Co-financing
Under co-financing (Engl. Co-financing ) are understood in finance joint co-financing of an investment or project by at least two lending institutions .
General
The term co-financing was coined by the World Bank ( International Bank for Reconstruction and Development , IBRD). It has been cooperating on projects with commercial banks since 1975 in the context of co-financing, as the World Bank does not under any circumstances fully finance projects. The World Bank began with parallel loans in 1974. With parallel loans , at least two loan agreements are concluded between (at least two) lenders and the borrower . In doing so, it must be ensured from a legal point of view that these two loan agreements are coordinated with one another so that the loan agreements do not collide legally and economically. The World Bank combines the credit agreements of the commercial banks with a "Memorandum of Agreement" with the granting of credit for the same project. Clauses such as “cross-reference” and cross-default clause ensure that the loans are legally coordinated. The former indicates the existence of a parallel loan agreement, the latter triggers a reason for termination if the borrower falls behind with the loan servicing of the parallel loan agreement. This can prevent the debtor from unilaterally changing the repayment sequence.
EU funding programs
The law of the European Union has taken the concept of co-financing and made it a central concept of EU law. In cooperation with other institutions ( governments , regional governments , export credit insurances , banks ) it grants loans for a variety of EU funding programs. Most EU funding programs do not provide full financing for investments or projects, but instead require the use of additional sources of finance outside the EU institutions of up to 50% of the total investment or project volume. Co-financing is therefore a prerequisite for issuing a notification of approval. Funding is therefore only granted if the institutions mentioned contribute to the financing. The part that is supposed to come from other sources of funding is called co-financing.
In the case of EU funding programs for regional and structural policy ( structural funds , e.g. ERDF to strengthen the regional economy), it is required that, in addition to EU funding, part of the total funding of a project must be co-financed from other sources. The funds from the European Social Fund "must in principle be supplemented by national funds." Evidence of co-financing must be provided before an EU funding program is approved. With the co-financing, the EU pursues the purpose of only co-financing projects that are also worthy of funding in the interests of the member states. Sources of co-financing can be own funds , national co-financing by the applicant's member state, debt securities or bank loans .
species
In the case of national co-financing, the community only takes on part of the financing, so there is mixed financing by the community and the member state. Within the framework of the EU funding programs, a distinction is made between two types of national co-financing, optional and compulsory national co-financing . In the optional one, the member states can choose whether they want to grant a benefit co-financed by the Community ( Art. 175 (1) sentence 3 TFEU). The mandatory national co-financing, on the other hand, requires a contribution from the member states, which have to bear the non-community-financed part themselves.
consequences
The combination of at least two sources of funding in international funding for the purpose of co-financing requires cooperation between international and national institutions. A loan for investments or projects can only be granted if several institutions cooperate and coordinate the drafting of contracts. The funds made available to the borrower therefore do not come from a single source, so that it is also easier for the individual - with scarce funds - donors to raise large amounts in particular.
The reason for these regulations also lies in the consideration that the co-financing from third public sources, above all at national or regional level, offers additional security and control for the EU as a donor, because a. assumes that the applicants and their projects can be better assessed on site. The share of own funds can also be mandatory as co-financing.
In the federal states this sometimes leads to deadweight effects : Funding projects are pushed because funding is available - state governments measure their success by how much federal and EU funding they have raised. However, the projects must meet the criteria of the co-financier, he thereby determines the direction and can, to a certain extent, lead the project manager by the “golden reins”. The question arises as to whether certain projects would have started if there had been no co-financing. At least the priority in the competition with other projects might have decreased many times. This is a classic problem of subsidies .
literature
- Matthias Klöpper: Mixed financing and co-financing as instruments of order financing in the industrial plant business: an analysis from the perspective of the German plant exporter . VVF, Munich 1990. 238 pp. Zugl .: Berlin, Free University 1989 Dissertation , university publications on business administration, vol. 83, ISBN 3-88259-772-0 .
- Manfred Tauber: The innovations in EU co-financing of development programs and their impact on non-governmental organizations with reference to Austria . Vienna, University of Economics, Diploma thesis, 2002.
- Federal Ministry of Education and Research (Ed.): Policy to strengthen incentives and mechanisms for co-financing lifelong learning: international conference , 8. – 10. October 2003, Bonn. OECD (Translated by Barbara Möller-Lauffs). Berlin 2005. 188 pp.
Individual evidence
- ↑ Miren Etcheverry / Brian P. Nolan, Cofinancing of World Bank Projects: Problems and Prospects ( Memento of the original from February 19, 2014 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. , May 1983, p. 8.
- ↑ Miren Etcheverry / Brian P. Nolan, Cofinancing of World Bank Projects: Problems and Prospects , May 1983, p. 10.
- ↑ Renate Ohr, Fit for the exam: Europäische Integrationl , 2013, p. 198.
- ^ Daniel Pichert, The ten stumbling blocks of EU fundraising , 2011, p. 53.
- ↑ Co-financing workbook ( Memento of the original from February 3, 2014 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. , Federal Ministry of Labor and Social Affairs, February 2009, p. 2.
- ↑ Wolfgang Schenk, Structures and legal questions of the community service administration , 2006, p. 104 ff.
