Research for SMEs and research SME associations at a glance : the FP7 funding model.
Date: 2008-01-23
Institutions: Directorate-General for Research and Innovation
Subjects: EU financing, EU research policy, financing, group of companies, innovation, intellectual property, outsourcing, research and development, small and medium-sized enterprises

EUROPEAN COMMISSION

RESEARCh
FOR SMEs AND
AT A GLANCE

RESEARCh SME ASSOCIATIONS

The FP7 Funding Model

2007

Directorate-General for Research

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INTRODUCTION

Research for SMEs and Research for SME Associations are two dedicated 
initiatives  to  strengthen  the  innovation  capacities  of  SMEs  by  providing  the 
support they need to outsource research critical to their core business. This 
brochure  conveniently  spells  out  how  these  initiatives  are  designed,  and 
explains in plain terms how the funding model works in practice. If you are 
an  SME, this publication will aid you  in your proposal  preparation as you 
submit your application for funding. In addition to this guide, the European 
Commission’s SME TechWeb — http://ec.europa.eu/research/sme-techweb 
— hosts a user friendly spreadsheet that instantly calculates the EC’s estimated 
contribution to your project. 

FP7 contains numerous opportunities open to innovative SMEs, and the EC’s 
Directorate-General for Research wants to ensure that applying for funding is 
as easy and painless as possible.

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TABLE OF 
CONTENTS

RESEARCH FOR SME ASSOCIATIONS ...........................................p 6
p 6
Objectives 
p 6
Overall approach 
p 7
Activities in the project 
p 8
Minimum requirements for the consortium 
Recommendations for resources and duration 
p 9
Decision-making, coordination of the project and consortium agreement  p 9
p 10
Intellectual property rules 
p 10
Preparing a proposal 
p 11
The SME definition 
p 12
Calculation of the project budget 
p 15
Calculation of the EC contribution 
p 16
Distribution of the EC contribution 

RESEARCH FOR SMEs ............................................................... p 18
p 18
Objectives 
p 18
Overall approach 
p 19
Activities in the project 
p 20
Minimum requirements for the consortium 
Recommendations for resources and duration 
p 21
Decision-making, coordination of the project and consortium agreement  p 21
p 22
Intellectual property rules 
p 22
Preparing a proposal 
p 23
The SME definition 
p 24
Calculation of the project budget 
p 26
Calculation of the EC contribution 
p 27
Distribution of the EC contribution 

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RESEARCh FOR SME 
ASSOCIATIONS:

SME ASSOCIATIONS TAkING ThE SpOTLIGhT

Objectives

PrinciPle – the Overall aPPrOach

Research  for  SMEs  associations  aims  at  developing 
technical solutions to problems common to a large number 
of SMEs in specific industrial sectors or segments of the 
value chain, through research that could not be addressed 
under Research for SMEs. Projects can, for example, aim 
to develop or conform to European norms and standards, 
and  to  meet  regulatory  requirements  in  areas  such  as 
health, safety and environmental protection. Projects must 
be driven by the SME associations, which are given the 
opportunity to subcontract research to RTD performers in 
order to acquire the necessary technological knowledge 
for their members.

Projects  must 
render  clear  exploitation  potential 
and  economic  benefits  for  the  SME  members  of  the 
associations involved.

The SME associations and their members are the direct 
beneficiaries of the project: they invest in the RTD project 
and  outsource  (subcontract)  most  of  the  research  and 
demonstration activities to RTD performers, and receive in 
return the technological know-how they need.

The  relationship  between  the  SME  associations,  who 
act on behalf of their members, and the RTD performers 
under  this  programme  is  therefore  a  “customer-seller” 
relationship.  The  idea  is  to  allow  SME  associations  to 
assist their members in further developing their activities 
by buying knowledge from RTD performers, who sell their 
expertise and work. Research and development activities˙ 
undertaken  by  the  SME  associations  themselves  (and 
their  members)  with  their  own  resources  are  essentially 
focussed on initial specifications, and later, on validation 
and testing of the acquired knowledge. In this context, the 
real investment or cost incurred by the SME associations 
includes the price they pay for the know-how they wish to 
acquire on behalf of or for their members: the intellectual 
property  rights  and  knowledge  developed  during  the 
project. 

From  the  perspective  of  the  associations  and  their 
members,  but  also  for  a  positive  evaluation  of  the 
proposal, it is important that it is well verified and justified 
how  the  proposed  research  investment  addresses  the 
needs  of  large  communities  of  SMEs.  Furthermore  it  is 

 / RESEARCh FOR SMES AND RESEARCh FOR SME ASSOCIATIONS AT A GLANCE

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crucial to demonstrate how the activities for dissemination 
and use will ensure that large communities of SMEs will 
indeed benefit economically from the project results. The 
associations and their members have to keep in mind, that 
even if the level of public funding provided is substantial, 
it will never cover all the costs; shortfalls will have to be 
covered by the participating associations themselves.

