Access to funding: Practical tools for urban change

Cities face challenges accessing funding in order to implement their policies, projects, and sustainable urban development strategies. Accessing funding today often means blending public, private and philanthropic funds, each governed by their own rules, timelines, and institutional cultures. Cities are comfortable applying for grants from Cohesion Policy funds, but less so combining Cohesion Policy funds with other funding sources, especially if they are small or medium-sized cities, which implies less capacity and human resources.

The urgency of these challenges is underlined by a growing investment gap. The European Central Bank (ECB) estimates that achieving the EU’s 2030 climate and energy targets will require an additional €477 billion per year in green investment on top of current spending levels^[1].  Similarly, the Institute for Climate Economics (I4CE) identifies a European climate investment deficit of around €406 billion annually, with current investments covering only about half of what is needed.^[2] As major public instruments such as NextGenerationEU begin to phase out, the ECB warns of a looming public funding gap from 2027 onward.

The EUI Forward-Looking Survey (2024)[3] highlighted cities’ difficulties in combining funding sources and engaging private or philanthropic capital, and the Urban Innovative Actions study Bridging the Gap (2024)[4] mapped innovative financial instruments emerging across European cities. Both found that cities across Europe - especially smaller ones - face four common challenges:

• Combining multiple funding sources;
• Engaging private and philanthropic investment;
• Preparing strong, aligned applications for Cohesion Policy funds; and
• Aligning local priorities with EU and national funding frameworks.

Capacity is needed not only to handle large budgets but the variated and rich spectrum of funding opportunities for local authorities at the national and European level. There are many working hypotheses about the barriers cities face to unlocking access to finance. One is that in the past, project-based grant cycles rewarded short-term piloting instead of long-term financial planning and replication of ‘what works’. Another is that local authorities often lack the structures, staff, and governance tools required to design multi-year pipelines that mix grants, loans, guarantees, and private or community finance. A third is that where such mechanisms exist, they are vulnerable to disruption by local and national political cycles and funding strategies are either never fully formed or abandoned too quickly.

City success stories note that financial innovation depends on institutional readiness: examples such as Oradea (RO) , Rotterdam (NL), and Burgas (BG) show that cities able to plan multi-year pipelines, manage and communicate credible governance frameworks attract diverse partners. Innovative financial instruments multiply impact by enabling the same euro to be invested again and again using revolving funds that invest revenues into the next project in the pipeline. Another insight was that finance follows when cities know what they want. Cities that articulate a clear vision grounded in the public and social goods they want to deliver are better positioned to align investors and funding sources. Finally, capacity remains a decisive constraint. Even where resources exist, many municipalities lack staff trained in finance, risk assessment, or impact measurement.

There is a new perspective on the role of cities when they treat finance as an enabler of policy rather than an administrative process. This can mean that in the next Multiyear Funding Framework, Cohesion Policy and EUI support may not lie solely in creating innovative financial instruments but in building the local capacity capable of operating them. The report that follows this introduction distils cross-cutting lessons on how cities can use innovative financial instruments to access grants, loans, and private investment while keeping a mission of public purpose and accountability.

[1] European Central Bank (2025), Economic Bulletin, Issue 1/2025: Green investment needs in the EU and their funding. Available from: Green investment needs in the EU and their funding

[2] Institute for Climate Economics (I4CE) (2024), European Climate Investment Deficit Report: An Investment Pathway for Europe’s Future. Available from: European-Climate-Investment-Deficit-report-An-investment-pathway-for-Europe-future_V1.pdf

[3] https://portico.urban-initiative.eu/european-urban-initiative/understanding-urban-priorities-across-europe-forward-looking-survey

[4] https://portico.urban-initiative.eu/uia/bridging-gap-exploring-innovative-financing-schemes-european-cities-6707

1.1 Relevance of the topic, related challenges of cities

Cities across Europe share a common challenge: how to mobilise different funding sources for strategic investment while keeping long-term control over their development agenda and the public benefits those investments are meant to deliver. Oradea (RO) and Rotterdam (NL)–The Hague (NL) provide two complementary experiences that show how local governments can align public and private capital, use finance as a lever for growth, and institutionalise investment capacity.

