Support systems for new activities in rural areas
Part 2 - Individual services
Grants and finance
How to use this guide & Table of Contents
Grant management is actually an extremely
complex and skillful activity.
Speed, flexibility and the effectiveness of
LEADER groups in this area is what
distinguishes them from more remote agencies
and establishes their credibility with
the local population.
Common problems and bottlenecks
Recommendations and guidelines (*)
- In certain cases, grant giving can become the sole reason for being of
LEADER groups. The group looks for a niche that is not covered by other
agencies (based on size or geographical coverage) and simply concentrates
on doling out grants to as many projects as possible.
- In many rural areas, it may be a priority to develop methods of financial
engineering that meet the specific problems of new activities:
- formulae for applying seed, start-up and development capital for
initiatives with no funds;
- other methods of matching capital outlays to project income (leasing,
- systems for mobilising local savings (1).
low or no interest loans, which are sponsored by a local mentor.
Some agencies have created risk capital funds with or without financial
partners. Even if relatively modest, these funds can become levers for
other investors and credit organisations.
- Each group has to engineer a balance of funding projects with short-term
quantifiable results and more risky, proactive services directed at
priority groups and sectors (2).
- As with other support services, such as animation and training, financial
support must be coordinated and integrated into the rest of the support
strategy. In other words, it is no use funding projects run by people who
have been inadequately trained and have no idea or means of marketing their
- Short-term quantifiable criteria, such as the immediate impact on job and
private investment leverage, take overwhelming precedence over more complex
variables such as the demonstration and multiplier effects on the local
- The initiatives most likely to produce short-term outputs are those with a
certain amount of resources and experience. This means that there is a
tendency to neglect projects proposed by disadvantaged groups of the
- A contradiction can appear between dedicating a large amount of resources
to animating projects among disadvantaged groups or project promoters with
no funds of their own, and communities where there is no mechanism for
dealing with their lack of personal capital with which to match grants.
- The criteria for selecting projects and allocating grants have little in
common with the strategic priorities of the business plan.
(*) The ways of using the Structural Funds in these various cases are
explained in the Official Journal of the European Communities (OJ L 146 of 5
(1) In France, for example, the "Plates-formes d'Initiative Locales" -
saving funds - lend to local people and projects at zero-interest.
(2) According to the BICs, they would have to turn down between 50 and 90%
of potentially viable projects if they did not have access to some form of
N.B.: The dossier "From strategy to action: project selection" (LEADER
European Observatory / AEIDL, 1998) gives examples of financial support
mechanisms in the context of LEADER.