It  is  important  to  note  that  Research  for  SMEs 
associations  is  a  bottom-up  scheme:  the  projects  may 
address  any  research  topic  across  the  entire  field  of 
science and technology.

activities in the PrOject

A project will typically require a mix of different activities 
to achieve its objectives. 

•

•

•

•

Research and technological development 
activities (RTD) form the core of the project with 
a major contribution from the RTD performers. SME 
associations, their members and the SMEs directly 
involved in the project focus on specifications, 
testing and validation of project results and the 
preparatory stages for further use. 
Demonstration activities (DEMO) are designed 
to prove the viability of new technologies that offer 
a potential economic advantage but which cannot 
be commercialised directly (e.g. testing of product-
like prototypes). This is the last development stage 
before products or processes enter production.
Other activities (OThER) facilitate the take-up of 
results by the SME associations and their members, 
in particular training and dissemination.
Management activities (MANAG) are a regular 
part of the project and provide an appropriate 
framework that brings together all project 
components and maintains regular communications 
with the Commission.

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MiniMuM requireMents fOr the 
cOnsOrtiuM

Projects under Research for SME associations require 
participants from the following categories.

•

•

•

At least three independent SME association/
groupings (SME-AGs), established in three 
different Member States or associated countries, 
or one European SME association/grouping. 
SME associations/groupings are legal persons, 
composed mostly of and representing the interests 
of SMEs (e.g. industrial associations, national or 
regional industrial associations and chambers of 
industry and commerce).

RTD performers: At least two RTD performers which 
must be independent from any other participant and 
which can come from any country. Examples of RTD 
performers are universities, research organisations 
and industrial companies, including research 
performing SMEs. 

In addition, Other enterprises and end-users 
(including SMEs) may participate by making a 
particular contribution to the project. They must 
also be independent from any other participant.  A 
limited number of individual SMEs (two to five) must 
participate to ensure that the results of the project 
address SME needs and can be used by a large 
number of SMEs. At least two participants must be 
SMEs (Other enterprises or end-users) established in 
two MS or AC.

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recOMMendatiOns fOr resOurces and 
duratiOn 

decisiOn-Making, cOOrdinatiOn Of the 
PrOject and cOnsOrtiuM agreeMent

The size of the consortium should typically be between 
10 and 15 participants. 
In addition, the SME end-users' group should be limited 
to 2 to 5 members. 
The  overall  budget  of  the  project  should  typically  be 
between  EUR  1.5  million  to  EUR  4.0  million  and  the 
duration of the project should normally be between 2 and 
3 years. If a project deviates from these recommendations, 
a justification is required.

The management and decision making approach of the 
project should be tailored to the real needs, in terms of 
scale and complexity. The consortium has to ensure that 
no decision can be taken against the collective interest of 
the SME associations.

The coordination of the project is a demanding and 
complex management task which requires a well qualified 
and experienced coordinator. The SME associations may 
entrust the coordination to a RTD performer or a partner 
in  the  consortium  specialised  in  professional  project 
management.  The  coordinator  carries  out  the  following 
tasks: 
•

•

•

•

•

Monitors compliance by the partners with their 
obligations;
Verifies that all partners accede to the grant 
agreement;
Receives the Community financial contribution and 
distributes it in accordance with the consortium and 
grant agreement;
Keeps records and financial accounts and informs 
the Commission of their distribution;
Acts as intermediary for efficient and correct 
communication between the participants, and 
reports regularly to the participants and to the 
Commission on the progress of the project.

Once  a  project  has  been  selected  and  negotiations 
are  finalised,  the  participants  have  to  submit  a  signed 
consortium  agreement  to  further  detail  information 
already reflected in the Technical Annex to the contract. 
It  addresses  issues  such  as  the  internal  organisation 
of  the  consortium,  the  management  of  the  Community 
financial  contribution,  and  rules  on  dissemination  and 
use, including intellectual property rights management or 
the settlement of internal disputes. 

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intellectual PrOPerty rules

PreParing a PrOPOsal 

At the proposal stage, the consortium has to provide a 
clear and adequate description of how the participants will 
organise IPR (Intellectual Property Rights) ownership and 
user rights (e.g. licences, royalties) among themselves.

The  consortium  may  decide  to  follow  the  default 
regime,  which  gives  full  ownership  of  all  project  results 
(“foreground”) and IPR to SME associations. 