Oradea (RO), a medium-sized city of just over 200,000 inhabitants, has built a resilient business ecosystem through industrial parks, incubators and intermodal hubs. Its journey is particularly relevant for cities that need to use finance strategically to diversify their economies and attract investors. Rotterdam (NL) and The Hague (NL) faced the question of how to finance the energy transition. Using revolving funds developed under JESSICA[1], both cities showed how each euro of public capital can be reused, derisking portfolios and crowding-in private partners.

Common barriers discussed included limited creditworthiness, high up-front costs, long pay-back periods, and fragmented project pipelines. These challenges can be overcome through planning, strong governance, and early partnership with financial institutions.

1.2 Learnings from cities

Lessons from Oradea (RO) – Financing and Building a Business Ecosystem

• Think in pipelines, not projects. Oradea (RO) created a rolling portfolio of investment-ready projects anchored in its Integrated Urban Development Strategy. This long-term pipeline reassured investors and ensured consistent delivery beyond political cycles.
• Use finance as a lever, not a constraint. When EU reimbursements were delayed, the city used a €20 million domestic loan, later complemented by EIB financing, to maintain momentum. This blended approach normalised the use of debt alongside grants.
• Institutionalise investor support. The Local Development Agency of Oradea (RO) (ADLO) acts as a one-stop shop for investors, reducing administrative risk and coordinating education–industry partnerships.
• Deliver and communicate results. The city reports over 13,000 new jobs and €700 million in private investment — proof that transparent governance and measurable outcomes attract further capital.

Lessons from Rotterdam (NL) and the Hague (NL) – Financing and urban development and energy transition through revolving funds

• Make capital revolve. Revolving funds transform finite grants into renewable resources; once loans are repaid, the same capital finances new projects, multiplying public value by continuously reinvesting repayments into the next generation of projects. To state it simply: set up a fund where money that is paid back from earlier projects is used again to finance new ones — so the same public money keeps working over and over.
• Crowd in partners. By blending ERDF, municipal, and private contributions, the cities shared risks and attracted investors into projects such as The Hague’s geothermal network and Rotterdam (NL)’s urban regeneration schemes.
• Link finance to strategy. Every investment was tied to integrated urban plans, ensuring social and economic returns — from repurposed hospitals to innovation hubs.
• Build credibility through governance. Independent fund managers operating under clear EU-compliant rules increased confidence among banks and private partners.

Transferable lessons to other cities

• Lead with a strategic vision backed by data.
• Bundle projects into coherent, bankable portfolios.
• Strengthen financial literacy and in-house expertise.
• Invest beyond hard infrastructure by supporting social, educational, and cultural projects that enhance liveability and make the city more attractive to residents and investors.
• Prove impact through transparent governance and delivery.

[1] Jessica: A new way of using EU funding to promote sustainable investments and growth in urban areas

2.1 Relevance of the topic, related challenges of cities

Cohesion Policy remains the EU’s main tool for reducing regional disparities and supporting sustainable urban development. More than 40 % of integrated strategies now target small and medium-sized cities, yet many municipalities still struggle to access or combine funds. Key obstacles include limited staff capacity, difficulty aligning local priorities with EU objectives, and the complexity of managing multiple instruments. Addressing these challenges require increasing the capacity of local practitioners when designing funding mixes for city strategies and managing funds in real-life projects. A practical example from Alba Iulia (RO) illustrates how this approach can be applied in practice.

2.2 Learnings from cities

Lessons from Alba Iulia:

• Strategic alignment is fundamental. A clear long-term framework, matched to EU priorities, helps identify the right funds and partners.
• Inclusive governance adds strength. Establishing an Urban Consultation Group involving the quadruple helix ­— local government, business, academia, and civil society — turned ad-hoc consultation into a permanent partnership platform, improving coordination and accountability in project delivery.
• Integrating funding sources increases efficiency. Combining ERDF, ESF+ and national resources under flagship projects reduces fragmentation of funding streams and management sources.
• EU funding acts as a catalyst. Well-structured projects attract additional private capital and build credibility.

