3.1.2. Co-financing of actions by other partners
An action is always financed by the EU Budget or the EDF. However, other partners may co-finance the action together with the EU. These partners are essentially Member States or third donor countries, partner countries and international organisations. Private organisations, such as foundations and charities, could also provide co-financing.
Two types of co-financing should be distinguished: parallel and joint co-financing.
Parallel co-financing: the action is broken down into clearly identifiable sub-actions, each funded by a different co-financing partner. The funds of each donor are earmarked. Normally, each sub-action will be subject to the rules and procedures imposed by the donor financing that sub-action.
Joint co-financing: the total cost of the action is divided between the co-financing partners and all the funds are pooled, with the result that the source of funding for a specific activity within the action cannot be identified (no traceability). Funds of the donors are hence not earmarked. As it is virtually impossible to apply each donor's rules and procedures, the donors agree on the common rules to be applied. A jointly co-financed action is known as multi-donor action.
If the fund-managing entity is a Member State's or third donor country's agency, or an international organisation, the application of common rules implies a flexibility of the EU rules to accept the fund-managing entity's ones: the equivalence of the rules, procedures and systems of the donor is assessed ex ante in the pillar assessment (see below). Further, the EU agrees that the fund-managing entity (under indirect management or as a grant beneficiary (for grants, where co-financing is provided) applies its own rules on nationality and origin provided that they are not narrower than the EU's. The rules on nationality and origin define which procurement tenderers and grant applicants and goods and materials purchased are eligible for funding. These rules are determined in the relevant basic act, i.e. Common Implementing Rules (EU Budget basic acts), Annex IV to the Cotonou Agreement (EDF - ACP States) and the Overseas Association Decision (EDF - OCTs)). Under the EDF, ACP States preferences stipulated in Article 26 of Annex IV to the Cotonou Agreement do not have to be applied by the fund-managing entity. By way of exception, the deadline for the fund-managing entity to conclude agreements with final recipient (so-called D+3) may be extended in multi-donor actions (EDF and Budget). Also, the loss of traceability implies that the EU rules on ex-post transparency on contractors and grant beneficiaries (i.e. publication of the recipients of EU funds) cannot be applied. Instead, those of the fund-managing entity can be accepted.
With a view to harmonising the terminology used in the legal framework, the term 'joint co-financing' will cover such terms as pool funds, basket funds, multi-donor funds/actions, active or passive co-financing with Member States and multi-donor trust funds, all of which are forms of co-financing.
Joint co-financing activities should be included in the joint annual reviews, the mid-term reviews and the end-of-term reviews.