SME associations have the possibility to find tailor-made 
solutions to organise the ownership of project results and 
its dissemination and use, in a way that takes into account 
the needs, interests and capabilities of the SME-AGs and 
their  members,  of  the  Other  enterprises  and  end-users 
involved  in  the  project,  as  well  as  the  RTD  performers. 
The  arrangement  should  address  transfer  of  ownership, 
licences or any other form of rights for the dissemination 
and use of results generated by the project. It has to make 
sure that SME associations are provided with all the rights 
that  are  required  for  the  intended  use  and  exploitation 
of  the  project  results  by  their  members.  In  practice,  this 
can,  for  example,  mean  that  the  RTD  performers  keep 
ownership of the entire foreground (or parts of it) and that 
the SME associations and their members acquire licences 
only. 

In exchange, the RTD performers co-invest with their own 
resources in the project. Therefore the price and payment 
modalities  agreed  between  RTD  performers  and  SME 
associations  should  reflect  the  value  of  the  intellectual 
property  rights  and  knowledge  acquired,  meaning,  for 
example, that the price of licences should be lower than 
the price for ownership of all results. 

This quick guide to Research for SME associations is 
intended to help applicants understand the principles of 
Research for SME associations. It does not supersede the 
official and legally binding documents related to the call. 
To prepare a proposal please refer to the following:
Work programme “Research for the benefit of 
SMEs”,
Guide for applicants “Research for SME associations”,
Guide to Intellectual Property Rules for FP7 projects,
Rules for the submission of proposals.

•
•
•

•

These  documents  and  additional  information  about  the 
open calls are available on the following webpage:
http://cordis.europa.eu/fp7/dc/index.cfm?fuseaction=UserSite.

CapacitiesDetailsCallPage&call_id=36  

The SME TechWeb provides a wide range of background 
information and resources for technology-oriented SMEs: 
http://ec.europa.eu/research/sme-techweb 

The network of National Contact points (NCp) for SMEs 
is the main provider of advice and individual assistance 
in all Member States and associated countries. They offer 
a wide range of services and should be the first contact 
when preparing a proposal.
You can easily find the contact details of the designated 
National Contact Points for your country:
http://cordis.europa.eu/fp7/ncp_en.html 

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the sMe definitiOn
SMEs  employ  fewer  than  250  persons  and  have  an 
annual  turnover  not  exceeding  EUR  50  million,  and/or 
an  annual  balance  sheet  total  not  exceeding  EUR  43 
million.  Additional  conditions  for  autonomy  apply.  For 
more information, see:
http://ec.europa.eu/enterprise/enterprise_policy/sme_

definition/index_en.htm 

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calculatiOn Of the PrOject budget

Proposals  will  include  a  detailed  work  plan  with  the 
different  activities  necessary  to  achieve  the  project’s 
objectives. Based on the resources which are needed to 
implement the work plan, the consortium has to set up a 
project budget.

steP 1: the budget fOr sMe assOciatiOns

SME  associations  charge  eligible  costs  under  the  various  activities  to  the  project.  The  remuneration  of  the  RTD 
performers (excl. VAT) by SME associations will be considered as eligible costs for the latter. VAT is not an eligible 
cost.
The way SME-AGs and RTD performers choose to arrange the remuneration should take into account the nature of 
the transaction, the IPR arrangements and/or the legal status of the SME-AGs, and may be based, for example, on 
invoices or grant agreements between SME-AGs and RTD performers. Each participant has also to make sure that they 
carry out the transaction and remuneration in accordance with the applicable national laws.
It is important to understand that SME associations have the possibility to charge costs incurred by its members in 
carrying out the project, directly to the project. In practice, this means that the associations can offer their members to 
contribute to the project without the obligation to become a partner in the consortium, while charging their members, 
costs as eligible costs to the project.
The following fictive example shows a possible distribution of costs for the different activities.

Budget for SME-AGs 
Activities and costs

SME-AG 1

SME-AG 2

SME-AG 3

RTD

0 000

40 000

130 000

Own RTD

40 000

30 000

10 000

Invoice RTD performers for 
subcontracted RTD

730 000

440 000

120 000

DEMO

Own DEMO

Invoice RTD performers for 
subcontracted DEMO

50 000

0

50 000

0

0

0

0

0

0

OThER

50 000

20 000

20 000

MANAGEMENT

110 000

10 000

 000

TOTAL

80 000

500 000

15 000

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steP 2: the budget fOr rtd PerfOrMers

RTD  performers  will  charge  eligible  costs  only  under  Management  activities  and  Other 
activities (including training and dissemination). Resources they use for RTD and Demonstration 
will  be  invoiced  directly  to  the  SME  associations  at  an  agreed  price  and  therefore  this 
appears in the budget of the SME associations.

Budget for RTD performers 
Activites and costs

RTD 1

RTD 2

OThER

MANAGEMENT

TOTAL

0 000

45 000

10 000

10 000

0 000

55 000

steP 3: the budget fOr Other enterPrises and end-users
(including sMes)

A limited number of individual SMEs (2-5) must participate to ensure that the results of the project address SME needs 
and can be used by a large number of SMEs. 
In  addition,  in  certain  cases  the  SME  associations  may  require  the  participation  of  additional  participants  in  the 
category Other enterprises and end-users (OTH), to make a particular contribution to the project. 
Participants under this category may also charge eligible costs under the various activities to the project, including 
direct subcontracting to the RTD performers.