Additional insights:

• Understand and match EU funds. Map available instruments, eligibility and procedures; dedicate staff or knowledge hubs.
• Combine funding carefully. Blending expands scope but requires strong coordination; use Integrated Territorial Investments[1] (ITIs) or Community-Led Local Development (CLLD) tools to simplify administration and combine multiple funds under one framework.
• Adapt to regional contexts. Tailor funding strategies to territorial and socioeconomic conditions.
• Invest in people. Strengthen inter-departmental cooperation to pair financial and technical expertise.
• Use funds for soft as well as hard measures. Support capacity-building, networking and innovation in governance.

Transferable lessons to other cities:

• Maintain a pipeline of integrated, fundable projects aligned with EU priorities.
• Engage managing authorities and stakeholders early.
• Budget for project preparation and feasibility work.
• Treat each funding round as an opportunity to build capacity.
• Combine evidence-based planning with participatory approaches for stronger alignment and legitimacy.

[1] What are Integrated Territorial Investments? | urbact.eu

Through six city experiences from across Europe, three cross-cutting insights stand out. First, successful cities secure finance for pipelines, not projects. They think in long-term, bankable portfolios that provide continuity even when specific grants or loan facilities are delayed. Second, they treat finance as an instrument of policy, aligning economic returns with social and environmental objectives. Third, they build institutional credibility and partnerships that enable repeated investment through dedicated delivery structures, transparent governance, and measurable impact.

Together, these examples show that financial innovation is not the preserve of large capitals. Mid-sized and smaller cities are increasingly using blended financial instruments (combinations of grants, loans and guarantees), community ownership models (such as land trusts and cooperatives), and social finance mechanisms (tools that attract private investment for measurable public or social outcomes) to unlock capital and multiply the impact of public funds. The following case studies illustrate how different cities are designing financial architectures that match their local needs — from revolving funds and impact coins to community land trusts and governance reform — and what other cities can learn from their experience.

Both Chalandri (EL) and Den Helder (NL) , partners in URBACT Innovation Transfer Networks (ITNs), have been exploring how to finance local innovation and institutional capacity. Their experiences highlight the funding challenges faced by smaller municipalities seeking to sustain governance and social initiatives beyond project cycles and demonstrate the value of peer-to-peer exchange in testing potential financial solutions.

Chalandri, Greece - Financing institutional and digital innovation

Chalandri’s ambition is to institutionalise data-driven, participatory governance within its municipal structures. The main challenge lies in securing funding for the staff, digital infrastructure, and civic platforms needed to ensure continuity beyond EU project cycles. Chalandri (EL) explored innovative financing models for open-data systems and shared service units designed to strengthen participation, transparency, and long-term innovation capacity.

This case highlights the limitations of short-term, project-based funding and underscores the need for sustainable financing mechanisms to support ongoing institutional reform. By treating administrative capacity as an investment rather than a cost, Chalandri (EL) demonstrates that good governance can generate measurable efficiency gains and public value—resources that can, in turn, be reinvested to sustain innovation.

Key learnings

• Recognise governance reform as a long-term investment.
• Quantify efficiency and transparency gains as measurable outcomes.
• Pool resources across municipalities for shared capacity.
• Link digital participation to accountability frameworks.

Transferable lessons to other cities

• Develop a funding line for institutional capacity and digital tools.
• Use inter-municipal cooperation to sustain staff and systems.
• Present governance efficiency as a return on investment.
• Pair data systems with participatory budgeting to ensure use and trust.

Case Study: Municipality of Den Helder, the Netherlands - Blending soft and hard measures for child-friendly regeneration

Den Helder (NL) aims to become the most child-friendly city in the Netherlands, combining physical renewal with social investment. The municipality explored EU and philanthropic mechanisms to finance education, safety, and play alongside housing and public space improvements. This integrated approach seeks to bridge funding silos by aligning social impact and infrastructure finance within one investment framework.

By coordinating local priorities with EU instruments such as Community Led Local Development (CLLD)[1] and the EU funding programme LIFE[2], Den Helder (NL) with a population of 59,600 people demonstrates how smaller cities can mobilise cross-sector partnerships for holistic regeneration. The experience underlines that evidence, persistence, and political advocacy are vital to secure financing for people-centred development.

