Funding rules

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Applicant type, size and activity

You may be eligible to receive different rates of funding depending upon the type and size of your organisation and the activity that you are doing in the project. For competition funding purposes, you will apply as:

Business

The Technology Strategy Board provides funding for projects which are led by business. The principal objective of the support is to stimulate R&D and innovation activity, encouraging businesses to develop innovative products, processes and services with future commercial potential.
 
Business applicants, which includes industry and all other organisations that do not qualify as Research Organisations, or Charities/Public Sector Organisations undertaking research, will be able to have their individual eligible costs funded at the following rates:
 
Applicant Business Size Fundamental Research Pre-industrial Feasibility Studies Industrial Research Pre-experimental Feasibility Studies Experimental development
Micro/Small 100% 75% 60% 50% 35%
Medium 100% 75% 60% 50% 35%
Large 100% 65% 50% 40% 25%
 
Please see section 2 below for research category definitions.
 
The definition of micro, small and medium-sized enterprises (SMEs)  used by the Technology Strategy Board is contained in the European Commission Recommendation of 6 May 2003 concerning the definition of micro, small and medium-sized enterprises (2003/361/EC), which took effect on 1 January 2005 or any subsequent definition provided by the Commission.  This can be found at:
 
 
"large enterprise" means any enterprise that is not an SME.

Research Organisations

When referring to 'Research Organisations' (RO) the Technology Strategy Board uses the definition from the Community Framework for State aid for Research and Development and innovation -
 
"Research Organisation" means an entity, such as a university or research institute, irrespective of its legal status (organised under public or private law) or way of financing whose primary goal is to conduct fundamental research, industrial research or experimental development and to disseminate their results by way of teaching, publication or technology transfer.
 
All profits must be reinvested in these activities, the dissemination of their results or teaching. Undertakings that can exert influence upon such an organisation, for instance in their capacity of shareholders or members of the organisation, shall enjoy no preferential access to the research capacities of such an organisation or to the research results generated by it.
 
Research Organisations undertaking non-economic activity will be funded as follows:
 
For Technology Strategy Board competitions this means:
  • Universities (HEIs)
  • Non-profit distributing Research and Technology Organisations (RTO) including Catapults
  • Public Sector Research Establishments (PSRE) and
  • Research Council Institutes
where the organisations meet the definition of RO as stated above and where they are undertaking non-economic activities.
  • Universities – 80% of Full Economic Costs (as determined via the JeS application system described below)
  • Non profit distributing Research and Technology Organisations, Catapults, Public Sector Research Establishments and Research Council Institutes – 100% funding of eligible costs
To receive funding at this level, Research Organisations will have to be non-profit distributing, and ensure they disseminate the outputs of their research relating to the project, and state in the application how they are going to do this.
 
Please note: Where Research Organisations are engaged in economic activity as part of the project, they should apply and will be treated as business enterprises and the aid granting conditions will be the same as those applicable to business.
 
See State Aid section for information on economic and non-economic activity.

Full Economic Cost (FEC) and Joint Electronic System (JeS)

Universities and other Research Organisations registered on the JeS system submit their costs through this system using an approved research costing methodology. The costs submitted and approved through the JeS system should then be input onto the specific Application and Finance Forms for submission into the competition.
 
Please note:
  • Universities and other HEIs must continue to use the JeS system
  • Other Research Organisations registered on JeS should continue to use that system where they are applying as academic institutions for non-economic project activity and where their costs are required to be submitted in that format
  • For JeS applicants, only 80% of the FEC is allowable as eligible costs. The remaining 20% is not considered to be a contribution from the Research Organisation to the project and should not show on the finance table or forms.
Research costs submitted through the JeS system must be in line with the business and research participation rules.