Budget for Other enterprises and end-users 
Activities and costs

OTh 1
(SME)

OTh 2
(SME)

OTh 3
(SME)

OTh 4

RTD

Own RTD

Invoice RTD performers for 
subcontracted RTD

DEMO

Own DEMO

Invoice RTD performers for 
subcontracted DEMO

OThER

MANAGEMENT

TOTAL

40 000

40 000

40 000

25 000

25 000

25 000

25 000

25 000

15 000

15 000

15 000

0

20 000

20 000

20 000

25 000

20 000

20 000

20 000

25 000

0

0

0

0

0

0

0

0

2 000

2 000

2 000

2 000

2 000

2 000

2 000

52 000

RESEARCh FOR SME ASSOCIATIONS AT A GLANCE / 13

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steP 4: the tOtal budget Of the PrOject 

Together, the individual budgets form the total budget of the proposed project.

SME-AG 1

0 000

50 000

110 000

50 000

80 000

Own activites 

40 000 

0

Subcontracting

730 000

50 000

SME-AG 2

Own activites 

Subcontracting

SME-AG 3

Own activites 

Subcontracting

RTD 1

RTD 2

0

0

0

40 000

30 000

440 000

130 000

10 000

120 000

10 000

20 000

500 000

 000

20 000

15 000

10 000

0 000

0 000

10 000

45 000

55 000

OTh 1 (SME)

40 000

20 000

2 000

0

2 000

Own activites 

25 000

20 000

Subcontracting

15 000

OTh 2 (SME)

40 000

20 000

2 000

0

2 000

Own activites 

25 000

20 000

Subcontracting

15 000

OTh 3 (SME)

40 000

20 000

2 000

0

2 000

Own activites 

25 000

20 000

Subcontracting

15 000

OTh 4

25 000

25 000

2 000

0

52 000

Own activites 

25 000

25 000

Subcontracting

TOTAL

1 515 000

135 000

155 000

15 000

2 000 000

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calculatiOn Of the ec cOntributiOn 

The European community will provide the project with finan-
cial support which covers only part of the total costs. The 
SME associations will therefore have to contribute with their 
own resources to the project. The EC contribution is based 
on upper funding limits for individual activities.

•

•

Research and technological development activities: 
maximum of 50 % of the eligible costs.
However, SMEs, non-profit public bodies, 
secondary and higher education establishments, 
and research organisations may receive up to 75 %.

•

•
•

SME associations, which fulfil any of the above 
mentioned conditions, qualify for the higher funding rate.
Demonstration activities: maximum of 50 %.
Management and Other activities: maximum of 100 %.
One  important  rule  for  the  calculation  of  the  EC 
contribution applies: 
In order to achieve the aim of promoting the out-
sourcing of research and demonstration activities, 
the financial support to the project will be limited 
to 110% of the total amount of the subcontracting 
to the RTD performers (price to be invoiced by RTD 
performers to SMEs). 

RTD 
(50%/5%)

DEMO
(50%)

MANAG 
(100%)

OThER
(100%)

TOTAL

Maximum EC 
contribution

0 000

40 000

730 000

40 000

30 000

440 000

130 000

10 000

120 000

40 000

25 000

15 000

40 000

25 000

15 000

40 000

25 000

15 000

25 000

25 000

50 000

110 000

50 000

80 000

2 500

0

50 000

0

0

0

20 000

20 000

20 000

20 000

20 000

20 000

25 000

25 000

10 000

20 000

500 000

382 500

 000

20 000

15 000

124 500

10 000

10 000

2 000

2 000

2 000

2 000

0 000

45 000

0

0

0

0

0 000

55 000

2 000

0 000

55 000

42 000

2 000

42 000

2 000

42 000

52 000

2 000

partners & costs

SME-AG 1

Own activites

Subcontracting

SME-AG 2

Own activites

Subcontracting

SME-AG 3

Own activites

Subcontracting

RTD 1

RTD 2

OTh 1 (SME)

Own activites

Subcontracting

OTh 2 (SME)

Own activites

Subcontracting

OTh 3 (SME)

Own activites

Subcontracting

OTh 4

Own activites

Subcontracting

TOTAL

1 515 000

135 000

155 000

15 000

2 000 000

1 54 500

TOTAL amount of subcontracting, excl. VAT

Maximum EC contribution = 110% of subontraction to RTD performers, excl. VAT

Requsted EC contribution is the minimum of the two

1 385 000

1 523 500

1 523 500

Therefore this fictional project would receive financial support of up to EUR 1 523 500.