Key learnings

• Blend sectoral funds to connect physical and social objectives, using mechanisms such as CLLD or LIFE to bridge policy areas.
• Phase investments into manageable components so smaller funding streams can contribute progressively.
• Use local data and pilot evidence to advocate for soft measures in regeneration plans.
• Treat wellbeing as an economic and spatial outcome by embedding social indicators in investment strategies.

Transferable to other cities

• Integrate social and spatial priorities under one pipeline by aligning project calls across departments.
• Combine multiple EU programmes (e.g. ERDF for infrastructure, ESF+ for skills, LIFE for environment) through joint calls or shared project governance.
• Partner with philanthropic actors early to co-finance pilots and de-risk new approaches before mainstream investment.

Cross-cutting takeaway from the case studies

Across all six cases, one shared principle emerged where finance follows strategy when a city has invested in capacity to deliver.

Cities that succeed in mobilising diverse funding sources align their financial tools with long-term visions, strengthen institutional capacity, and build trust through transparent delivery. Whether through revolving funds, social impact currencies, or community ownership, each example illustrates how public finance can evolve from a transactional activity into a transformative mechanism for sustainable urban change.

Ultimately, these cases underline that finance delivers greatest value when treated as a policy tool — a means to achieve public and social outcomes, not simply to fund projects. Cities that align their financial design with purpose generate impact that lasts beyond each investment cycle.

[1] LEADER/CLLD | The European Network for Rural Development (ENRD)

[2] LIFE - European Climate, Infrastructure and Environment Executive Agency

European cities have the opportunity now to move beyond being a grant funding applicant to an emerging investment managers within complex finance ecosystems. The scale of climate, digital, and social investment in cities require a shift from project-by-project grant dependency to integrated, long-term funding strategies. The central finding of the event was not a surprise to any – that capacity in local authorities to deliver rather than lack of ‘dry powder’ available was the largest constraint.

Cities demonstrated that innovative funding begins when funding is seen as part of policy, not as an administrative function. Blended finance and revolving mechanisms already exist, but uptake depends on institutional capacity and readiness: stable delivery vehicles, financial capacity, and credible monitoring of impacts and results. Where those conditions are present, cities can align public, private, and philanthropic capital around shared missions such as regeneration, economic and social inclusion, and decarbonisation.

Three main insights emerged from the discussions and exchanges among urban stakeholders[1]:

• Pipelines deliver long-term access to funding. Typical success stories combine Cohesion Policy funds, EIB support, and domestic loans to accelerate financial diversification, leading to de-risked, resilient project delivery. They also result from early, consistent engagement with funders by the local authority.
• Innovative financial instruments can recycle the same euro into new projects inside a pipeline or portfolio again and again. These instruments derisk projects, reuse the original public capital, and enable social returns that overwise would require the local authority to use its resources to seek out grant funding.
• Money with purpose multiplies value and impact, and all actors in the finance ecosystem expect local authorities to act with this purpose. Funding strategies that deliver social and public goods for residents and businesses get engagement and trust as credible and long-lasting propositions by potential private sector partners.

Finally, the overall finding is that the capacity needed to create funding strategies, pipelines, and instruments is lacking, especially in small and medium-sized cities. Below are some recommendations that have emerged from these insights:

For cities and local authorities

• Be brave and experiment. Don’t wait for perfection -  try, test, and iterate. Innovation starts with small, practical steps.
• Ask for help and collaborate. Reach out through Cohesion policy instruments (ERDF, ESF+, JTF), EUI, EIB advisory services, and peer networks to share challenges and find solutions. Seek external expertise when needed. Where in-house financial or technical skills are limited, use external experts strategically to strengthen immediate delivery and build internal capacity over time.
• Design funding architectures, do not chase funding. Design coherent funding strategies around city needs and objectives — then identify the most suitable mix of instruments and partners to realise them.
• Undertake regular horizon scanning and build a funding strategy. Systematically map available EU, national, private, and philanthropic funding opportunities, and plan across short-, medium-, and long-term horizons. Think in pipelines, not projects.
• Move toward impact-based financing. Measure and monetise impact, as shown by the city of Rotterdam (NL)[2], to attract partners and embed social value and social justice in financial models that support a fair and inclusive Europe.
• Strengthen capacity across departments. Build financial literacy not only among finance officers but across technical, strategic, and delivery teams to create a shared understanding of funding and investment.
• Use finance as a lever. Treat funding not as an end in itself but as a strategic tool. Critically assess how each grant or loan can achieve maximum leverage — for instance, by de-risking projects, attracting private investment, or unlocking additional co-financing.
• Make your money work and go further through strategic procurement and revolving mechanisms, ensuring transparency and good governance to build credibility with partners and investors.

