In Italy, people increasingly talk about “simplification” in the management of EU funds and the NRRP (National Recovery and Resilience Plan), but only a few know the technical tools behind this concept. In this shift, two acronyms are key: SCOs (simplified cost options) and FNLC (financing not linked to costs), meaning different ways of calculating reimbursements that no longer rely on traditional invoice‑based reporting.
Why traditional reporting is no longer enough
The traditional “actual costs” model is based on a simple principle: every euro of support must be justified by invoices, contracts, timesheets, reported line by line. However, this approach has generated a very heavy administrative burden, with complex rules and detailed checks that discourage especially smaller and less structured companies and entities from applying for EU funding. To address this problem, the European Commission has changed gear by promoting tools that allow contributions to be calculated based on rules and parameters defined ex ante, reducing the volume of documents to be produced and verified. The goal is clear: to make life easier for those implementing projects and, at the same time, to make it more transparent what is being financed and which results are expected.
What simplified cost options (SCOs) are
SCOs are reimbursement modalities that replace detailed expenditure with standard formulas. The three main forms are:
• unit costs: a fixed amount per unit of activity or service (for example, X euros for each training hour per participant)
• lump sums: a fixed amount for a project or a specific phase, paid if the activity is completed as planned
• flat‑rate financing: a percentage applied to a category of costs (often to cover overheads or indirect costs).
In practice, all project invoices are no longer checked one by one; instead, authorities verify that the planned outputs have been delivered (training hours, services provided, works completed) and apply the formulas agreed in advance. In Italy, ministries and administrations have started to formalise these logics in guidance documents and technical sheets, for example in the agricultural sector (MASAF) and in several NRRP measures.
What financing not linked to costs (FNLC) is
FNLC goes one step further than SCOs. In this case, the Union contribution is no longer linked to costs (not even standardised ones), but to verifiable conditions or results: if the condition is fulfilled, the agreed amount is paid; if it is not fulfilled, the contribution is not disbursed or is reduced.
Some examples include:
• a fixed amount for each person placed in stable employment
• a lump sum upon completion of an infrastructure by a given date, with technical specifications verified
• a payment linked to the reduction of an environmental indicator or to the number of users of a new digital service.
What matters is not how much the beneficiary has spent, but whether it has achieved the result agreed with the managing authority. For now, FNLC is more widespread at EU level than in national programmes, but it is at the core of the Commission’s recommendations to make public spending more performance‑oriented.
How SCOs and FNLC differ
SCOs and FNLC share the same underlying logic: reducing red tape and making the link between public funding and results achieved more explicit.
There are, however, some differences: with SCOs, the contribution is based on standard scales of costs (per unit, per project, as a percentage), defined ex ante based on data and methodologies; with FNLC, the contribution is based on result indicators or specific conditions, with no reference to underlying costs. In both cases, everything hinges on sound “upstream design”: setting realistic parameters, reliable data sources and clear verification criteria is more important than collecting invoices ex post. For managing authorities and beneficiaries, this means learning to work with result indicators, clear numerical targets and monitoring systems that connect activities, outputs, results and payments.
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What changes for users of public funds
These modalities are not only relevant for ministries, regions and municipalities: they apply equally to businesses, universities, research organisations and third‑sector entities participating as beneficiaries in funded programmes. For all public and private actors, the key question is no longer just “how much funding is available?”, but “which reimbursement modalities does this call for proposals provide (SCOs, FNLC or actual costs) and are we able to manage them without incurring risks?”. For public entities, the main risk lies in failing to set up and steer complex project portfolios, with different reimbursement schemes and layered controls. For companies and other private organisations, the risk is to underestimate the impact of SCOs and FNLC on cash flow, internal organisation and capacity to measure outputs and results, with the potential loss of already‑allocated contributions in case of errors or missed targets.
In both cases, tools and skills are needed to select calls consistent with one’s administrative and measurement capacity, to design interventions compatible with SCO schemes and, looking ahead, with FNLC, and to continuously monitor activities, outputs, milestones and indicators linked to payments.
The Public Funding offering by OpenEconomics is designed precisely for public administrations and private companies. On the one hand, the SaaS platform supports the entire funding cycle (scouting, application, management, reporting) with workflows and controls that reduce errors; on the other hand, our models and analyses help public administrations and businesses quantify results and impacts, a requirement that is increasingly central in SCO and, above all, FNLC schemes.
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