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distributiOn Of the ec cOntributiOn 

In the next step, the partners in the consortium have to decide how to allocate the total EC contribution among partners. 

It is important to distinguish between the distribution of costs between partners and the allocation of the EC contribution 
among  partners.  It  is  up  to  the  consortium  to  decide  upon  the  allocation  of  the  EC  contribution.  This  allows  the 
consortium to find the right balance between the individual contributions to the project (costs for own and financial 
resources) and the expected benefits from the project results.

It is important to keep in mind that the SME associations and Other enterprises and end-users must always take into 
account the remuneration of the RTD performers.
For our project example we show two possible scenarios — but keep in mind that each consortium should find a 
tailor-made solution according to individual circumstances. 

partners & costs

Total costs

EC contribution for 
each participant

Own contribution 
(in kind)

Own contribution 
(in cash)

SME-AG 1

Subcontracting

SME-AG 2

Subcontracting

SME-AG 3

Subcontracting

RTD 1

RTD 2 

OTh 1 (SME)

Subcontracting

OTh 2 (SME)

Subcontracting

OTh 3 (SME)

Subcontracting

OTh 4

Subcontracting

TOTAL

80 000

780 000

500 000

440 000

15 000

120 000

0 000

55 000

2 000

15 000

2 000

15 000

2 000

15 000

52 000

838 500

141 500

440 000

0 000

120 000

3 000

0 000

55 000

0

0

0

0

0

0

2 000

2 000

2 000

52 000

0

0

0

0

0

0

0

0

0

2 000 000

1 523 500

Scenario  1:  RTD  performers  receive  a  contribution  to 
cover their management and other costs; Other enterprises 
and end-users do not receive EC contribution. SME-AG 2 
and SME-AG 3 receive a contribution which allows them 
to cover the invoices and the remaining EC contribution 
goes to SME-AG 1.

1 / RESEARCh FOR SMES AND RESEARCh SME ASSOCIATIONS AT A GLANCE

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Scenario  2:  All  partners  receive  an  EC  contribution 
according to their share of costs in the project, with the 
exception  of  participants  OTH  1,  OTH  2  and  OTH  3, 
who  receive  a  contribution  to  cover  the  invoices  of  the 
RTD performers, and OTH 4, who does not receive an 
EC contribution.

partners & costs

Total costs

SME-AG 1

Subcontracting

SME-AG 2

Subcontracting

SME-AG 3

Subcontracting

RTD 1

RTD 2 

OTh 1 (SME)

Subcontracting

OTh 2 (SME)

Subcontracting

OTh 3 (SME)

Subcontracting

OTh 4

Subcontracting

TOTAL

EC contribution for 
each participant

Own contribution 
(in kind)

Own contribution 
(in cash)

822 321

15 

0

41 552

0 000

20 448

131 3

25 21

58 3

4 151

15 000

11 23

8 84

4 000

15 000

4 000

15 000

4 000

0

52 000

0

0

0

0

0

0

0

80 000

780 000

500 000

440 000

15 000

120 000

0 000

55 000

2 000

15 000

2 000

15 000

2 000

15 000

52 000

2 000 000

1 523 500

RESEARCh FOR SME ASSOCIATIONS AT A GLANCE / 1

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RESEARCh FOR SMES:

hELpING SMES GET A hEADSTART ON GLOBAL 
COMpETITION

Objectives

PrinciPle – the Overall aPPrOach

Research for SMEs supports small groups of innovative 
SMEs  in  solving  technological  problems  and  acquiring 
technological know-how. Projects must fit into the overall 
business and innovation needs of the SMEs, which are 
given  the  opportunity  to  subcontract  research  to  RTD 
performers in order to acquire the necessary technological 
knowledge.  Projects  must  render  clear  exploitation 
potential and economic benefits for the SMEs involved.

The SME participants are the direct beneficiaries of the 
project:  they  invest  in  the  RTD  project  and  outsource 
(subcontract)  most  of  the  research  and  demonstration 
activities  to  RTD  performers,  and  in  return  they  receive 
the technological know-how they need to develop new 
or  improve  existing  products,  systems,  processes  or 
services.

The  relationship  between  the  SMEs  and  the  RTD 
performers under this programme is therefore a “customer-
seller” relationship. The idea is to allow SMEs to further 
develop  their  activities  by  buying  knowledge  from  RTD 
performers, who sell their expertise and work. Research 
and  development  activities  undertaken  by  the  SMEs 
themselves  with  their  own  resources  are  essentially 
focused on initial specifications, and later, on validation 
and  testing  of  the  acquired  knowledge.  In  this  context, 
the real investment or cost incurred by the SMEs includes 
the price they pay for the know-how they wish to acquire: 
the intellectual property rights and knowledge developed 
during the project. 

