Classical Funding Scheme Targeting Innovation

‘Classical funding schemes targeting innovation’ take various shapes, each designed to support the development and implementation of innovative projects. A common approach to implement this scheme is through grants, often distributed via calls for projects. These funding opportunities provide essential financial support to local businesses, NGOs, and SMEs  that demonstrate strong impact potential. Another widely used model is award prizes, which incentivise innovation by recognising and financially supporting outstanding projects that contribute to urban sustainability.

Step 1 – Issuing call for proposal

The municipality announces a call for proposals specifically targeting innovation, outlining the eligibility criteria, funding objectives, evaluation process, and submission deadlines. This call is typically published on official websites to reach a broad audience and may be accompanied by a communication campaign to raise awareness and encourage participation.

Step 2 – Applying for funding

Interested applicants submit proposals that outline their innovative project’s description, objectives, demonstrate their expertise, expected outcomes, budget estimates, and timeline. Municipalities may offer services to help applicants in the application process.

Step 3 – Select and provide funding

A selection committee reviews the submitted proposals based on predefined criteria such as feasibility, innovation potential, societal impact, and financial sustainability. The most promising projects receive funding, often in the form of grants, to support their implementation.

Step 4 – Project implementation

Once funding is secured, the recipients begin executing their projects according to the approved plan. They must adhere to the agreed-upon timelines, budgets, and deliverables. Regular progress reports and evaluations may be required to ensure accountability and compliance. In some cases, funders provide additional support through mentorship, networking opportunities, or technical assistance to maximise project success.

Step 5 – Ongoing monitoring and evaluation

To ensure public funds are used effectively and minimise risks, funded projects must undergo continuous monitoring and evaluation. Beneficiaries must submit regular progress reports, financial statements, and impact assessments to demonstrate proper fund utilisation. If a project falls short of its milestones, municipalities may take corrective measures, such as adjusting the scope, offering additional support, or, in some cases, withdrawing funding.

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The costs associated with the scheme will vary depending on the scope and type of project being financed. Foreseen costs include developing the programme's documentation, launching the open calls for projects, transferring payments to beneficiaries, and conducting reporting, payments, and checks.

Targeted support for innovative solutions: The scheme directs financial resources towards innovative projects that address specific local challenges and priorities. By prioritising innovation, these programmes encourage creativity and risk taking, , creating a supportive and conducive environment for innovation. In addition, these schemes often come with access to expert advice, further enhancing the impact of funded innovative solutions.

Funding sustainability challenges: Maintaining the financial sustainability of the scheme can be challenging, as it depends on consistent funding over time. Municipalities may struggle to secure long-term financial commitments, particularly during election cycles when budget priorities can shift. Strong political support and strategic financial planning are essential to ensuring the scheme's continuity and resilience against funding uncertainties.

Application requirements: Participating organisations may lack familiarity with the financial scheme, leading to difficulties in accessing funds. The complexity of eligibility criteria, reporting requirements, and compliance regulations can create barriers for smaller organisations or those with limited administrative capacity. To mitigate this, municipalities can offer technical support, including training sessions, step-by-step guidance, and assistance to help applicants navigate the process effectively.

Ensure long-term sustainability: Structure the scheme to promote project continuity by incorporating long-term financial planning, fostering strategic partnerships, and encouraging self-sustaining business models to maintain impact beyond the initial funding period. To help ensure commitment and project sustainability, it is recommended to include a co-financing requirement (e.g., 20%) from beneficiary organisations. This contribution ensures that beneficiaries have a vested interest in the project's success.

Learn from best practices: Actively engage with other cities implementing similar schemes to learn about their specific approaches, results, and examples of best practices. Learning from these experiences will help minimise errors during the development phase and ensured a smoother, more efficient implementation.

Drive community engagement: Involve local communities at every stage— from design to implementation— through consultations, workshops, and feedback mechanisms to ensure relevance, public support, and long-term impact.

Align programme with local needs: Ensure the programme is tailored to address specific local challenges by actively engaging with local businesses and citizens, adapting initiatives to meet community needs effectively.