Public sector organisation or charity doing research activity

There are a number of charities and public sector organisations, for example, medical research charities, NHS Trusts and Local Authorities, that may work with business in delivering innovation. They do this by providing knowledge, skills and resources.
Where such organisations are not undertaking economic activity or obtaining economic benefit from a project, and where they are not giving economic benefit to other project participants, they are able to apply for 100% grant funding for their eligible project costs if they:
  • are undertaking research (see below), and
  • meet the requirements for dissemination of their project results, and
  • state in the application how they are going to do this.
Please note:
  • research activity may be taken to be experimental or theoretical work or critical investigation aimed at the acquisition of new knowledge and skills or to research a new understanding for developing new products, processes or services;
  • where charities and public sector organisations are undertaking research within a project, their eligible costs should be included in the total research organisation involvement for the purposes of meeting the participation rules;
  • the organisation should also ensure that it is not applying for grant towards costs, for example, overheads, that are already funded by the public purse as part of its normal activities or as part of another public-funded project.  

See State Aid section for information on economic and non-economic activity.

 

Category of Research & Development

The category of R&D activity will be specified in the competition scope, as explained in the competition brief and the guidance document. In applying to the competition, your project should fall within this specified category of research and development.

The Technology Strategy Board supports the following categories of research and development:

Fundamental Research

This means experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundations of phenomena and observable facts, without any direct practical application or use in view.
 
Industrial Research
 
This means the planned research or critical investigation aimed at the acquisition of new knowledge and skills for developing new products, processes or services or for bringing about a significant improvement in existing products, processes or services. It comprises the creation of component parts to complex systems, which is necessary for the industrial research, notably for generic technology validation, to the exclusion of prototypes.

Experimental Development

This means the acquiring, combining, shaping and using of existing scientific, technological, business and other relevant knowledge and skills for the purpose of producing plans and arrangements or designs for new, altered or improved products, processes or services.
 
These may also include, for instance, other activities aiming at the conceptual definition, planning and documentation of new products, processes or services. The activities may comprise producing drafts, drawings, plans and other documentation, provided that they are not intended for commercial use.
 
The development of commercially-usable prototypes and pilot projects is also included where the prototype is necessarily the final commercial product and where it is too expensive to produce for it to be used only for demonstration and validation purposes. In case of a subsequent commercial use of demonstration or pilot projects, any revenue generated from such use must be deducted from the eligible costs.
 
The experimental production and testing of products, processes and services shall also be eligible, provided that these cannot be used or transformed to be used in industrial applications or commercially.
 
Experimental development shall not include routine or periodic changes made to products, production lines, manufacturing processes, existing services and other operations in progress, even if such changes may represent improvements.
 
Technical Feasibility Studies
 
The objective of technical feasibility study research is to assist business to work, either individually or collaboratively, with other industrial or research organisations on Research & Development that requires an initial study prior to embarking on a subsequent and larger R&D project. These studies are considered to be further away from the market than the project itself, and therefore higher aid intensities apply.
 
The Technology Strategy Board supports two categories of Feasibility Study research:
  • Preparatory to Industrial Research
  • Preparatory to Experimental Development
The competition scope will define the requirements for the feasibility study, including the area of research and development as well as the expected size and duration of the study.

Projects that span more than one category of research

The competition scope will specify in which category of R&D the project must sit.  However, there may be a need for some projects to include work packages which represent more than one category of research. For example, some may include a range of Industrial Research and Experimental Development. In this case, you should identify:
  1. where the project predominantly sits (ie where more than 50% of the eligible costs will be incurred), and
  2. where the other work packages in the project fit within each category of research, and
  3. that the project still meets the scope of the competition, and
  4. apply for a grant commensurate with the aggregated work packages.
You should then:
  1. Identify the main category, e.g. Industrial Research, where the project predominantly sits in the appropriate field on the first page of the Application Form
  2. Calculate the appropriate level of funding for the total project. e.g. for a large company if 80% of a project is Industrial Research and 20% Experimental Development, as defined by work package costs, the total eligible level of funding is 45% of total eligible project costs (80% @ 50% = 40%, and 20% @ 25% = 5%)
The Assessors will judge if the project fits the category of R&D, and that the work packages are correctly assigned across the research and development categories.
 