From  an  SME  perspective,  but  also  for  a  positive 
evaluation  of  the  proposal,  it  is  important  that  how  the 
proposed research investment fits into the overall business 
strategy of the SMEs involved is well verified and justified. 
Even if the level of public funding provided is substantial, 
it will never cover all the costs; shortfalls will have to be 

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covered  by  the  participating  companies  themselves. 
Research  for  SMEs  is  not  a  suitable  instrument  to 
solve  short-term  technological  problems,  but  can  assist 
companies  in  acquiring  technological  know-how  and 
accessing international networks for their medium to long-
term business development.

It is important to note that Research for SMEs is a bottom-
up scheme: the projects may address any research topic 
across the entire field of science and technology.

activities in the PrOject

A project will typically require a mix of different activities 
to achieve its objectives.

•

•

•

•

Research and technological development 
activities (RTD) form the core of the project with a 
major contribution from the RTD performers. SMEs 
focus on specifications, testing and validation of 
project results and the preparatory stages for further 
use. 
Demonstration activities (DEMO) are designed 
to prove the viability of new technologies that offer 
a potential economic advantage but which cannot 
be commercialised directly (e.g. testing of product-
like prototypes). This is the last development stage 
before products or processes enter production.
Other activities (OThER) facilitate the take-up 
of results by the SMEs, in particular training and 
dissemination.
Management activities (MANAG) are a regular 
part of the project and provide an appropriate 
framework that brings together all project 
components and maintains regular communications 
with the Commission.

RESEARCh FOR SMES AT A GLANCE / 1

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MiniMuM requireMents fOr the 
cOnsOrtiuM

Research for SMEs projects require participants from the 
following categories.

•

•

SME participants: At least three independent SMEs, 
established in three different Member States or 
associated countries. 
RTD performers: At least two RTD performers, which 
must be independent from any other participant and 
which can come from any country. Examples of RTD 
performers are universities, research organisations 
and industrial companies, including research-
performing SMEs.

In  addition,  Other  enterprises  and  end-users  may 
participate  by  making  a  particular  contribution  to  the 
project. They must also be independent from  any other 
participant. 

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recOMMendatiOns fOr resOurces and 
duratiOn 

decisiOn-Making, cOOrdinatiOn Of
the PrOject and cOnsOrtiuM agreeMent

The size of the consortium should typically be between 
5 and 10 participants. The overall budget of the project 
should typically be between EUR 0.5 million to EUR 1.5 
million and the duration of the project should normally be 
between 1 and 2 years. If a project deviates from these 
recommendations, a justification is required. 

The management and decision-making approach of the 
project should be tailored to the real needs, in terms of 
scale and complexity. The consortium has to ensure that 
no decision can be taken against the collective interest of 
the SME participants.

The coordination of the project is a demanding and 
complex management task which requires a well qualified 
and experienced coordinator. The SME participants may 
entrust the coordination to a RTD performer or a partner in 
the consortium, who is specialised in professional project 
management.  The  coordinator  carries  out  the  following 
tasks:

•

•

•

•

•

Monitors compliance by the partners with their 
obligations;
Verifies that all partners accede to the grant 
agreement;
Receives the Community financial contribution and 
distributes it in accordance with the consortium and 
grant agreement;
Keeps records and financial accounts and informs 
the Commission of their distribution;
Acts as intermediary for efficient and correct 
communication between the participants, and 
reports regularly to the participants and to the 
Commission on the progress of the project.

Once  a  project  has  been  selected  and  negotiations 
are  finalised,  the  participants  have  to  submit  a  signed 
consortium  agreement  to  further  detail  information 
already reflected in the Technical Annex to the contract. 
It  addresses  issues  such  as  the  internal  organisation 
of  the  consortium,  the  management  of  the  Community 
financial  contribution,  and  rules  on  dissemination  and 
use, including intellectual property rights management or 
the settlement of internal disputes. 

RESEARCh FOR SMES AT A GLANCE / 21

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intellectual PrOPerty rules

PreParing a PrOPOsal 

At the proposal stage, the consortium has to provide a 
clear and adequate description of how the participants 
will  organise  IPR  (Intellectual  Property  Rights)  ownership 
and  user 
royalties)  among 
themselves.  The  consortium  may  decide  to  follow  the 
default regime, which gives full ownership of all project 
results (“foreground”) and IPR to the SMEs.

licences, 

rights 

(e.g. 

However, the consortium may reach a different agreement 
in its own best interest, as long as the SMEs are provided 
with all the rights that are required for the intended use 
and  exploitation  of  the  project  results.  In  practice,  this 
can,  for  example,  mean  that  the  RTD  performers  keep 
ownership of the entire foreground (or parts of it) and that 
the SMEs acquire licences only. 

