Expert InsightWhat Makes FSTP Convincing in an EU Proposal

Author: Andreas Aron, Project Manager Innovation Financing

 

Financial Support to Third Parties (FSTP), often referred to as cascade funding, can be a powerful way to bring new actors into an EU-funded project. It can open the door for start-ups, SMEs and other organisations to test solutions, contribute complementary technologies or help bring project results closer to the market.

But from a proposal-writing perspective, there is one important point to keep in mind:

FSTP is not simply an extra funding mechanism added to a project. It is, in many ways, a small funding programme within the project itself.

That means it needs a clear purpose, the right expertise, sufficient resources, strong outreach channels and credible management structures from the very beginning.

A convincing FSTP approach therefore answers three questions particularly well: Why are third parties needed? How will you reach the right ones? And can the consortium realistically manage the mechanism?

Here are five aspects we consider particularly important when designing FSTP for an EU proposal.

1. Start with the role FSTP plays in the project

Before thinking about the call procedure, funding amounts or selection criteria, start with a more fundamental question:

Why does this project need third parties at all?

There should be a clear strategic reason.

Third parties might, for example, help validate a solution in different environments, accelerate its uptake, introduce it into new application areas or develop complementary technologies that strengthen the project's overall results.

Once that purpose is clear, many other decisions become easier.

Who should receive the funding? What should they do? What results should they deliver? And how will those results contribute to the project's wider objectives and expected impact?

The strongest FSTP concepts do not treat cascade funding as an isolated activity. They make it part of the project's intervention and impact logic from the start.

2. One broad call is not always the best solution

It can be tempting to design one large FSTP call covering several objectives. But in some projects, several focused calls can be more effective.

Imagine, for example, that a project develops a new technology.

One FSTP call might target organisations interested in testing and validating the solution in real-world settings. Another could support companies developing a complementary technology that adds functionality or extends the solution into another application area.

If a project combines several technology streams, separate calls may also help address each stream more precisely.

The advantage is clarity.

Each call can then have its own target group, objectives and expected results while still contributing to the overall project strategy.

The question should therefore not be: How many calls should we have?

It should be:

What structure best supports what we are trying to achieve?

3. Design the mechanism before the project starts

A convincing proposal should already show that the consortium has thought through how the FSTP scheme will actually work.

That includes practical questions such as:

• Who is eligible to apply?
• Which activities can be funded?
• How much funding can each third party receive?
• How will applications be evaluated?
• What outputs or results are expected?
• How will third parties be contracted and monitored?

A maximum contribution of €60,000 per third party is common, but the amount should always reflect the purpose of the call.

Sometimes it may be more effective to provide smaller grants to a larger number of organisations. If the aim is to involve many SMEs in validating a solution, for example, broader participation could be more valuable than supporting only a few beneficiaries with larger amounts.

The funding must, however, remain realistic for the activities expected.

It is also important to think through the full operational process: from outreach and application to evaluation, contracting, implementation, monitoring and payment.

Independent evaluation, transparent procedures, equal treatment and appropriate handling of conflicts of interest are not details to address later. They are part of what makes the FSTP approach credible in the proposal.

4. Do not underestimate outreach

A well-designed call is only useful if the right organisations hear about it.

This is one of the areas that can easily be underestimated during proposal development.

If a consortium plans to fund start-ups, SMEs, technology providers, cities or other specific actors, it should be able to demonstrate how it will reach those communities.

Which networks already connect the consortium to potential applicants? Which clusters, industry associations, regional ecosystems or innovation communities can help promote the call? Which consortium partners have established relationships with the target groups?

Strong outreach is not simply a communication task at the end of the process. It is part of the design of the FSTP mechanism.

The expected number of applications should also be realistic. A competitive scheme depends on attracting a sufficiently large and relevant pool of applicants.

This is why partners with strong connections to the target ecosystem can make an important contribution to an FSTP-based project.

5. Give FSTP clear ownership – and enough resources

Running an FSTP scheme requires significant operational capacity.

The responsible partner may need to prepare the calls, communicate with potential applicants, manage questions, coordinate the evaluation process, organise contracting, oversee financial processes, monitor third-party activities and keep the mechanism aligned with the wider project.

That workload should not be underestimated.

We therefore normally recommend giving FSTP clear ownership within the consortium and, in many cases, a dedicated work package.

In lump-sum projects, it can also make sense to structure FSTP activities across more than one work package – for example, to reflect different calls or implementation phases.

The exact structure will depend on the project. What matters is that the proposal shows that the consortium has both the expertise and capacity to implement the mechanism properly.

The key takeaway

If applicants remember only one thing about FSTP, it should be this:

Design it as part of the project's strategy, not as an add-on.

A convincing FSTP mechanism is closely linked to the core objectives of the project, reaches the right third parties and is backed by a consortium that has the resources, networks and expertise to implement it.

If those three elements are credible, the individual calls, funding conditions and procedures can then be designed around them.

And that is often the difference between an FSTP mechanism that simply fulfils a requirement and one that genuinely strengthens the proposal.

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