Financial capacity assessment in Horizon Europe: what to expect?

Horizon Europe grants cannot be taken for granted. Receiving a grant preparation invitation letter marks an exciting moment as it means your proposal has been selected for funding after a highly competitive process. But before you receive the funds, your organisation will undergo a series of checks and controls which may include a financial capacity assessment. However, some exceptions may apply, based on the conditions of the call, type of participant or grant amount.

Why a financial capacity assessment?

In order to successfully implement the project, applicants must have both the adequate operational and financial capacity. While the assessment of operational capacity is carried out during the evaluation of your proposal, financial capacity is checked at a later stage, normally during the grant preparation phase.

The objective is to ensure that your organisation has sufficient resources to perform the proposed tasks of your project. To that end, financial capacity is assessed on the basis of neutral financial indicators (liquidity, financial autonomy, solvency and profitability) but also considers other aspects, such as deficit and revenue in previous years and dependency on EU funding.

Financial capacity check in practice

If you must be assessed on your financial capacity, the Central Validation Service will contact you through the EU Funding & Tenders Portal to upload a set of documents including:

• Profit and loss account
• Balance sheet
• External audit report or self-declaration certifying the validity of the accounts.

As a general rule, these documents must cover the last two closed financial years.

The Central Validation Service will collect, analyse and validate the financial information included in the documents. The final decision on financial capacity will be taken later by the EU service in charge. In case the financial capacity is considered unsatisfactory, EU services may require mitigation measures.

What’s different from other checks?

Financial capacity is one of several checks that are performed during the grant preparation, such as legal entity validation, Legal Entity Appointed Representative (LEAR), or the validation of special legal status relevant to the specific call (e.g. small or medium sized enterprise – SME).

However, while other grant preparation steps are mandatory for all participants, such as a legal entity validation or LEAR appointment, the financial capacity assessment is not always required. For instance, if you are a public body, an international organisation, or the requested grant amount is equal or less than EUR 60 000, the financial capacity check is not mandatory.

If you need support to prepare for your financial check or are wondering if you will be assessed on your financial capacity, don’t hesitate to contact us at hello@getpolite.eu and we will be happy to help!