From first come, first served to a lottery
In the world of subsidies, there are tender-based schemes and schemes that operate according to the so-called first come, first served principle. With tender schemes, applicants have until a certain deadline to submit their proposal. Applications are then assessed on their merits and only the best projects receive funding.
With first come, first served schemes, the principle is simple: the earlier you apply, the better. Recently, however, budgets for these schemes have increasingly been oversubscribed on the very first day they open. The result is a lottery. Many applications are then not even assessed, despite all the effort applicants have put into preparing them.
The MIT Feasibility and SLIM schemes are well-known examples. More recently, the same happened with the VIA Friesland Drenthe scheme. On the first day of the application period, demand was so high that the available budget was immediately oversubscribed, resulting in a lottery.
To illustrate
In Utrecht, the MIT Feasibility scheme opened on 8 April at 9:00 a.m. On that very day, applications were submitted for a total of €1,840,032.50 in subsidy, while the scheme remained open until 16 September and only €850,000 was available. In other words, demand far exceeded the available budget.
For the same scheme in the Northern Netherlands, administered by SNN, almost €6 million in subsidy was requested against a budget of €3.5 million. Here too, a lottery was required, meaning that many applicants missed out.
Applications are generally registered in the order in which they are received. If demand on the first day exceeds the available budget, all applications submitted that day are grouped together and a lottery, often supervised by a civil-law notary, is held.
Each application is assigned a number and then considered in numerical order against the available budget. The list is worked through until the budget has been fully allocated. Applications that fall outside the available budget are set aside and are not assessed further. The applicant then receives a rejection letter. In other words, the applicant’s fate is effectively in the hands of the notary.
In our professional practice, we increasingly see companies deciding not to submit an application at all because the chance of being selected is simply too small. They dislike the element of chance.
Having no influence over the outcome while still having to invest significant time and effort does not sit well with many organisations.
Folding chairs
Anyone who has been around in the world of subsidies for a little longer may remember the scenes from years ago: applicants sitting on camping chairs outside the subsidy office, hoping to be the first through the door when it opened.
Consultancy firms would hire students to queue on their behalf. When the doors opened in the morning, the student would rush inside with the application to obtain a receipt stamp from the reception desk or doorman. Mission completed.
Back then, physical presence and being first literally mattered. Even the exact time on day one could make the difference. There may have been a touch of heroism to it all, but above all, the process was inefficient and opaque.
To create equal opportunities, this system was abandoned. Today, it no longer matters whether you submit your application at 7:30 a.m. or 11:59 p.m. on the first day. Applications are also submitted digitally rather than physically. A major improvement.
A case for a two-stage approach
There is, however, an unpleasant side to the current lottery system if your application is not selected: the hours and costs already invested in preparing it.
Whether an organisation decides to write the application itself or asks a specialist to prepare it, time still has to be spent developing and submitting a complete proposal. It does not happen by itself.
Even though these schemes are often presented as simple and accessible, the real complexity lies in the formal declarations that must accompany the application. Applicants also need to carefully consider compliance requirements to avoid problems afterwards due to non-compliance with European or other regulations.
Quite a few documents therefore have to be submitted. Examples include State aid assessments, SME declarations and de minimis declarations. These may appear to be simple forms, but in practice they often require considerable research and additional substantiation.
In short: submitting an application costs money. If you are then eliminated by lottery, a significant amount of time and money has been spent on preparing a complete and high-quality application that may never even be assessed.
It is time for a more practical and realistic approach that takes these unnecessary costs for applicants into account.
My proposal is to use a two-stage process for first come, first served schemes where there is a high likelihood of a lottery. In the first stage, applicants should be able to submit a simplified application: a concise document containing a basic budget and a compact project plan explaining what the project involves and why it meets the criteria.
If the application is then selected in the lottery, the funding body can request the remaining documents and, where necessary, ask for additional information.
This still requires time from the applicant, but at least they know that their application has made it past the first hurdle.
Such an approach would lower the threshold for participation and prevent unnecessary waste of time and resources. An additional benefit is that organisations that had previously decided not to apply because of the lottery element may be encouraged to participate again.
Winning subsidies takes more than luck!
Do you see opportunities to grow, but want to make sure your subsidy application is submitted in a smart and effective way? Together, we can turn a well-prepared application into your strongest asset. Feel free to call or email us.