For Managing Authorities and EU institutions 

• Invest in capacity at every level. Provide targeted assistance for cities - especially small and medium-sized ones, and foster national-level learning networks where municipal staff and finance teams can exchange experience, build shared literacy, and feed insights back into national and EU policy.
• Speak the same language — and beware of jargon. Simplify communication about instruments, eligibility, and impact. Many cities, especially smaller ones, struggle not with substance but with terminology. Using plain, accessible language helps partners understand opportunities, align expectations, and collaborate effectively.
• Continue to simplify and align funding rules. Persist in efforts to reduce fragmentation and make blending grants with financial instruments easier and more predictable.
• Better highlight and engage philanthropy and community finance. Increase dialogue and awareness of their complementary role in advancing Cohesion Policy objectives.
• Encourage replication and scaling. Prepare and circulate concise, practical case studies of cities using innovative financing schemes, and share them through existing networks and channels e.g. EUI, URBACT.
• Participate in EU-wide and national events. Cities clearly value spaces to learn, exchange, and build confidence in accessing funding.

For financial and philanthropic partners

• Continue to increase visibility and awareness. Many cities remain unaware of available financial supports - communicate clearly, avoid jargon, and share simple, real-world examples.
• Speak the same language — and beware of jargon. Simplify communication about instruments, eligibility, and impact. Many cities, especially smaller ones, struggle not with substance but with terminology. Using plain, accessible language helps partners understand opportunities, align expectations, and collaborate effectively.
• Provide technical assistance and guidance. Help cities understand how to apply for and manage funds, design financial structures, and measure impact.
• Share practical stories of impact. Publish easy-to-read examples of how cities have used your instruments creatively to deliver measurable social or environmental value.

Key message: One thing is clear - cities are ready to act. What they need now are skills, confidence, and the right connections. By building capacity, learning together, and embracing impact-driven finance, Europe’s cities can transform diverse funding opportunities into resilient, inclusive, and investable urban futures.

[1] EUI Focused Policy Lab and Capacity Building Event, Access to funding: Practical tools for urban change, Rotterdam (NL), The Netherlands, 30 September – 2 October 2025

[2] See case study Rikx

This report was produced with guidance from the EUI team in charge of the Access to funding: Practical tools for urban change EUI event. It was co-authored by EUI experts Eileen Crowley and Steve Lorimer, with contributions from Marion Cuget, Carlotta Fioretti, and Reka Soos, and thanks to valuable inputs from policy lab speakers and participants.

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2. European Climate, Infrastructure and Environment Executive Agency. (n.d.). LIFE Programme – EU’s funding instrument for the environment and climate action. Retrieved October 29, 2025, from https://cinea.ec.europa.eu/programmes/life_en
3. European Investment Bank. (2008). JESSICA: A new way of using EU funding to promote sustainable investments and growth in urban areas. Luxembourg: EIB.
4. European Network for Rural Development. (2021). LEADER & CLLD. Retrieved from https://ec.europa.eu/enrd/leader-clld_en.html
5. European Urban Initiative. (2025). Access to funding: Practical tools for urban change. Retrieved from https://www.urban-initiative.eu/
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9. Institute for Climate Economics (I4CE). (2024). European climate investment deficit report: An investment pathway for Europe’s future. Available from: https://www.i4ce.org
10. URBACT. (2025). What are Integrated Territorial Investments? Retrieved from https://urbact.eu