FAQ on in- kind contribution

1. What are in-kind contributions?  

2. Can work be in-kind contribution? 

3. Is there a limit in the budget for In-kind contributions? 

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 1.    What are in-kind contributions?

The Commission regulation (EC) No 448/2004 of 10 March 2004 states under Rule No 1 point 1.7 that in kind contributions are eligible expenditures provided that:
a) They consist in the provision of land or real estate, equipment or materials, research or professional activity, or unpaid voluntary work;
b) They are not made in respect of financial engineering measures (see rules 8, 9 and 10 of the same regulation – e.g. guarantee funds and venture capital funds);
c) Their value can be independently assessed and audited; d) in the case of the provision of land or real estate, the value is certified by an independent qualified valuer or duly authorised official body;
e) In the case of unpaid voluntary work, the value of that work is determined taking into account the amount of time spent and the normal hourly and daily rate for the work carried out.
f) The provisions of rules 4 (Purchase of second-hand equipment), 5 (Purchase of land) and 6 (Purchase of real estate) are complied with where applicable.
From this definition it is possible to deduce that in-kind contribution is considered as any kind of contribution of work or services which are not backed by a corresponding invoice. The most common features of in-kind contributions that can occur in the implementation of a project can be the provision of meeting rooms for events or conferences, the provision of research results on which one PP has exclusive rights, the provision of office premises or of office equipment, the execution of some tasks by unpaid volunteers. The amount certified by the final beneficiary must be evaluated and certified either using official scales drawn up by an independent authority or by an independent professional third party, and is therefore considered as eligible expenditure.

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2.   Can work be in-kind contribution?

The internal hours (staff costs) of project partners are eligible expenditure and are considered as costs for professional services.
Internal hours of project partners (public or private) are not considered as contribution in kind. If the expenditure is based on salaries or wages actually paid out, the expenditure is not regarded as contribution in kind but as paid expenditure, which must be backed by specific documents and is regulated by the point 1.1 of the eligibility regulation 448/2004. Only unpaid voluntary work is regarded as contribution in kind and therefore the stipulations of regulation 448/2004 points …. apply.
The evaluation of the cost of private voluntary work must be in conformity with the national rules establishing the calculation of labour cost per hour, day or week (legally approved standards, for examples) where such rules exist.
These limitations make it quite difficult to include work as in-kind contribution in the project budget. The Lead Partner shall carefully consider beforehand this option, because the presence of many conditions may turn out in complicated and time-consuming checks.
In-kind contributions of work should be limited to small amounts and, considering that internal staff is not accountable, shall not include specialised work. Only work carried out to perform small and unskilled activities (e.g. distribution of brochures at some publicity event) can be regarded as in kind contribution in the form of voluntary work.

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3.   Is there a limit in the budget for In-kind contributions?

There are no specific limits but the following rule applies.
The ERDF contribution (e.g. 50%) is theoretically calculated on the total eligible expenditure (e.g. 100); nevertheless, the actual final contribution cannot exceed the expenditure actually incurred = total eligible expenditures net of the in-kind contributions. Here are two brief examples:

1. Given a Community part-financing rate of 50% and a total eligible expenditure of 100 of which 40 was eligible expenditure paid in cash and 60 was eligible expenditure supplied in kind, the theoretical community assistance of 50 (100 x 50%) will be limited to 40 (100 – 60);
2. Given a Community part-financing rate of 50% and a total eligible expenditure of 100 of which 70 was eligible expenditure paid in cash and 30 was eligible expenditure supplied in kind, the theoretical community assistance of 50 (100 x 50%) will be entirely provided.