In exchange, the RTD performers co-invest with their own 
resources in the project. Therefore the price and payment 
modalities  agreed  between  RTD  performers  and  SMEs 
should reflect the value of the intellectual property rights 
and knowledge acquired, meaning, for example, that the 
price  of  a  licence  should  be  lower  than  the  price  for 
ownership of all results. 

This  quick  guide  to  Research  for  SMEs  is  intended  to 
help  applicants  understand  the  principles  of  Research 
for SMEs. It does not supersede the official and legally 
binding  documents  related  to  the  call.  To  prepare  a 
proposal please refer to the following:

•
•
•
•

Work programme “Research for the benefit of SMEs”,
Guide for applicants “Research for SMEs”,
Guide to Intellectual Property Rules for FP7 projects,
Rules for the submission of proposals.

These  documents  and  additional  information  about  the 
open calls are available on the following webpage:
http://cordis.europa.eu/fp7/dc/index.cfm?fuseaction=UserSite.

CapacitiesDetailsCallPage&call_id=35  

The SME TechWeb provides a wide range of background 
information and resources for technology-oriented SMEs: 
http://ec.europa.eu/research/sme-techweb

The  network  of  National  Contact  points  (NCps)  for 
SMEs  is  the  main  provider  of  advice  and  individual 
assistance in all Member States and associated countries. 
They offer a wide range of services and should be the 
first point of contact when preparing a proposal.

You can easily find the contact details of the designated 
National Contact Points for your country:
http://cordis.europa.eu/fp7/ncp_en.html 

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the sMe definitiOn

SMEs  employ  fewer  than  250  persons  and  have  an 
annual  turnover  not  exceeding  EUR  50  million,  and/or 
an  annual  balance  sheet  total  not  exceeding  EUR  43 
million.  Additional  conditions  for  autonomy  apply.  For 
more information, please see:
http://ec.europa.eu/enterprise/enterprise_policy/sme_

definition/index_en.htm 

RESEARCh FOR SMES AT A GLANCE / 23

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calculatiOn Of the PrOject budget
Proposals  will  include  a  detailed  work  plan  with  the 
different  activities  necessary  to  achieve  the  project’s 
objectives. Based on the resources which are needed to 
implement the work plan, the consortium has to set up a 
project budget.

Step 1: The budget for SMEs
SME participants charge eligible costs under the various activities to the project. The payment of RTD performers’ 
invoices (excl. VAT) by SMEs will be considered as eligible costs for SMEs. VAT is not an eligible cost.
The following hypothetical example shows a possible distribution of costs for the different activities.

Budget for SMEs 
Activities and costs

RTD 

Own RTD 

Invoice RTD performers  
for subcontracted RTD

DEMO

Own DEMO

Invoice RTD performers  
for subcontracted DEMO

OThER

MANAGEMENT

TOTAL

SME 1

SME 2

SME 3

20 000

45 000

215 000

10 000

10 000

35 000

55 000

340 000

25 000

20 000

0

5 000

10 000

0 000

340 000

5 000

5 000

430 000

125 000

20 000

105 000

0

0

0

10 000

5 000

140 000

Step 2: The budget for RTD performers
RTD performers will charge eligible costs only under Management activities and Other activities (including training 
and dissemination). Resources they use for RTD and Demonstration will be invoiced directly to SME participants at an 
agreed price, and therefore this appears in the budget of SME participants.

Budget for 
RTD perfomers 
Activities and costs

RTD 1

RTD 2

OThER

0

30 000

MANAGEMENT

TOTAL

5 000

5 000

5 000

35 000

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Step 3: The budget for Other enterprises and end-users
In  certain  cases,  SME  participants  request  the  participation  of  Other  enterprises  and  end-users  (OTH)  to  make  a 
particular contribution to the project. They may also charge eligible costs under the various activities to the project.

Budget for Other enterprises 
and end-users 
Activities and costs

OTh 1

RTD 

DEMO

OThER

MANAGEMENT

TOTAL

10 000

40 000

0

0

50 000

Step 4: The total budget of the project 
Together, the individual budgets form the total budget of the proposed project.

partners & costs

RTD

DEMO

MANAG

OThER

TOTAL

SME 1

Own activities

Subcontracting

SME 2

Own activities

Subcontracting

SME 3

Own activities

Subcontracting

RTD 1

RTD 2

OTh 1

TOTAL

0 000

10 000

340 000

5 000

5 000

430 000

10 000

10 000

25 000

20 000

5 000

0

5 000

10 000

140 000

20 000

45 000

215 000

35 000

55 000

340 000

125 000

20 000

105 000

10 000

0 000

40 000

5 000

5 000

5 000

0

0

30 000

0

5 000

35 000

50 000

80 000

55 000

1 000 000

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calculatiOn Of the ec cOntributiOn 

The European Community will provide financial support 
to the project, which covers only part of the total costs. 
The  SME  participants  will  therefore  have  to  contribute 
with their own resources, in cash or in kind, to the project. 
The EC contribution is based on upper funding limits for 
individual activities.

