A lump sum (flat-rate funding) is a method of grant disbursement in which the beneficiary receives a fixed, predetermined amount rather than a reimbursement of actual costs incurred. This model is increasingly being adopted in schemes such as Horizon Europe.

What it means in practice

In a lump sum grant, the overall project budget is broken down into specific components (such as work packages or milestones). Each component has a pre-set fixed amount that is disbursed once that specific portion of the project is completed.

As a result, the recipient:

• does not need to provide proof of actual expenditures (such as invoices or timesheets),
• avoids detailed financial reporting,
• primarily demonstrates the completion of project activities and deliverables.

Key benefits

• Reduced administrative burden – eliminates complex expenditure reporting,
• Clear, fixed budget – the amount is fixed and known in advance,
• Lower risk of errors and financial corrections – the eligibility of individual line-item expenses is not audited,
• Focus on results – evaluation is based on achieving project goals rather than individual receipts.

What to watch out for

• if a segment of the project is not fulfilled, that portion of funding may not be paid out,
• the budget must be carefully planned as early as the application stage,
• higher accountability for project management and delivering agreed outcomes.