Co-financing grants for cluster projects

The procedure for submitting and processing the applications for cluster project co-financing regulate the use of the funds provided by the Tallinn City Enterprise Board (hereinafter the Enterprise Board) for co-financing cooperative cluster projects (hereinafter the grant).

The terms and conditions for supporting the development of clusters has been established  in order to achieve the goals specified in the priority course entitled Increasing the Innovation and Growth Abilities of Companies, which is based on the Strategy for Use of National Structural Funds from 2007 to 2013, and the Implementation Plan for the Development of the Economic Environment, which is based thereon.

The Tallinn Cluster Development Programme for 2009 to 2013, which was approved by Resolution no. 136 of the Tallinn City Council dated 19 June 2008, stipulates that the co-financing of cooperative projects for cluster developments as an important course of activity. This procedure is intended as local government co-financing for the cluster development co-financing grants that are stipulated in Regulation no. 25 of the Minister of Economic Affairs and Communication dated 20 March 2009, entitled Conditions and Procedure for the Support of Cluster Development.

In the case of preliminary applications, the following may apply for grants:

- Companies registered in the Estonian Commercial Register, which are members of consortia planning to create clusters, and persons with the right of representation that have been authorised to submit applications by the consortia;

- Nonprofit associations or foundations entered in the Estonian Register of Nonprofit Associations and Foundations if the partners taking part in the implementation of the project have been defined;

In the case of full applications, applicants may be nonprofit associations or foundations entered in the Estonian Register of Nonprofit Associations and Foundations if the partners taking part in the implementation of the project have been defined.

Based on the key economic areas listed in the Tallinn Innovation Strategy for 2009 to 2013, preference shall be given to associations that fall into one of the following priority areas listed in the Tallinn Cluster Development Programme for 2009 to 2013:

1) information technology;

2) mechatronics;

3) medicine and technology;

4) creative industries;

5) maritime operations and logistics.

The fact that the project is carried out in cooperation between sectors and helps to apply key technologies, which include information technology, telecommunications, biotechnology or material technology will be monitored. It is also required that at least 50% of the companies in the consortia are registered in Tallinn or Harju County, and their primary place of business is located in Tallinn or Harju County.   

Grants are only available to cover the justified costs of a specific project, i.e.  for co-financing the preliminary applications submitted during an application round opened by Enterprise Estonia, during which the following cluster initiatives are supported: mapping the common interests of partners and investigating the feasibility of cooperation opportunities, including participating in trips to study cluster initiatives in other countries; searching for the partners necessary to realise cooperation opportunities; developing a common development strategy among the partners; developing the action plan needed to achieve the development strategy; and translation costs.

For co-financing the full applications submitted during the application round opened by Enterprise Estonia, during which the following cluster initiatives are supported: coordination of common marketing, including conducting market research and searches for partners; coordinating the division of production capacities; mapping the need for the human resources necessary for carrying out the common activities of the cluster, including compiling a prognosis of labour needs, determining training needs, and participating in the development of training programmes; initiating and coordinating other common development projects; and searching for partners needed to realise cooperation opportunities.

The self-financing limit for a project at the preliminary application stage is at least 25% of the eligible costs of the project, of which the grant may comprise up to one-half of this amount, i.e. 12.5% of all eligible costs, but not more than 66,000 EEK. Since the maximum grant to be allocated through Enterprise Estonia during the preliminary application stage, within the framework of the national measure, is 400,000 EEK and it may comprise up to 75% of the eligible costs then the total for the project must exceed 533,333 EEK, in order to qualify for the maximum grant, 12.5% of which when rounded off is 66,000 EEK.

Self-financing for projects at the full application stage must total at least 30% of the project's eligible costs of which the grant may comprise up to half, i.e. 15% of all eligible costs, but not more than 600,000 EEK. The companies' self-financing must comprise at least 50% of the total self-financing. Since a maximum rate has not been established for grants allocated through Enterprise Estonia, within the framework of the national measure, at the full application stage, the Enterprise Board has proceeded from the assumption that cost of  "soft activities" during a three-year project generally total between three and five million EEK, of which 15% averages 600,000 EEK.

The application form is coordinated with the Enterprise Estonia application forms for cluster projects.

The submission of applications to the Enterprise Board takes place in rounds that correspond to the Enterprise Estonia application rounds. If budgetary funds exist, the Enterprise Board shall generally open a grant application round within five (5) workdays of the application round being opened by Enterprise Estonia, and shall make notification thereof on the city's website and in a nationally distributed daily newspaper. Application forms shall be made available on the Enterprise Board website and at the Enterprise Board's enterprise information desk. 