If the Assessors judge that they are not correctly assigned, the Technology Strategy Board will adjust the grant percentage accordingly.
 
It is rarely the case that a single project contains all three categories of research.

Participation in a project

Business

The Technology Strategy Board provides funding for research and development which is business-led. The principal objective of the support is to stimulate innovation activity, encouraging businesses to work with other commercial and research organisations to develop innovative products, processes and services with future commercial potential.
 
To support this business focus, the Technology Strategy Board aims to optimise the level of funding business receives whilst recognising the importance of the contribution of research organisations to R&D projects. We require, therefore, the following levels of participation:
 
  • at least 70% of the total eligible project costs are incurred by commercial organisations and
  • a maximum of 30% of total eligible project costs is available to research participants. Where there is more than one research participant, this maximum will be shared between them.
Please note: The above participation levels will not be varied unless otherwise specified in the competition scope.
 
Businesses may choose themselves to fund directly any higher levels of research organisation involvement in projects, but those additional costs:
  • will be considered to be outside the project;
  • should not be included as eligible cost in the project for either participant;
  • should not appear on any finance forms; and
  • will not attract grant.
Please note: If a business applicant is participating in a project but is not requesting a grant, then:
  • their role and level of involvement should be described in the relevant sections of the application form as for other participants;
  • their name should appear in the list of participants in the finance summary table with their total costs but with zero grant requested;
  • they do not need to complete a detailed finance form;
  • if the application is successful, they will not be included in the grant offer letter but the project description, costs and associated grants for other participants will be made public to comply with government requirements on transparency of public funding. 

Research Organisations

The level of Research Organisation involvement will be for the project consortium to agree according to the scope of the competition, and the specific project aims and objectives. However, it must also fit with the business share of eligible costs as outlined above.
 
Where the Technology Strategy Board is specifically targeting transfer of knowledge from the research base to business, the level of total research organisation participation will be increased to 50% of the total project cost.
 
In this case, the funding levels will be specified in the competition documentation at the outset and above.
 
Please note:
  • The level of total research participation is set at a maximum of 30% of total eligible project costs
  • If there is more than one Research Organisation (University, non-profit distributing RTO, Catapult, PSRE, Research Council Institute, charity or public sector organisation undertaking research) in the project, the maximum 30% of eligible costs must be shared between them
  • Eligible costs for JeS registered applicants means 80% of FEC

Public sector organisations and charities

Where charities and public sector organisations are doing research within a project, the work and dissemination plan should be described in the application and the eligible costs counted towards the research organisation participation levels set for the competition.
 
Research activity may be taken to be experimental or theoretical work or critical investigation aimed at the acquisition of new knowledge and skills or to research a new understanding for developing new products, processes or services.

Funding Example

The table below provides an example of the cost sharing aspect from a consortium perspective:
 
Example: Industrial Research; Total Cost of Project £750,000; 3 Partners (1 large business, 1 SME, 1 University)
 
  Total eligible project cost Maximum % of eligible costs which may be claimed as grant TSB Grant Project contribution
Large Business 350,000 50% 175,000 175,000
SME 200,000 60% 120,000 80,000
Research organisation 200,000* 100% 200,000 nil**
Total 750,000   495,000 255,000
 
*80% FEC.
** 20% FEC not to be shown as a contribution

Collaboration

The objective of Collaborative Research & Development is to assist industry, research communities and other organisations to work together on Research & Development projects in strategically important areas of science, engineering and technology, from which successful new products, processes and services can emerge.
 
In all collaborative projects there must be:
  • at least two collaborators;
  • business-led consortium, which may involve both business and research participants; and
  • evidence of effective collaboration.
Effective collaboration can be evidenced, for example, through the distribution of work packages and added value created in the project from working together.
 
Typically, this would mean that no one partner would have more than 70% of the eligible costs, and we would expect to see the structure and rationale of the collaboration described in the application.
 
Please note: The lead partner in a project must be a grant recipient.