•

•

•
•

Research and technological development activities: 
maximum of 50 % of the eligible costs.
However, for SMEs, non-profit public bodies, 
secondary and higher education establishments, 
and research organisations: a maximum of 75 %.
Demonstration activities: maximum of 50 %
Management and other activities: maximum of 100 %

One  important  rule  for  the  calculation  of  the  EC 
contribution applies: 
In order to achieve the aim of promoting the out-
sourcing of research and demonstration activities, 
financial  support  to  the  project  will  be  limited  to 
110% of the total amount of the subcontracting to 
RTD  performers  (price  to  be  invoiced  by  RTD  per-
formers to SMEs). 

partners & costs

SME 1

Own activities

Subcontracting

SME 2

Own activities

Subcontracting

SME 3

Own activities

Subcontracting

RTD 1

RTD 2

OTh 1

TOTAL

TOTAL amount of 
subcontracting, excl. VAT

Maximum EC contribution = 
110% of subcontracting to 
RTD performers, excl. VAT

Requested EC contribution 
is the minimum of the two

RTD 
[50 %/5 %]

DEMO 
[50%]

MANAG 
[100%]

OThER 
[100%]

TOTAL

Maximum EC  
contribution

20 000

10 000

0 000

10 000

340 000

20 000

45 000

10 000

215 000

35 000

25 000

5 000

5 000

430 000

318 50

55 000

20 000

340 000

5 000

0

5 000

10 000

140 000

108 50

125 000

20 000

105 000

10 000

40 000

5 000

5 000

0

0

30 000

0

5 000

35 000

50 000

5 000

35 000

25 000

0 000

5 000

80 000

55 000

1 000 000

2 500

5 000

31 500

31 500

Therefore this fictional project would receive financial support of up to EUR 731 500 

2 / RESEARCh FOR SMES AND RESEARCh SME ASSOCIATIONS AT A GLANCE

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distributiOn Of the ec cOntributiOn 

In  the  next  step,  the  partners  in  the  consortium  have  to 
decide how to allocate the total EC contribution among 
themselves. 
It  is  important  to  distinguish  between  the  distribution  of 
costs  between  partners,  and  the  allocation  of  the  EC 
contribution among partners. It is up to the consortium to 
decide  upon  the  allocation  of  the  EC  contribution.  This 
allows the consortium to find the right balance between 
the individual contributions to the project (costs for in-kind 
and financial resources) and the expected benefits from 
the project results.
For our project example we show two possible scenarios 
—  but  keep  in  mind  that  each  consortium  should 
find  a  tailor-made  solution  according  to  individual 
circumstances.
It is important to keep in mind that the SMEs must always 
take  into  account  the  payment  of  the  invoices  of  the 
RTD performers. Each participant has also to make sure 
that  they  carry  out  transactions  and  remunerations  in 
accordance with the applicable national laws. 

Scenario  1:  RTD  performers  receive  a  contribution  to 
cover  their  management  and  other  costs,  SME  2  and 
SME 3 receive a contribution which allows them to cover 
the  RTD  performers,  invoices,  and  the  remaining  EC 
contribution goes to SME 1. Participant OTH 1 does not 
receive an EC contribution.

partners & costs

Total costs

EC contribution  
for each 
participant

Own contribution 
(in kind)

Own contribution 
(in cash)

SME 1

Subcontracting

SME 2

Subcontracting

SME 3

Subcontracting

RTD 1

RTD 2

OTh 1

TOTAL

340 000

215 000

430 000

345 000

140 000

105 000

5 000

35 000

50 000

241 500

8 500

345 000

85 000

105 000

35 000

5 000

35 000

0

0

0

50 000

1 000 000

31 500

0

0

0

0

0

0

RESEARCh FOR SMES AT A GLANCE / 2

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Scenario  2:  All  partners  receive  an  EC  contribution 
according to their share of costs in the project, with the 
exception of participant OTH 1, which does not receive 
an EC contribution.

partners & costs

Total costs

SME 1

Subcontracting

SME 2

Subcontracting

SME 3

Subcontracting

RTD 1

RTD 2

OTh 1

TOTAL

EC contribution  
for each 
participant

Own contribution 
(in kind)

Own contribution 
(in cash)

21 800

8 200

0

331 100

8 00

13 00

10 800

32 200

3 850

2 50

0

1 150

8 050

50 000

0

0

0

0

340 000

215 000

430 000

345 000

140 000

105 000

5 000

35 000

50 000

1 000 000

31 500

28 / RESEARCh FOR SMES AND RESEARCh SME ASSOCIATIONS AT A GLANCE

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