Applications should be submitted to the Enterprise Board within fifteen (15) workdays of the announcement of Enterprise Estonia's decision to approve the application on the Enterprise Estonia website.

Applications should be submitted on the form approved by the Enterprise Board along with a copy of the decision (administrative act) issued by Enterprise Estonia regarding the approval of the application, to which, in the case of a full application, a copy of the application submitted to Enterprise Estonia is attached along with the required annexes except for English-language translations.  The Enterprise Board does not require English-language translations, since they are intended for evaluation committees comprised of foreign experts.

The applicant must have paid all national and local taxes, or if an instalment plan has been instituted for tax debts, the instalment payments must have been made on time. 

The compliance of the applicant and application with requirements shall be decided by the Director of the Enterprise Board within ten (10) workdays of the date the application was submitted. The decision will be made known to the applicant.

An official of the Enterprise Board shall forward the applications that comply with requirements, along with his/her evaluation and proposals to the evaluation committee for a decision.   

The evaluation committee shall present a ranking of applications along with a proposal to approve (or reject) the applications and the minutes of the meeting to the Director of the Enterprise Board. 

Based on the proposal of the evaluation committee, and taking into account the budgetary possibilities, the Director of the Enterprise Board shall issue a decision on whether to approve or reject the applications within five (5) workdays of the evaluation committee makings its decision.

The decision to approve an application is valid for two months as of the corresponding Enterprise Estonia administrative act coming into force. During this time, the grant recipient must conclude a cluster development grant contract with the City of Tallinn. The Enterprise Board shall conclude a contract with the grant recipient that is valid for the entire period of eligibility for using the grant. The contract shall specify the intended purpose of the grant, the transfer method for the grant, the deadline or payment schedule, the rights of the agency to check on the purposeful use of the grant, the obligations of the grant recipient, sanctions in case of a breach of contract, and the method, time and place for submitting reports.  

The grant recipient shall submit to the Enterprise Board copies of the interim reports and final report submitted to Enterprise Estonia for the deadlines specified in the application approval decision.  The payment of the grant shall occur in instalments, proportionate to the length of the project - based minimally on three-month, and maximally on six-month reporting periods. Therefore, a table of costs based on the accrual method and quarterly cost statement forms must be added to the copies of the interim and final reports required by Enterprise Estonia.   

In the case of approved applications, the payments for which are planned and possible during the current calendar year, the grant recipients must conclude a cluster development grant contract with the Tallinn City Enterprise Board not later than within two months of the excerpt from the Director of the Enterprise Board's directive being delivered to the grant recipient.

If the evaluation committee makes a proposal to approve an application and the Director of the Enterprise Board decides to approve and finance an application with payments that will stretch out for a period longer than just one calendar year, within five (5) workdays of the issuance of the Director of the Enterprise Board's directive, the Enterprise Board will initiate the proceeding of a city council draft resolution regarding participation as the co-financer of the application and issuing authorization for the signing of a cluster development grant contract. 

In case of preliminary applications, each grant shall be paid in one lump sum. In the case of full applications, the grants shall be paid in instalments twice a year proportionally to the length of the project. In the case of full applications, the first instalment shall be paid to the grant recipient within one month of the contract being concluded and the next instalments in conformity with the interim and final reports approved by Enterprise Estonia that are submitted to the Enterprise Board. The final settlement shall be made at the end of the project, when the applicant's self-financing has been reduced in conformity with the implementation of the project activities.

The grant recipient shall submit copies to the Enterprise Board of the project's interim and final reports submitted to Enterprise Estonia by the deadlines specified in the resolution to approve the application, whereas the copy of the final report must be submitted not later than one month after the end of the project's activities. 

In addition, the grant recipient shall submit information to the Enterprise Board at the end of each quarter (either on paper or electronically) of the costs incurred during the quarter. The information shall be submitted on the cost report form provided in the annex to the contract.

The necessary budgetary resources for the allocation cluster project co-financing grants are included in the City of Tallinn budget, in the Enterprise Board's administrative area under small business costs that are part of enterprise development.  

More information:

Ingrid Hindrikson
Coordinator of business development projects
Tallinn City Enterprise Board
Vabaduse väljak 7
15199 Tallinn, ESTONIA
E-mail: ingrid.hindrikson(at)tallinnlv.ee