State Aid

State aid as defined by the European Community (EC) Treaty is financial aid that has the following characteristics: It
  • is granted by the State or through State resources;
  • favours certain undertakings or production of certain goods;
  • distorts or threatens to distort competition;
  • affects trade between Member States of the Community.
The Treaty allows a certain level of State aid within an approved framework, associated funding limits and criteria.
 
The Technology Strategy Board operates competitions within an approved scheme. This can be found at: http://www.innovateuk.org/deliveringinnovation/state-aid.ashx
 
You are responsible for making sure that we are given the correct information that allows us to award grants within our scheme.
 
If there is a breach of State aid, the European Commission would require the project participants to repay any grant received, including interest, above that which was due. In a consortium project, the Collaboration Agreement should make provision for this possibility.

Non-economic activity

In most cases, the primary activities of Research Organisations are normally of a non-economic character, notably:
  • education for more and better skilled human resources;
  • the conduct of independent R&D for more knowledge and better understanding, including collaborative R&D; 
  • dissemination of research results.
Technology transfer activities (licensing, spin-off creation or other forms of management of knowledge created by the research organisation) are of non-economic character if these activities are of an internal nature and all income from these activities is reinvested in the primary activities of the Research Organisation.
 
Where public sector organisations and charities are involved in a project, they will need to demonstrate that the work they will be doing qualifies as non-economic research activity to be treated as a research participant.
 
State aid, as defined by the European Community (EC) Treaty, is financial aid that has the following characteristics: It
  • is granted by the State or through State resources;
  • favours certain undertakings or production of certain goods;
  • distorts or threatens to distort competition;
  • affects trade between Member States of the Community.
The Treaty allows a certain level of State aid within an approved framework, associated funding limits and criteria. The Technology Strategy Board operates competitions within an approved scheme. This can be found at: http://www.innovateuk.org/deliveringinnovation/state-aid.ashx
 
You are responsible for making sure that we are given the correct information that allows us to award grants within our scheme.
 
If there is a breach of State aid, the European Commission would require the project participants to repay any grant received, including interest, above that which was due. In a consortium project, the Collaboration Agreement should make provision for this possibility.

Economic activity

Where non profit distributing RTOs, Catapults, Public Sector Research Establishments, Research Council Institutes, charities and public sector organisations are involved in a project where they are undertaking economic activities, they will need to do so as an industrial partner.
 
They will, therefore, be required to provide the appropriate match funding for the project or will need to act as a sub-contractor. This would include, for example, projects where they do not plan to disseminate their results, or where they are not planning to reinvest the income from these activities in the primary activities of the research organisation.
 
RTOs operating on a ‘profit distributing' basis will always be considered to be an industry partner.
 
The Community Framework for State aid for Research and Development and Innovation makes the following reference to the public funding of economic activities -
 
‘If research organisations or other not-for-profit innovation intermediaries (for example, technology centres, incubators, chambers of commerce) perform economic activities, such as renting out infrastructures, supplying services to business undertakings or performing contract research, this should be done on normal market conditions, and public funding of these economic activities will generally entail State aid'.
 
Please note:
  • Where Research or other organisations are undertaking both economic and non-economic activity, in order to avoid cross-subsidisation of the economic activity, the two kinds of activities and their costs and funding must be clearly separated.
  • If the work that a Research or other organisation is proposing to undertake in a project does not meet the definition of non-economic activity, then it should apply as an industry partner.

Dissemination

Where Research and other organisations are involved in Technology Strategy Board projects and funded for undertaking non-economic research activity, we will expect to see evidence of plans to disseminate their project outputs over a reasonable timescale. This means we will look for evidence in the application and, for funded projects, during and following the conclusion of the research and development.
 
The requirement for dissemination of research results intends to secure wider benefit from the higher level of public support given to those research participants.
 
There are various ways dissemination of project results may occur, for example producing a case study, speaking at a conference, publishing academic papers, open access repositories (databases where raw research data can be accessed by anyone), or through free or open source software and so on.
 
The specific nature and timing of the dissemination will be determined by the project, but must be described in the application and developed throughout the project if successful in gaining funding.