
Cascade funding
Cascade funding, otherwise known as Financial Support for Third Parties, is one of the many ways in which projects are financed by European Union grant schemes. This system was launched by the European Union under the Horizon 2020 programme when it needed to set up a funding system for start-ups and small and medium-sized enterprises (SMEs). This distribution method of funding is used for the introduction and development of digital innovations in particular.
Cascade financing is a form of support where a consortium implements a larger project that has already been approved, and provides the partial tasks in this project through third parties. These consortia launch their own (mostly open) calls for proposals with their projects. Each ‘cascade’ call has its own rules, eligible project types and grant amounts. The whole project is therefore managed by the consortium whose larger project has been supported by EU funding.
Use of cascade funding
Projects financed by cascade funding are usually competitive calls, with the primary aim of helping start-ups to develop technologies, supporting the development of prototypes, experiments created by start-ups or SMEs, and involving a larger number of participants in the project. Calls from cascading funding are usually aimed at expanding the already existing capacity of a project and at encouraging experimentation. They also allow new partners to develop new features for the needs of the project and to delegate specific tasks (e.g. experiments and demonstrations) that are planned in the main project.
To make it easier to visualize cascading funding, we can give an example of an innovation project for a new technology where the entire grant goes to the company creating the technology. The latter, through a new self-announced ‘cascade’ call for smaller companies, will distribute the financial support to the end-users of the product (technology) who will thus use it, test it and develop its other components.
Overview of open cascade challenges
In addition to applying for a “big” grant, SMEs and start-ups can also apply for smaller grants in the grant schemes of individual successful consortia. The current list of open calls can be found on the European Commission’s website under calls for third parties. Many of the calls will close in the next few weeks, but some will not close until next year or 2023.
It is important to say that cascading funding schemes will also be used in the new European Union programming period 2021-2027.