs. In any event, “state aid/deminimis” remains a restriction on the participation of civil society organizations, which will lead to the failure of competitive procedures for projects. This, in turn, will be followed by rhetoric about the low capacity of civil society organisations and the need for European funds to be used exclusively by institutions and municipalities (the latter are not subject to the demimis).
The lack of advance payment: a strong barrier for all
The current program period has marked a new ‘high’ in the placing of obstacles to NGO participation. In the previous decade and a half, organizations could count on receiving a 20% advance on a successful project. It is obvious that this is insufficient and cannot even remotely match the centralized programs (which typically provide an advance of 80%). After 2022, even a modest 20% advance seems implausible if the lead beneficiary is an NGO. Let’s see now how many organizations have the courage to participate despite the lack of advance payment…
In fact, there is no change in any of the European regulations. In the past and currently, the managing authorities of the ESF+ programs can grant an advance of 20% without violating any regulation. The difference lies in an important detail, fully implemented at national level. In previous years, the Managing Authorities required a ‘Promissory Note’ for the amount of the advance from approved beneficiaries. At present, the Managing Authority of the Education Program does not recognize such an option. Only the bank guarantee and the insurance of the advance value are accepted as collateral. It is self-evident that if an organization has the amount of the advance at its disposal, it does not need to provide a bank guarantee (the latter is linked to additional fees and costs), but would prefer to work without an advance only through interim payments against the costs incurred.
The reason for the non-recognition of the Promissory notes relates to the need for the MA to seek the transferred funds through the Bulgarian courts. It is noteworthy that our institutions prefer not to resort to the justice system. The fact is that in the vast majority of cases of promissory notes, the organizations diligently carry out the activities of the project concerned and the advance granted is quickly accounted for. It is also a fact that there have been a small number of cases where this was not the case and the MA had to resort to civil procedure to collect the advances made. It turns out that in these cases the promissory note is not a sufficient reason for the MA to immediately receive the amount transferred, but “only” provides the institution with a writ of execution and the need for additional efforts to collect the payment.
Guided by the well-known principle that, if there is a flea in the mattress, it is better to burn the whole mattress, MAs prefer to completely reject the option of an advance in the case of an NGO beneficiary. Such a guarantee is not required from beneficiaries with a budget. A bank guarantee or insurance is a much easier way for the institution to recover the advance. However, they are completely meaningless for beneficiaries, as explained above Thus, in practice, they have to choose whether to work without an advance, to take out a loan or to find another way to secure the necessary funds for the first weeks of project implementation. Or not to apply as the lead beneficiary, but to be partners of municipalities or schools, which will receive an advance without problems and in case of good will (which is not mandatory for these geographic areas) can also provide an advance to the NGO partner. My observations are that most organizations prefer this option. Center Amalipe’s experience from the implementation of partner projects under previous operations (e.g. ‘Socio-economic integration…’) shows that many municipalities are reliable partners and others – not that reliable. (We have had cases where municipalities have delayed for months already verified payments and received a tranche from the operational program under the pretext that ‘we are experiencing difficulties at the moment…’).
Difficulties in collecting advances have been experienced by all donors. For example, during the pandemic, many organizations went bankrupt, including those that received an institutional grant from the European Commission. It has started (and presumably continues, probably without much success) to seek its revenues through the prosecutor and the judiciary, but has not changed the practice of transferring 80% of the advance under CERV and other programs. The idea of the Bulgarian MAs guaranteeing the advances transferred, while essentially not transferring advances, is Bulgaria’s contribution to the development of civil society. This is a specific “shock therapy” for CSOs – only the strongest will survive. Milton Friedman, Jeffrey Sachs and Leszek Balcerowicz (the fathers of ‘shock therapy’) can be proud of their followers in Bulgaria. The problem is that if this approach stabilises the economy (albeit at a heavy price, especially for workers), in the social sphere, and in particular in civil society organisations, it is likely to have very unfavourable consequences.
It is obvious that political will is needed to overcome this barrier as well. In practice, no regulatory changes are needed, only a decision to continue the practice of previous years despite the inevitable risks.
Looking ahead
The involvement of civil society organizations in the use of EU funds is imperative both for the development of civil society and for the successful implementation of (operational) programs and the achievement of their objectives. Currently, there are a number of obstacles in this direction. Two of them, the application of deminimis to distinctly non-economic NGO projects and the rejection of the possibility to grant advances through “promissory notes”, limit and reduce to a minimum the possibility for NGOs to be beneficiaries under the current and forthcoming competitive project selection procedures. Overcoming them requires political will and a willingness to take minimal risks for the sake of civil society development. It is certainly a risk worth taking!
Author: Deyan Kolev, deyan_kolev@yahoo.com
President of Center Amalipe and member of the Education Program Committee
Photo by Nopparuj Lamaikul on Unsplash